Kevin L, Author at Kevin Low

Forecasting scenarios

What sort of forecasting is better?

If this, then …
It will be …

The first makes assumptions explicit. The second hides the assumptions and takes them for granted.

In my work as a strategy consultant, I make extensive use of scenarios, and often we might not consider the likelihood of scenarios while constructing them. It matters because it helps us to immerse ourselves into a reality such that our construction of the reality is not affected by how likely we think it would be. It is more important to be able to extensively work our the implications of our assumptions at that stage.

Only after the scenario modelling is complete, it makes sense to step back and examine the assumptions, perform sensitivity analysis and consider how the outcomes are sensitive to some of the assumptions.

And then what? Then we consider likelihoods of those assumptions manifesting.

Do less work

This is not about quiet quitting. It is about doing good work. Sometimes you can only do this amount of good quality work and no more. Because good work takes time, effort and attention – all of them are short in supply. Work is not short in supply. There is plenty of work. But good work is, because there is only a limited amount of work that is actually worth doing.

The other work are mostly responses to corporate pressure, urges or itches from bosses, the kind of work that involves corporate politics, and so on. If we could all do less of those and focus on the good work, we can be sure the world will be better.

So if you’re in a place of influence, maybe focusing on a more fundamental cause of doing less work would be good. The world doesn’t need more work; it needs more good work.

Notions of additionality

What does additionality mean? There’s this idea that the activity needs to add on something to the existing context. This is a big matter in the case of renewable energies as people are speaking against carbon credits or renewable energy certificates that are actually not adding more renewable energy or removing carbon emissions from the atmosphere.

We are trying to create a system where incentives themselves are not blunted or abused. If for example, we introduce incentives to reduce rat infestation by rewarding those who catch rats, then you risk the abuse where people are breeding rats to be killed and submitted for incentives. The result of this unintended condition is that people are taking actions that may be contrary to what the original intent of the incentives were.

The world is trying to shift towards a low carbon world. Incentives ought to be rejigged and aligned towards reducing carbon emissions. Yet if we allow abuses and undermine the credibility of emission reductions, we’re hurting ourselves. If forest land owners are suddenly making new revenue streams for trees they are already protecting, it might be a problem that there is no additionality for the new carbon assets.

We should only be incentivising activities that will reduce the world’s carbon emissions. Or increasing its sequestration. The problem is that is hard to measure and align standards of what really counts.

Market for innovation

One of the biggest argument for capitalism and market economy is the promotion of innovation. Competition promotes innovation; and the common incentive of money (as a placeholder for all things monetised) helps to drive that competition. The challenge is that money is based on those who actually happen to get hold of a lot of it, no matter how.

Consequently, the market economy can develop a lot of innovations that are not useful. An additional brand of shampoo, or another design of reading glasses, or another variation of packaging. Yet these sometimes seemingly useless improvements can be incremental steps towards newer, disruptive products. So even during those times when money is seen to be chasing something frivilous, the march and progress in innovation can still be advancing.

Yet we are unlikely to rely purely on the movements in the market to develop innovations that we as humans truly need. Often, innovations that eventually change the world involves some degree of intentionality and sense of mission. The market for innovation isn’t as much about dollars and cents, as compared with purpose and mission.

Forgetting ignorance

Once we learn something, it is hard to unlearn it. In fact it is impossible to unlearn it to the extent of being ignorant of what you have learnt. In some sense, learning changes us irreversibly. In learning something, we forsake the ignorance. And we forget what it is like to not know.

That is really something we can’t forget.

Dynamic cost-benefit analysis

One of the most power tools that economics have brought to the world is cost-benefit analysis and really assessing what is the constitution of cost or benefits at various levels: individuals, firms, regional government, national government, countries.

