The Strategic Brain: reconciling risk and uncertainty in volatile times
Read time: 8 minutes
General Sir Mark Carleton-Smith is a senior advisor to CT Group. He is the former Head of the British Army and the longest serving Army Chief since the Second World War. During a 40-year career Mark served across the Middle East, the Balkans, South-East Asia, Africa, Afghanistan and South America. He has commanded the SAS and is the first Director Special Forces to be appointed as the Chief of the General Staff.
In this article, Mark explores various aspects of leadership and decision making at the very highest levels including the challenges faced by any organisation looking to survive and thrive in complex, volatile geopolitical conditions.
The Strategic Brain: reconciling risk and uncertainty in volatile times
‘The worst historian has a clearer view of the period he studies than the best of us can hope to form of that in which we live. The obscurest epoch is to-day.’ R.L. Stevenson
It’s generally agreed that, in terms of geopolitical risk, we live in increasingly volatile times. This may turn out to be an interesting observation to historians or economists insofar as geopolitical stability tends to be deflationary, lowering risk and promoting investment while volatility tends to be – and to do – the opposite.
But it begs the question how, in practice, decision makers are meant to apply this kind of information to the specific challenges they face, converting interesting observations into usable, actionable insights.
Before looking for an answer, we need first to check that we fully understand the question. There is, after all, an important distinction between risk and uncertainty (or, as John Kay and Mervyn King define them, between resolvable uncertainty and radical uncertainty). This distinction – like the distinction between interesting observations and actionable insights – is crucial when it comes to how organisations and their leaders should think, plan and act effectively.
Risks can be resolved. Uncertainty must be endured – and exploited
So yes: geopolitical risk may well be rising. Most argue that it is. It certainly seems that identifiable threats are proliferating and diversifying. We have more data than ever with which to back up this assertion, and increasingly powerful methods and models to apply to the quantification and mitigation of the risks.
Geopolitical uncertainty, on the other hand, is neither rising nor falling. It is both constant and inevitable. We may gather more data and produce more intelligence, we may get better at forecasting what a competitor or adversary will do tomorrow or even next week on a tactical or operational level, but we will never cease to be strategically surprised by world events.
It’s all too easy to be paralysed or overwhelmed by this uncertainty. It’s correspondingly difficult – but eminently possible – to learn to thrive off it, and to build robust, resilient, flexible organisations that adapt to each crisis and emerge ahead of other companies. To do this, leaders need to ensure that their organisation has a highly deliberative but also highly decisive strategic brain – a brain that’s been trained how to think when confronted with uncertainty, not what to think.
The application of imagination and intuition to data and intelligence is crucial
I don’t mean to suggest for a moment that rigorous geopolitical research and expert analysis aren’t vitally important. Quite the reverse. It’s impossible to make a well-informed decision without these things. Any serious assessment of the current strategic context will likely list three or four macro trends, among them:
- the redistribution and diffusion of global economic power eastwards
- the growth and changing nature of systemic competition characterised by the return of Great Power competition
- the deliberate weaponisation of those aspects of globalisation – like the free movement of people, ideas, services and data – that hitherto we thought would keep us safe, secure and prosperous
- the continuous acceleration of the Fourth Industrial Revolution, which is outstripping the technical and cultural capacity of institutions, organisations and companies that still are configured for the industrial age rather than the information one.
The assessment may include reference to the decay of the Pax Americana and the decline of European political and cultural unity. It will almost certainly mention political fragmentation and polarisation in the West, and the tightening affiliation of authoritarian regimes like Russia, Iran, China and North Korea.
As the analyst’s focus narrows from the global to the regional, they will likely provide a summary of the three most urgent and important ongoing crises: the war in Ukraine; Iran’s malign support (tacit or otherwise) to regional crises stretching from the Red Sea to Gaza to Lebanon; China’s ambitions and growing influence in the Indo-Pacific.
What we’re unlikely to get from this notional analysis – accurate though it may be – is the so what? It may be true, but is it usefully true? From the analysis alone, it’s hard to determine what any of this should mean to the decisions that Presidents and Prime Ministers must make, or how this information might be applied by a CEO and their board.
The key question then, is how analysis and intelligence can and should be configured in the organisation’s strategic brain alongside leaders’ experience, imagination and judgement so that it’s relevant to specific, time-bound decisions they must make.
Fresh perspectives are as valuable as fresh intelligence
The leader in question may be operating in an international forum or a boardroom. In every case, data and information (none of which is ever definitive) must be allied to expert, independent advice from a wide range of perspectives if it’s to be of any real value beyond justifying a predetermined course of action.
It’s perfectly possible, of course, to make certain kinds of tactical decisions without this external advice. Finance professionals, for example, can turn a profit or mitigate a short-term risk based on their instinct, personal experience and the opinions of their colleagues.
Those organisations and leaders at the very top of their respective games, however, need something more if they’re to build and maintain robust, resilient organisations and develop strategies, plans and contingencies that will see them emerge from uncertainty ahead of their competitors. As well as a finely tuned strategic brain, these organisations and leaders need advisors who are unafraid to challenge their assumptions, to help them think through possible second- and third-order effects, and to ask awkward but important questions: advisors, in short, who seek to help, not to please.
Defining a problem is often harder than solving one
At the very highest levels, leadership is more a question of defining problems than solving them. (This is as it should be: as Robert Gates points out towards the end of his excellent memoir, Duty, leaders are often the only ones qualified to set objectives but usually poorly qualified to solve problems.)
One of the most important questions an advisor can ask, therefore, relates to the definition of an organisation’s ultimate objective. It’s difficult to overemphasise how important and how difficult this seemingly simple task can be. It’s a question of imagination as much as expertise; it requires an ability to accommodate and even exploit uncertainty – something that only a finely tuned strategic brain can hope to accomplish – to understand the context, define the critical issue and then act decisively.
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