Tuesday, 10 March 2009

More On Futurists ...

A number of correspondents have asked me to clarify what I am saying about the three time horizons and weak signals (see post). I have produced a chart that might help to explain this:

What I am suggesting is that in traditional practice we consider three time horizons, whereas there are, in fact, four. The fourth – that of weak signals is not normally considered because it is subsumed into our consideration of ‘the long term’. However, what recent events have done is to challenge that presumption because, even in the short term now, we cannot presume that our underlying business model will be stable.

I suspect that this may settle down again once order is restored to the financial system. However, in the meantime, organisations may need to resort to scenario planning in order to generate a range of budgets. In part this is a reflection of the degree of risk and uncertainty that exists in the current environment. In part it reflects the chaotic systemic change that we are all experiencing.

To extend a previous argument (see post), if a lesser reliance can be placed on financial forecasts, then this would in part explain the reluctance on the part of the banks to lend to businesses. In order to restore normal lending conditions, a necessary (but not sufficient) condition would be to stabilise the business environment to allow a degree of certainty to return to financial forecasts.

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