Saturday, July 27, 2013

QOTW: Strategy is not predicting the future. Instead, it's about making decisions today to be ready for an uncertain tomorrow - Drucker

This quote is from Peter Drucker, p 125 of his 1974 classic book: Management: Tasks, Practices, Responsibilities (Harper and Row).  Though it talks about strategic planning, the same applies to risk management (emphasis added):
"Strategic planning does not deal with future decisions.  It deals with the futurity of present decisions.  Decisions only exist in the present.  The questions that faces the strategic decision-maker is not what his organization should do tomorrow.  It is, 'What do we have to do today to be ready for an uncertain tomorrow?'  The question is not what will happen in the future.  It is, 'What futurity do we have to build into our present thinking and doing, what time spans do we have to consider, and how do we use this information to make a rational decision now?'"
Drucker's use of the term futurity is notable and he gives it special meaning.  By futurity, he means, roughly "forces or factors that shape future events".  Applying this definition and rephrasing, Drucker is asking us to view strategic planning (and risk management) as the process of making decisions today in a way that will shape future events in a way that achieves our objectives, even in the face of uncertainty and forces outside of our control.  I'd call it "shaping the space of possibilities".  Here's a quote that expresses this idea:
"Forecasting attempts to find the most probable course of events, or perhaps a range of probabilities.  But the entrepreneurial problem is [to find] the unique event that will change the possibilities [and probabilities], for the entrepreneurial universe is not a physical but a value universe.  Indeed the central entrepreneurial contribution and the one which alone is rewarded with a profit is to bring about the unique event, the innovation that changes the probabilities."
This comes from a longer essay on this topic in the book Technology, Management and Society, p 110-112.  This was originally published in 1959 in the journal Management Science (available on JSTOR):
Drucker, Peter F. (1959): Long-Range Planning: Challenge to Management Science. Management Science 5(3): 238-249.

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