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Time to Prepare for 2021! Here’s How.

Blog

Time to Prepare for 2021! Here’s How.

About this time last year, Perch Perspectives didn’t have a name yet. Jacob knew he wanted to start a human-centric business and political consulting firm, but he had no idea what to call it. After months of working with the wonderful, Austin-based folks at Shakewell Creative and Red Fan Communications, we eventually settled on the name “Perch Perspectives.”

We loved the name for a few reasons. First and perhaps most importantly of all, it was available! No other firm existed with the name “Perch Perspectives.”

But the real reason we chose “Perch Perspectives” was because it deeply resonated with our company mission: to give every client the perspective to better understand their environment and the agency to influence their own outcomes. A crucial part of analysis is the ability to see the forest for the trees – to get a high-altitude look at the global processes constantly shaping the world at all times. We also know from personal experience that even the most well-situated “perch” has its blind spots. It was important for us to combine the idea of seeing the world from perch with the idea of seeing the world from many different perspectives.

If you’ll indulge us for a moment as we extend the arboreal metaphor: it is not enough to see the forest for the trees. To be a reliable and complete source of geopolitical information for businesses and decision-makers means being able to look at the world from multiple perches. Sometimes, the center of gravity of a critical intelligence question cannot be answered by seeing the forest. Sometimes, a macro perspective that encompasses the surrounding streams and mountains and rival forests is necessary to generate mission-critical insights. Other times, a firm grasp of the micro perspective is paramount. As COVID-19 has so powerfully demonstrated, a single unhealthy branch of a single tree can completely change your operating environment.

Integrating top-down and bottom-up analytical approaches into a comprehensive framework that is flexible enough to respond to unexpected events but predictive enough to anticipate changes in broad structural trends is a lot harder than it sounds. In the same way that nature abhors a vacuum, human brains abhor chaos. Remember the last time you looked at the sky and thought you saw an image in the clouds? Humans instinctually try to see patterns in data whether they are present or not. Once we know a thing, the knowledge becomes so precious that we will dismiss new information, even if it contradicts the truth that we decided we already know.

One of the primary tools we use to give our clients agency over their environment is geopolitical forecasting. Obviously, we want every prediction we make to be 100 percent accurate, but that is not why we do forecasts. We have no crystal ball. Savvy clients understand that anyone who purports to have a make 8-ball is selling a bill of goods. Forecasting is not about predicting the future. It is an intense analytical process that helps to bound the range of possibilities. Ultimately, the most important part of forecasting is not to reach the conclusion. The most important part is to have a conclusion – a rigorous set of scenarios and possibilities that you have considered deeply enough so that you have the self-confidence necessary to change your mind or your behavior when the unexpected inevitably occurs.

With five weeks left in 2020, we are doing what all good analysts should do at least once a year: looking at the globe with fresh eyes. Even for an analytical group like ours, which lives and breathes and nerds out on geopolitics at all hours of the day (often to the chagrin of our supportive partners and friends who are probably tired about hearing us debate the finer points of U.S. trade law), assumptions and biases and irrational beliefs creep in. The end of the year is as good a time as any to remind ourselves that true wisdom begins with the recognition of what we don’t actually know.

This is a three-step process:

1) Describe the current situation. Describe, in as concise and terse a manner as possible, the snapshot of the global balance of power today. Seriously, the fewer the words at this stage, the better. There is (usually) an inverse relationship between the amount of thought that went into a statement about the current reality and the number of words used by an analyst to describe it.

2) Project what will happen next. This necessarily means defining what can and what can’t happen. Weigh the constraints of global actors, businesses, even individual leaders, against the imperatives – the things that must be done, no matter the cost. In the immortal words of Sherlock Holmes, “once you eliminate the impossible, whatever remains – no matter how improbable – must be the truth.”

3) Define what it looks like if you’re wrong. This is the most important part of the process. A thesis or scenario or forecast that is not unfalsifiable is worthless. If you’ve done parts 1) and 2) right, you will be able to delineate some very clear signposts that can serve as an early warning system for if something has gone wrong.

This approach can and must be tailored to multiple “perches.” Our internal, end-of-year process is a global, top-down review. It isn’t for any one client – it is a necessary part of maintaining global situational awareness so we are prepared to help our clients when they call. But we tailor this approach to every client we take on. Sometimes, we do it on a country-level or even a city-level basis in order to bound investment risk in a given market. Sometimes, a client with a global supply chain needs to understand where geopolitical risks lie, which means giving an entire supply chain the Perch Perspectives treatment. Once we do, the real work begins, because you can begin to zero in on key risks and opportunities and mitigate or capitalize accordingly.

The time for preparing for the curveballs 2021 promises to throw our way is now. Many companies were caught off-guard by the COVID-19 pandemic – don’t let yourself be caught off-guard by the end of the pandemic. Even as respected a voice as The Economist declared last week that “Joe Biden’s China policy will be a mix of Trump’s and Obama’s.” That’s a classic analytical trap! As we warned briefly in the newsletter a few weeks ago, and as we’ve been warning clients now in greater depth, President-elect Biden is his own man with his own priorities, and the country and global context he is inheriting couldn’t be different from Obama’s or Trump’s. Biden’s China policy will be his policy, a product of his goals and the challenges of this unique moment, not a cocktail of bargain-basement policies acquired from previous administrations.

If you’ve read this far, that means you’ve gotten to the pitch: the time to prepare for 2021 is now. For those of you enjoying these brief snippets of analysis for free, we hope they will continue to help orient you for the coming year. We’re glad to have such excellent company on our perch. For those of you who realized after reading this that your investments or your business or your organization isn’t prepared for the competitive and complicated post-pandemic world that lies ahead, drop us a line. We can meet at zoom or insha’allah sometime soon on your perch and figure out together how to make sure you have the knowledge you need to influence your own outcomes.

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