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Ethos Perspectives
Emerging Strategic Issues and Wildcards
"Often do the spirits of great events stride on before the events, and in today already walks tomorrow." - Friedrich Schiller, German poet, philosopher, historian and playwright (1759 – 1805)
The idea that the present contains signals of potential futures lies at the heart of strategic planning in the Singapore Government. For almost 20 years, we have used scenario planning to generate alternative "storylines" of the future. Scenarios covering the broader geopolitical, economic, environmental, social and other spheres, as well as focused scenarios on specific issues, have helped us test our assumptions and stress-test the robustness of current policies.
Like all other tools, scenarios are not equally useful to analyse all issues. For instance, because the scenario planning methodology depends critically on an analysis of "driving forces" — deep trends underlying change — it is not well-placed to deal with issues where trends are non-continuous: either because they are still too nascent to have become fully established, or because the change in question is a one-off, game-changing event rather than a trend with a sustained or well-developed history. Developing tools that help us understand the latter types of change has become increasingly important in today’s complex global environment, where the pace, intensity and scope of change is increasing, often exponentially.
What are Emerging Strategic Issues and Wildcards (ESIs)?
Emerging strategic issues are issues that have not yet surfaced as critical, but would have significant impact if they were to occur, and for which there is some evidence today that they might occur in the future.
Wildcards are low probability, high impact opportunities and threats that would be disruptive should they occur but for which there is not necessarily evidence today that they will happen.
ESIs can arise for several reasons. They can:
1) Develop as the result of an acceleration of existing phenomena. A recent example is the phenomenon that analyst Chris Anderson has called "Freenomics". 1 "Free" goods and services can exist through encouraging the sales of related products, as in the case of the razor and razor blades, or come in the form of digital content (such as news articles or television programmes), where revenue is made through advertising or a premium version of the same product. While the concept of "free" goods and services has always existed, the rapid spread to new industries and markets can cause a shift in pricing paradigms. New classes of free goods and services may emerge, reshaping the underlying economics of entire industries.
2) Arise as second or third order effects of existing phenomena, as in the current case of rising protectionism. The global financial crisis is leading to domestic economic and political constraints for several countries, leading to the proliferation of protectionist practices among nations. An early sign of this phenomenon was seen in the inclusion of a "Buy American" requirement in the US stimulus package in January 2009. While this clause was ultimately softened by required compliance with WTO rules, it spurred a similar move by China. Together, these developments have the potential to redefine trade relationships and the global trading regime.
3) Arise as the combination of two or more existing phenomena, as seen in the example of food price shocks. Increasingly, we are seeing situations where the demand for food nearly equals supply, leading to volatility in food prices, severe price shocks and potentially temporary shortages where food is not merely expensive, but unavailable at any price. At the height of the food price shocks in 2007/2008, prices of rich, wheat and maize doubled. If demand for food continues to increase and is combined with production and transportation constraints, it is plausible that we will experience more frequent and high-magnitude spikes in food prices.
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