Business perspectives (foresight) from the top of the Jungfrau (without James Bond!)

The pursuit of short-term strategies and objectives has become endemic in the business world. Regrettably, this propensity to focus on the short term (including short term profits / the monthly or quarterly bottom line) is also to be found in the risk management field. It is obvious that a short-term focus on strategy would, ipso facto, impact on the risk management ethos of a business. It also goes without saying that any short-term focused risk management philosophy would be predisposed towards the identification of short-term contextual signals (including contextual warning signals / risks); in other words, too much focus is placed on the identification of micro events or ‘noise’ in the contextual environment. 

I have seen many times the never-ending ‘seesaw’ between short term business optimism and pessimism among corporate executives (sometimes a change in mood literally happens overnight) – and this eventually impacts on business strategy and its associated risk management strategies. It produces organisational short-sightedness. Therefore, in most businesses an urgent need exists for a combination of short-, medium- and long-term strategies – including risk management strategies. The application of futures thinking / futures research (which is normally the domain of Futurists) could lend a hand to create long term strategic horizons and paint or create the bigger risk picture / profile. In order to do exactly that, a proper methodology is indispensable in suspending the noise (micro events) in the contextual environment – so as to identify the macro patterns / pictures and long-term trajectories of developments (i.e., the underlying and deeper mechanisms or tectonic plates of change in a society). The application of Futures Studies allows for the use of macrohistory (or an alternative term would be “macro patterns in change” [1]). So, what is macrohistory? 

What is macrohistory?

Macrohistory is a study of change in social systems through time, not in time; it is concerned with the historical development of a subject through a long period of time – not with a subject as it existed at one point in time. Macrohistory is therefore concerned with the history of social systems through centuries since the epoch of the human race. Macrohistorians’ studies cover long periods (diachronic data), focusing on the identification of striking or grand patterns / regularities / laws in the histories of social systems (hidden in a massive amount of historical data), not on the endless number of dissimilarities and micro historical events (synchronic data). In other words, macrohistorians are not interested in the ‘noise’ in the media. Macrohistorians have a tremendous appetite for ambiguity in their quests to suspend all dissimilarities and to identify the underlying mechanisms of change. It is a phenomenal feat and intellectually difficult – hence the small number of macrohistorians in the entire human history. 

According to Inayatullah (2004: 7) it is important to understand that “macrohistory does not predict the future per se but questions patterns…” [3]. Inayatullah then continued by stating that “without macrohistory the future remains fanciful, and overly based on the new influences of new technologies… the future becomes overly idiosyncratic, what individuals currently feel, instead of based on the evolutionary life cycles of collectivities”. Therefore, by also focusing on the macro patterns of change, decision-makers can gain more insight into the probable long-term shape of risks (and, of course, opportunities). It is important to differentiate between the roles of micro- and macrohistory. Microhistory events tend to be muddled and do distort perspectives, while macrohistory patterns provide more stable, and long term, views about probable futures and risks. These patterns did and still do occur, and cut across centuries of human history, and they are therefore more reliable to enlighten decision-makers about long term future images.

Macrohistory patterns can therefore be used as the ‘acid-test’ to test the underlying assumptions of business and risk strategies. Macrohistory can be applied to contextualise events and trends by using identified and well-known macro patterns in change. For example, by understanding these patterns, a strategist is in a better position to understand the long-term trajectory of a country or a business and can therefore be in better position to invent creative alternatives or to even escape a pattern’s mechanisms; in other words, macrohistory does not insinuate that history is deterministic. Many macrohistorians did allow for an ‘escape clause’, from their identified patterns, via the human agency (the ‘vanguard of leadership’) and can therefore not be accused of deterministic views on the future. History, and especially macrohistory, should not be seen as constraining strategists, but should alert them of the given weight it carries (“the weight of history”), and how it could impact on their normative, preferred images / strategies of the future. From a risk management perspective, it is important to understand these patterns and how to respond to these long-term risk trajectories. 

