Ethos Issue 4, Apr 2008

Governance at the Leading Edge: Black Swans, Wild Cards, and Wicked Problems
Peter Ho

Singapore’s one-size-fits-all, mass-production approach to education in the 1970s was ill-suited to the needs of a country undergoing rapid economic change. So Dr Goh Keng Swee and a group of systems engineers studied this wicked problem and recommended a new efficiency-driven education system where students of different abilities could be developed differently. The education system we have today still bears the imprint of these changes made in the late seventies and early eighties.

There are many wicked problems that Singapore has to deal with today, such as our birth rate, a greying population, the environment, long-term energy security, and affordable healthcare. When these were first noticed as problems, they had all the characteristics of black swans or wild cards, although they would not be regarded as such today.

BEING COMFORTABLE WITH UNCERTAINTY
The key challenge for good governance going forward is how to identify black swans and wild cards, and then how to deal with their consequences: wicked problems. We need to be good at strategic foresight as well as strategic planning.

Few, if any governments are thinking about how to organise and prepare themselves for the more uncertain world that we will have to face. The Singapore Public Service must develop its own new and unique capabilities in governance. And we should have the confidence to do so, because we have an impeccable track record in policy innovation.

The first of these new capabilities is managing complexity and disruptive change. Tools like scenario planning and horizon scanning enable us to detect emerging trends, threats (as well as opportunities)—the wild cards and black swans—that are beginning to appear on the horizon. The Risk Assessment and Horizon Scanning (RAHS) system is one such tool to help us do this better. As a shared platform, it has the potential to connect silos, and encourage greater collaboration between different agencies. It should facilitate a more Whole-of-Government, networked approach to strategic planning and thinking about the future.

The second new capability is risk management. As more black swans appear, they will transform the world we live in, in unrecognisable ways that we cannot fully predict. While we may not have formulated a complete set of strategies to replace existing ones, that is no reason for inaction. Rather than plan exhaustively for every contingency before we move, we should adopt a “search and discover” approach: act before the window closes, and act boldly in areas where we sense opportunities. We must be prepared to experiment, even if we cannot be entirely certain of the outcome. The approach is to probe, sense patterns, and to act, even in the absence of complete information. We must learn to operate not in a “fail-safe” mode, but instead in a “safe-fail” mode.

Many black swan events and wild card situations offer opportunities even as they present threats and challenges for us. Climate change is potentially a big black swan. We will not escape the wicked problem of its impact. But undoubtedly, there are also opportunities, such as in the area of water management, where Singapore has built up considerable expertise, or in clean technology research and green financing. If we recognise and seize the opportunities early, we will have first-mover advantage.

But there are also risks, for example, in going into unfamiliar markets such as the Middle East. This means we must have an organisational framework that allows us to take risks, but without betting the whole house and our future on a wrong throw of the dice. Ministries are now beginning to employ enterprise risk management as a tool to manage strategic risk. The Ministry of Finance has also developed an integrated risk management framework for the Whole-of-Government level.

Systems thinking, whether in Dr Goh’s solution to the education system or in designing our road transport system, remains a very important tool in dealing with inter-connected problems. However, as complexity increases, we will need to develop solutions that draw from an understanding of the entire system and all its inter-related dimensions—social, political, economic, and so on.

We must also build on our existing efforts to strengthen the innovation culture in the public sector such that we not only have the capability to innovate incrementally, but also to innovate in disruptive ways, all the while maintaining a climate that is open to change and new opportunities. If innovation is the engine of progress for our society, we will also need the work of entrepreneurs to create bridges between the fruits of discovery and the realisation of value.

Finally, leadership must serve the vision. Certainly we must strive for ever higher levels of efficiency and effectiveness as a public sector, to ensure the security and prosperity of Singapore, but our growing capabilities must serve a higher purpose, and must relate to our evolving national idea.

Leaders must also practise a new skill-set, creating an appropriate sense of urgency and empowering their people to drive change and strategy. They must nurture organisational agility by being flexible with resources, willing to make useful exceptions, placing and defending talent, and championing an open, supportive climate that is conducive to innovation. We should “have strong opinions but hold them lightly”.