Where it fails is the ability to properly ascribe who cares about what. The assumption around rational, selfish agents cannot possibly hold in reality. On the other hand, there is radical inconsistencies when you perform such optimisation on behalf of “government” which is staffed by human agents and with politicians have their own agenda. Over the years, these poor assumptions have made room for more colourful, richer analysis of agents, decision-making units at different levels.

Now if we move our attention to the dimension of time rather than perspective of our agents, we realise another issue. We can assess somehow the cost and benefits of today if we use our imaginations but to stretch it to the future would require even more manipulations. And the uncertainty make render the exercise less fruitful than one may expect.

Alas, we continue to use these tools expecting them to work while not having proper assessment of whether they work or not when the outcomes play out in reality. It is not the issue of calculating those figures but how we incorporate them into our judgment that matters. Yet with limited budgets and resources, most have chosen to opt for a semblance of the exercise, paying a smaller cost but getting almost none of the benefits.

Trash & waste

About 81 years ago, Dorothy Sayer, a British writer penned these words:

A society in which consumption has to be artificially stimulated in order to keep production going is a society founded on trash and waste, and such a society is a house built upon sand.
Dorothy Sayers (1942), Why Work

In the article, I’m amazed by the clarity which Dorothy Sayers foresaw the world post-war, with piercing critique of the economic system we have created. The economics that she was schooled in was one of observations of the market, of history and of human psyche itself.

The second world war has ended for more than 70 years now; and as predicted by Sayer, we had immediately jumped back into the business as usual, where work and labour was valued only by money. And this is why we churn out more waste our planet can scarcely handle (both in terms of carbon emissions and lots of material wastage).

Sayer’s remedy has to do with appreciating our work in a different way and valuing it more. And much of it certainly sounds like echoes of the messages around ESG, corporate social responsibility and sustainability these days. Yet she also points to something deeper, points revolving around values of work, of the things we do in society, and value that is created to serve lives and human beings, not abstracted by the market in the form of price signals.

Her full essay can be found here. I confess of course that my shared faith with Sayers help me appreciate the essay in a deep way. If you do care about sustainability and our world, even if you are not a Christian, surely some of the points she brought up should give us a deeper motivation to drive us to live in a manner that is a part and yet apart from this market system?

Problems don’t end the world

Emily Kingsley wrote a tongue-in-cheek blog post on the point that yes there are problems in the world but the world doesn’t end because of it. It is one that is fitting for a time of the big overwhelm, when the world is struggling with huge problems that are so intractable the younger generation feels hopeless.

Yet problems are unlikely to be causing the world to end. It is quite likely that the world ends because actions were not taken to deal with the problems. I’m not saying here that blindly taking actions are going to solve all our problems. But action is necessary to recover our sense that we can do something, to prevent us from spiraling into hopelessness.

‘And’, which Emily Kingsley was trying to cling on to in her blog post is the notion that the mere presence of a problem itself should not be enough to defeat us or lead us into paralysis. Ultimately if anything kills, it’s not the problem but the paralysis that we induce ourselves into by telling ourselves the wrong stories about those problems.

Serving the user

Following my observations on Google’s mutated identity, there’s more news of the company’s “decay”. The focus here this time is something else; about the shift in the company culture that results in a bureacracy that plays it safe. There’s a common strand around the fact that Google has changed. And part of the change involves becoming removed from the needs of the user and a bit less grounded on realities.

Indeed, reality is about what the market wants when your company is small and just leading parts of a large market – usually a small part. Yet when a company grows, the insides of the company and the decisions of the management often can be more real than the user. In fact, your boss is likely going to have way more influence over your fate than the users have over the fate of the company. At least in the short term.

So should we have a cultural metric that is about how much a company revolves around serving the user? Maybe. But it is only possible from the top-down. The management have to model and lead that. Yet the management is usually selected by shareholders and at some point when the company grows big. At some point, the short term interests of the shareholders can conflict with that of the user. Moreover, the business model of Internet companies like Google is “ads” – which means users don’t even contribute directly to the revenues of the company!