The rise and fall of civilisations (and businesses!)

For example, Arnold Toynbee [2] was one of the most famous macrohistorians in history. He wrote volumes on the rise and decline of civilisations; a theory of history which can also be applied to business or risk strategy. To summarise his work in a few paragraphs is to do injustice to his work. But in summary Toynbee made it clear that a civilisation (or a business, for that matter) will be on the rise when there is a creative minority, “responding in an appropriate manner to the challenges of the environment” (and, of course, “environment” is a broad term which includes the physical environment and human-made eco-systems / contextual environment, like economic, political, geopolitics, social systems etc.). But it is not only about the creative minority. Such a creative minority should also have the support of the internal (internal citizens) and external (citizens of other countries) “proletariat” or majority. Without the majority’s support, there would be no successful “appropriate response”. 

Toynbee’s pattern (and, for that matter, any macrohistorian’s pattern) should also be applied to the internal business landscape. Yes, indeed, macrohistory is relevant to business and risk strategies. It is of the utmost importance to understand the long-term trajectory of a business too. The crucial question, from Toynbee’s perspective, is whether or not there is a creative minority in the business. And, if the answer is yes, the next question is if this minority have the support of the majority in the business (i.e., all stakeholders, from the shareholders right through to the most junior person in the business). Depending on the answer, the business would either be on the rise or decline. And if a business is on the decline, the crucial conundrum to be solved (in order to escape the decline process) would be how a creative minority could be established who would be able to respond in an appropriate manner to the challenges of the environment. However, Toynbee made it clear that the creative minority is characterised by their organic (natural / spontaneous / unforced) responses to the challenges of the environment. Any “merely ritualistic and routine, response” to the environmental challenges would result in a decline. Thus, it would be essential to identify a leadership who would be able to come up with creative strategies, igniting the support of the majority (in other words, true leadership is organic / natural / spontaneous). 

Business views from the top of the mountain

To conclude, there are more macro patterns to be considered than just Toynbee’s pattern. But unlike the popularity of the 1969 James Bond 007 film “On Her Majesty’s Secret Service” (filmed on the Jungfrau Mountain), macrohistory is not always popular among business leaders and politicians – due to the fact that a macrohistorian ignores details – e.g., national heroes’ names. “They are washed out by the tide of forces and mechanisms” (Galtung, 1997a: 5). Macrohistory ignores the wishes or interests of all parties – e.g., it will not promise a business or political party unlimited progress. Leaders and politicians would therefore hate macrohistory theories – especially if their businesses or parties are set for a decline. Regardless the macrohistory theory promoted, it could be a cyclical or linear macrohistory pattern, at some time in the future there will be doom and gloom or a downward slope. Tragically, by ignoring the (unpleasant) messages of macrohistorians, business leaders set themselves up for failure; ignorant of the bigger picture and deep underlying patterns in change – ultimately responsible for present-day trends. The view from the top of the Jungfrau affords different perspectives on Europe than the view from the foot of the Jungfrau Mountain. Macro perspectives provide long term clarity, horizons, and results. 

Sources:

[1] Galtung, J. 1997a. Macrohistory and Macrohistorians: A Theoretical Framework. In Galtung, J. & Inayatullah, S. (eds.), Macrohistory and Macrohistorians – Perspectives on Individual, Social, and Civilizational Change. Westport, Connecticut: Praeger.

[2] Galtung, J. 1997b. Arnold Toynbee: Challenge and Response. In Galtung, J. & Inayatullah, S. (eds.), Macrohistory and Macrohistorians – Perspectives on Individual, Social, and Civilizational Change. Westport, Connecticut: Praeger.

[3] Inayatullah, S. 2004. Futures and Change: From Strategy to Transformation. International Asia-Pacific Course in Futures Studies and Policymaking, 24 August, 1 – 24.