Responding to Change & Uncertainty in the
Western U.S.:
Managing Risk in Decision-Making
Phoenix, AZ
March 6-7, 2012
Stephen C. Aldrich
President, bio-era
How Can We Reach Good Decisions When Faced with
Wickedly Complex, Highly Uncertain Circumstances?
Stephen C. Aldrich
President, bio-era
Looking Ahead
Responding to Change and Uncertainty in
the Western United States
• “All experience, in matters of philosophical inquiry, teaches us
that, in such discovery, it is the unforeseen upon which we must
calculate most largely.”
-- Edgar Allan Poe
Responding to Change and Uncertainty in the
areWestern
completely
lost… do we appreciate the vastness
United States
• “Not ‘til we
and strangeness of nature.”
-- Henry David Thoreau
• “I never was lost in the woods in my whole life, though once I
was confused for three days.”
-- Daniel Boone
The One-Eyed Doe
Responding to Change and Uncertainty in
the Western United States
Responding to Change and Uncertainty in the
Western United States
Planning and Adapting to the Unforeseen
Responding to Change and Uncertainty in
the Western United States
The Story of UAL 232
Responding to Change and Uncertainty in the
Western United States
©2005 bio-era Bio Economic Research Associates
What I Mean by ‘Highly Complex’…
Responding to Change and Uncertainty in
the Western United States
(Situations that are High in All Three Types of Complexity Listed Below)
Type of Complexity
Scaling
Definition
When cause and effect are
operating at different
scales in space and
time
Responding
to Change
Western United States
Social
Actors have diverse
interests and perspectives
Generative
The future is unfamiliar
and undetermined
How to handle
when this type of
complexity is low?
How to handle
when this type of
complexity is high?
Piece-by-piece
System-as-a-whole
and Uncertainty in the
Experts and
Authorities
Actors and
Stakeholders
Existing Solutions
(tried and true)
Innovate
(new solutions)
©2012 bio-era LLC
Bio Economic Research Associates
What I Mean by ‘Highly Uncertain’…
Responding to Change and Uncertainty in
the Western United States
(Situations that are High in All Three Types of Uncertainty Listed Below)
Type of Uncertainty
Cumulative
Definition
How to handle
when this type of
uncertainty is low?
Probabilistic
The increase in
forecasts with
uncertainty as you move
confidence
intervals
away from the present
Responding
to Change and
Uncertainty
in the
How to handle
when this type of
uncertainty is high?
Scenarios
Western
United States
When the interaction
of
Dynamic
Political
many ‘factors’ are truly
important for determining
the outcome…
When the system in
question is subject to
human decision-making
and behavior
Models
Scenarios
Observation and
polling
Scenarios
©2012 bio-era LLC
Bio Economic Research Associates
Another Important Consideration…
Responding to Change and Uncertainty in
the Western United States
• Systems where important variables are changing
exponentially are inherently unstable…
Responding
Change and Uncertainty
the
• …and most often
thetovariables
that arein changing
Western United States
exponentially are linked to other important system
variables.
©2012 bio-era LLC
Bio Economic Research Associates
We Should Always Ask:
What Important Variables are Changing Exponentially…?
•
•
•
•
•
Responding to Change and Uncertainty in
the Western United States
Human, Animal, and/or Plant Populations?
Economic Growth?
The Power ofResponding
Technologies?
to Change and Uncertainty in the
United States of Technologies?
The DiffusionWestern
and Adoption
Concentration of Green House Gases in the
Atmosphere?
©2012 bio-era LLC
Bio Economic Research Associates
Predator-Prey Populations:
Linked Instability
Responding to Change and Uncertainty in
the Western United States
Responding to Change and Uncertainty in the
Western United States
Population Growth in Phoenix and
Maricopa County
Responding to Change and Uncertainty
in the Western United States
Source: http://amazingarizona.com/business-climate/
Values on the Chinese Stock Exchange
Responding to Change and Uncertainty
in the Western United States
Source:http://www.tradersnarrative.com/nailing-thechinese-markets-gyrations-2889.html
Global Oil Prices and Global GDP
Appear to be Linked
Responding to Change and Uncertainty
in the Western United States
Source: International Monetary Fund; Bureau of Labor Statistics; Wall Street Journal
http://economistsview.typepad.com/economistsview/2011/10/did-speculation-drive-oil-prices.html
Improvement in the Power and
Performance of New Technologies
Responding to Change and Uncertainty
in the Western United States
Diffusion of New Technologies
Responding to Change and Uncertainty
in the Western United States
©2012 bio-era LLC
Bio Economic Research Associates
Atmospheric Concentrations of So-Called
“Greenhouse” Gases
Responding to Change and Uncertainty
in the Western United States
Source: IPCC, 2007
What I Mean by ‘Highly Complex’…
Responding to Change and Uncertainty in
the Western United States
(Situations that are High in All Three Types of Complexity Listed Below)
Type of Complexity
Scaling
Definition
When cause and effect are
operating at different
scales in space and
time
Responding
to Change
Western United States
Social
Actors have diverse
interests and perspectives
Generative
The future is unfamiliar
and undetermined
How to handle
when this type of
complexity is low?
How to handle
when this type of
complexity is high?
Piece-by-piece
System-as-a-whole
and Uncertainty in the
Experts and
Authorities
Actors and
Stakeholders
Existing Solutions
(tried and true)
Innovate
(new solutions)
©2012 bio-era LLC
Bio Economic Research Associates
What I Mean by ‘Highly Uncertain’…
Responding to Change and Uncertainty in
the Western United States
(Situations that are High in All Three Types of Uncertainty Listed Below)
Type of Uncertainty
Cumulative
Definition
How to handle
when this type of
uncertainty is low?
Probabilistic
The increase in
forecasts with
uncertainty as you move
confidence
intervals
away from the present
Responding
to Change and
Uncertainty
in the
How to handle
when this type of
uncertainty is high?
Scenarios
Western
United States
When the interaction
of
Dynamic
Political
many ‘factors’ are truly
important for determining
the outcome…
When the system in
question is subject to
human decision-making
and behavior
Models
Scenarios
Observation and
polling
Scenarios
©2012 bio-era LLC
Bio Economic Research Associates