A few things on my mind at the moment, with what feels like a common theme that I’ll try to write a few words about …

In all of the pandemic retrospectives going round in the British media this week, one thing seems to be missing. It’s stuck in my mind, but seemingly nobody else’s, that according to the Global Health Security Index, as of the start of 2020, the United Kingdom was the second-best prepared country in the world in terms of overall preparedness for a novel pathogen, and the best prepared when it came to “rapid response to and mitigation of the spread of an epidemic”. The best prepared country in the world was the USA.

What I think is on my mind is a concept related to “target fixation”, which was the term coined in World War 2 to describe the tendency of pilots to sometimes crash into the things they were meant to be attacking. I worry that something like target fixation is a huge risk in the otherwise useful and important exercise of scenario planning. The purpose of thinking in terms of scenarios is to see what they reveal about the flexibility and responsiveness of your systems. But there is always a temptation to judge the exercise based on how good the outcome is assessed to be in the specific scenario.

That seems to be what happened with respect to pandemic preparedness; some systems, including that of the UK, were incredibly well-drilled for a pathogen that behaved basically like flu. The novel coronavirus had slightly different characteristics, which meant that it spread in a slightly different way, and it turned out that preparation for the outcome we had planned for was surprisingly little help in the outcome we got. My worry is that by trying too hard to “learn the lessons” of the 2020-21 pandemic, we risk doing exactly the same thing again.

One of the reasons why I’ve always been a little bit leery of “the lessons from history” is that although history in general can be very useful as a means of amplifying your ability to deal with complex situations, very big historical events seem to be really prone to causing target-fixation. Armies, for example, are so prone to develop fragile solutions which only apply to a recent and highly salient war that there’s a proverb about it. I have similar worries about climate risk scenarios, and I think it’s really quite obvious that financial regulatory stress testing is heading for outright uselessness[1] through a combination of target fixation and arbitrage behaviour.

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What can be done? I suspect that the “Campaign For Real Stress Tests” will make more appearances on this ‘stack, because I’ve always been an advocate of reverse stress testing (assume that your project has failed extremely badly, and then write the scenario which took you there). Similarly, “lessons learned” exercises should concentrate not on learning what we might have done to make things better, but on what we did do that made things worse.

I think you’re a lot less likely to get target fixated if you do scenario planning in a way that recognises that there are some scenarios where, as my old boss said “there’s nothing you can do except sit down and take your medicine”, rather than ones where there’s a solution. As I say above, the purpose of these things is not the hypothetical outcome, it’s what you learn about the effectiveness of your process. Interestingly to me, cyber risk “red team” exercises seem to be much better at understanding this than any other kind I’m familiar with; people just accept that the core of the scenario is “computer done stopped working”, rather than getting obsessed with the minutiae. But I suspect this is because cyber risk is relatively new, and that they will develop all the same pathologies as the rest of management in time.

Anyway, I’m currently writing a proposal for what I hope will be my next book, and consequently my computer screen is taken up with this sentence:

“The great irony – perhaps the tragedy – of our time is that just at the moment when we have delegated so much important decision making to data, models and evidence, we are faced with so many problems that aren’t in the dataset because they have never happened before.”

[1] Not quite uselessness; these days, the stress test is just a complicated way to reach a result of “stick another couple of points on the capital requirement”. But this is a bit of a disappointment for people who had hoped that the regulation of such a complex system might one day progress beyond arithmetic.

ANALYSIS | Despite diplomatic efforts, Australia faces steep US tariffs, risking broader trade impacts on key industries.

The post Australia faces trade turmoil as Trump goes ahead with tariffs appeared first on The Mandarin.

