Where business is concerned, there is no crystal ball. When you take on a new venture or work to grow an existing one, there are inherent risks. You can run numbers and plan to your heart’s content, but there are so many factors outside of your control. Wouldn’t we all like to have a better way to predict what would happen in the future?
For the business-owner who is trying to decide whether they should expand to a second location or the big-time investor with money tied up in the stock market, being a few steps ahead of the game can make the difference between making bank or losing your shirt. Uncertainty can have devastating impacts. The Great Recession of 2008, in which the bottom fell out of the US housing market, businesses folded, and people were left unemployed, still looms large in our memories when we think about our futures. Performing causal analysis can mitigate some of the risks of doing business by allowing us to anticipate major shifts like the Great Recession.
Take calculated risks and increase our success without losing it all.
The Great Recession had such a powerful impact because many people didn’t see it coming. The warning signs were there in advance of the collapse, but most people didn’t take them seriously until it was too late.
One of the great challenges in predicting your future is considering all the possible conditions. A business owner who was doing well in 2007 and had projected growth in 2008 had no way of accounting for the effects of broader economic troubles. The business owner who considered many perspectives and anticipated some unknowns undoubtedly fared better than the one who thought he or she could maintain the status quo.
Stop doing the same thing over and over and expecting different results.
One of the biggest pitfalls in business is thinking that a strategy will continue to be effective. In an ever-changing landscape, you have to be able to adapt you plan and respond to different circumstances. Causal layered analysis is an excellent way to find the best strategies for creating a secure future.
Causal layered analysis works by considering multiple inputs that can effect your outcomes. Some of the factors that must be considered are:
- The litany: These are beliefs and feelings that people have about a situation. These beliefs can be based on quantitative data, but they can take on a life of their own. For example, if data projects low sales in this quarter, employees may internalize that belief and respond with fear or helplessness. They may perform poorly regardless of opportunities during the quarter.
- Social causes: These include historical, political, and economic beliefs that influence outcomes. When a businessperson is deciding whether or not they wish to expand to a second location, they may cite uncertainty over the real estate market after 2008 as a reason not to buy a second property. The dominant political party’s economic policies may also impact how people choose to act in business matters.
- Discourse: When we think about shaping new policies, who has a seat at the table? Are men and women included in the company’s discussion on parental leave policies? A company that values diverse perspectives will gain new insights. Inclusiveness is powerful.
- Metaphor and myth: What are the dominant narratives, and how are those impacting outcomes? If we look at this in the context of schools, there is a common misconception that parents in low-income communities don’t care about education for their kids. This couldn’t be farther from the truth. Parents in low income communities are still involved in their children’s education. Misunderstandings in any context can have a negative impact on the way that we operate.
How Causal Layered Analysis helps you to predict the future?
After you’ve asked yourself a question and considered the litany, social causes, discourses, and myths surrounding that question, you can start to process of correcting misconceptions and shaping outcomes.
One of the best ways to correct misconceptions is to figure out what they are by reengaging stakeholders. When you empower every employee, from the entry level worker to the CEO to engage in a dialogue, you may see incredible results.
One powerful example of this comes from one of the most ubiquitous companies in the world today: Starbucks. Some baristas and a store manager suggested that the frappuccino would be a top-seller. People at the corporate level vetoed the idea, but a manager suggested that they try to market the product anyway. The frappuccino went on to be a major success for the company. Different perspectives matter!
2. Rebuild and repair mindsets.
From analyzing discourse and myths, you should know whose voices are being heard and who is controlling the dialogue. If one group is controlling the narrative at the expense of the rest of your staff, the imbalance is going to topple your organization. Perhaps you’ll need to change the office culture. If you are using causal layered analysis in your personal life, you may have to get to the core of why you hold certain beliefs.
3. Brainstorm again.
Use what you have learned to envision a better outcome. Solicit the input of your stakeholders once more in order to refine your solutions. Include multiple perspectives as well as quantitative and qualitative data.
4. Determine the takeaways.
Which ideas are going to take you toward your vision of success? What are the potential weaknesses and fears that you have moving forward?
5. Lock on to certainty.
There are some things you simply can’t change. Identify those things because you’ll either have to use them to your advantage or work around them. Perhaps you aren’t able to find talent to fill positions in your business, and this has always caused problems for you. You’ll either have to find new ways to recruit and train people, or you’ll have to scale your work accordingly.
6. What are the free radicals?
What types of unknowns could affect your outcomes? Could you build more fail-safes into your plan to account for potential problems?
You can perform Causal Layered Analysis on almost anything
This form of causal analysis is most often applied in the world of business, but it can be useful in other forms of future planning and problem solving–from climate change to terrorism futures. Whether you are deciding to buy a house or take a new job, you may find that thinking about your questions through the lens of Casual Layered Analysis can help you unpack the complexities of a problem. As we learned from Dubner and Levitt’s Freakonomics, we often come to the wrong conclusions because we do not understand the difference between correlation and causation, and we ask the wrong questions.
Causal analysis can help us ask the right questions and come up with solutions that reflect a multitude of considerations. We may not have a crystal ball, but we can have a multi-faceted approach to anticipating future events.
You can learn more from Sohail Inayatullah about Causal Layered Analysis here:
|||^||Forbes: What Really Caused the Great Recession|
|||^||The Telegraph: Federal Reserve missed financial crisis warning signs in 2007, documents show|
|||^||Shaping Tomorrow: Making better decisions today: Causal Layered Analysis|
|||^||Center for Public Education: Back to school: How parent involvement affects student achievement|
|||^||Business News Daily: If you listen up, your employees will step up|
|||^||Dr. Sohail Inayatullah: Causal Layered Analysis|