Schrodinger cat BrexitAs a candidate for "northern adoption", I try to look Londoners in the face and say good morning. Joking aside, I have had the opportunity over the past two months to interview people in the North and the South of the United Kingdom: Council representatives from Manchester, Birmingham, Nottingham, and London, managers of manufacturing companies with thousands of employees, a humble bicycle repairer from a small town, many directors of academic institutions, university researchers, representatives from DIT in London, people from the Spanish embassy, with high-tech entrepreneurs from UK and abroad, with  multinationals established in UK... Add to this some knowledge of the EU, after 15 years of collaborations with the Commission and some occasional relationship with Parliament, in the field of science and technology. Shake all that and...

Let's consider Brexit as an exercise of foresight. And let's use the method of Scenario Planning. With two years of negotiations, a more than likely transitional period of several years and a later adjustment, the horizon to study is about six years in the future. Not enough time for a pure foresight that should target at least 15 years in the future, but it is an event that will significantly influence our business in the medium and long term, so it is important to analyze.

 

To proceed with the foresight exercise we must follow some logical steps:

Step #1. Identify the change drivers in our future.

The change drivers to identify will depend on the nature of our business. Thus, we must consider whether our business exports or imports from the UK or EU, whether they are goods or services (let's consider food industry as a special case), and whether or not we have subsidiaries across the post-Brexit border.

Change drivers such as the transformation of "freedom of movement" will have a greater or lesser impact in our particular case, and so they will fall in one place or another of the table to prioritize them. In any case, Brexit is a process that is beyond the control of an individual company, so genuine Brexit change drivers should always be on the right side of the table.

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Step #2. Describe the possible scenarios.

The scenarios must be divergent, and be based on clearly differentiated values ​​for each of the chosen change drivers. Of course, the scenarios must be plausible.

To help the reader in this step I have developed the analysis of the following table, from which we can extract two main scenarios: The "Hard Brexit" or "Cliff edge" scenario (There is no agreement and the UK lives under the World Trade Organization rules), and the "Soft Brexit" scenario. In this last case I identified those issues more likely to become "negotiation stars". (Disclaimer: I developed myself this table as an exercise, and it may contain errors) .

 

 

Step #3. Develop the Intelligence Function on the chosen change drivers, and monitor them.

For monitoring the change drivers we may use a solution of Intelligence Automation as mussol by antara, in which we will model our intelligence hypotheses. We will assign the information channels to the internal and external people who collaborate in our Cooperative Intelligence Function, and we will request the Scenario Champions to elaborate the successive revisions of these scenarios.

 

Step 4. Review our business strategy.

The Scenario Champions will present the Intelligence to the Board of Directors, and we will discuss the strategy review based on the bets we make.

In the end we always have to make decisions with incomplete information and in a limited time, and therefore we rely on Foresight to reduce the uncertainty about the future and to make better strategic decisions.

I will not shy away from the commitment: I do not bet that Brexit will stop, nor for a second referendum which would be complicated to design and that would generate much greater uncertainty. It is likely to follow the same political course of Norway and Switzerland after the respective referendums against the EU in those countries. My bet is for a transition period in which the UK will be in the EU for all purposes, with a "Norwegian" horizon that would potentially evolve into a "Swiss" agreement by 2022.

But of course, like Scrödinger's cat, all scenarios are possible simultaneously, including the one of the WTO, until one of them materializes.

The processes of intelligence serve to continuously monitor the possibilities of each scenario and reorient our strategy with less uncertainty. So I left the bet in your hands. Play responsibly. Your business depends on it. Establish an Intelligence Function in your company that feeds Foresight.

If you are interested in applying the Strategic Scenario Planning in your company and establishing the mechanisms for reviewing the strategy, do not hesitate to contact us. And get ready for an interesting exercise to which we'll invite some of the best international experts.

 

By Miguel Borrás

( Coherence is a 2013 American science fiction film directed by James Ward Byrkit, based on the physics paradox of Schrödinger's Cat).

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