As the new American president shook allied capitals all over the world, a Virginia-class submarine — the USS Minnesota — arrived at a port in western Australia for the first of many routine Australian port visits slated for American submarines this year. It seemed like a positive signal for the U.S.-Australian alliance. And, despite uncertainty over America’s commitments, officials in the Trump administration have praised the AUKUS security compact. Still, these are the only sorts of Virginia-class submarines Australians should expect to arrive on their shores anytime soon: visiting American submarines crewed by Americans. Despite the promises of the first

The post When It Comes to Submarines, Australia Is Going to Be Left High and Dry appeared first on War on the Rocks.

This is #1 in a series on seven tensions that lead to common misunderstandings about strategy.

Strategy is not the same as planning

The line between strategy and planning (or “strategic planning”) is often blurry in organisations — more on why that is later. But it pays to be very clear about what strategy is and how it is fundamentally different from planning.

Planning must come after strategy

Planning is selecting and deciding the order of actions in already-interpreted situations, in order to achieve already-chosen outcomes. It assumes you’ve already figured out your resources, constraints, and operating environment. Planning is hugely important, very difficult, and requires much discipline. But it happens after strategy.

If strategy isn’t planning, what is it?

Strategy is the act of making difficult choices when there’s no clear answer: in other words, when there is uncertainty. These choices include choosing which of multiple outcomes to value and pursue (and which ones to devalue and ignore), diagnosing and making sense of ambiguous environments to decide how to respond to them, or deciding how to interpret different parts of the environment as either resources or constraints. Strategy creates the inputs for planning.

Strategic choices are difficult because they mean committing to a direction despite uncertainty about whether that direction is the “correct” one. And a big part of strategy work is recognizing that uncertainty is not the same as risk and cannot be math-ed out and optimised the same way.

Real strategy is hard for different reasons

Real strategy is both cognitively hard (like planning is) and affectively hard — it is uncomfortable and scary because confronting uncertainty is uncomfortable and scary. And non-risk uncertainty is increasingly unavoidable. This is why real strategy is important.

Roger Martin has an excellent HBR essay (link at the end) that goes right to the point: “All executives know that strategy is important. But almost all also find it scary, because it forces them to confront a future they can only guess at. Worse, actually choosing a strategy entails making decisions that explicitly cut off possibilities and options. An executive may well fear that getting those decisions wrong will wreck his or her career.

The natural reaction is to make the challenge less daunting by turning it into a problem that can be solved with tried and tested tools. That nearly always means spending weeks or even months preparing a comprehensive plan for how the company will invest in existing and new assets and capabilities in order to achieve a target—an increased share of the market, say, or a share in some new one. The plan is typically supported with detailed spreadsheets that project costs and revenue quite far into the future. By the end of the process, everyone feels a lot less scared.

This is a truly terrible way to make strategy. It may be an excellent way to cope with fear of the unknown, but fear and discomfort are an essential part of strategy making.”

Planning without strategy is the tail wagging the dog

If your strategy function consists only of planning (even if it is called “strategic planning”), your organisation may be inadvertently avoiding genuinely important and difficult confrontations with uncertainty.

Book some time below if you’d like to talk about implementing these insights in your organization.

Martin’s essay “The big lie of strategic planning,” is absolutely worth reading:

I’ve been working on tools for learning how to turn discomfort into something productive. idk is the first of these tools.

And I’ve spent the last 15 years investigating how organisations can design themselves to be good at working in uncertainty by clearly distinguishing it from risk.

It seems to me that "vibe checks" for how smart a model feels are easily gameable by making it have a better personality.

My guess is that it's most of the reason Sonnet 3.5.1 was so beloved. Its personality was made much more appealing, compared to e. g. OpenAI's corporate drones. [...]

Deep Research was this for me, at first. Some of its summaries were just pleasant to read, they felt so information-dense and intelligent! Not like typical AI slop at all! But then it turned out most of it was just AI slop underneath anyway, and now my slop-recognition function has adjusted and the effect is gone.

— Thane Ruthenis, A Bear Case: My Predictions Regarding AI Progress

Tags: llms, ai, generative-ai, slop, deep-research