Ferdinand Foch was lauded the world over for his insights into military strategy and is described by one historian as “the most original military thinker of his generation” – but he was no fan of airplanes.
“Airplanes are interesting toys, but of no military value,” he once said, dismissing the notion of air warfare as something that should concern the serious student of military strategy.
Fast forward a hundred years to the age of stealth bombers, UAVs and drone warfare, and a world where companies like Airbus, Thales and Safran are among the biggest air warfare exporters on the planet and it is clear that, on this point, Foch had it entirely wrong.
We can’t fault Marshal Foch, of course. After all, he had only the past performance of aircraft in warfare on which to base his conclusions. Hot air and hydrogen balloons had been in limited service in time of war since the late 18th century. The French balloon l’Entreprenant was the first modern aircraft deployed in a time of war to observe opposition forces from above and, by the time Foch made his observation in 1911, the Americans had purchased a plane from the Wright brothers for military use and the Italians were using airplanes for reconnaissance and bombing raids in Libya. Based on this relatively short history, Foch came to the fairly reasonable conclusion that airplanes would do little to impact the way that wars were fought.
Past Performance ≠ Future Performance
With the benefit of hindsight Foch’s statement seems naive – but how many decisions that business leaders make today are equally flawed, and for the same reasons?
Consider the very complex network of systems that the modern utility company represents. There are of course the system physical assets – the lines, the towers, the substations – but there are also the human, financial, environmental, political, economic, and regulatory sub-systems to consider, too. So often when trying to predict the future state of such an interdependent complex system executives fall back on previous system states and past performance as a basis for their predictions.
If, for example, electricity tariffs have increased by an average of 1.5% over the last three years an assumption is made that this trend will continue. Or if current maintenance strategies have proved largely effective for the past five years, no changes will be envisaged to what intuitively feels like an optimal strategy. Or perhaps the economic growth and consumption has been steady for decades – surely there is good reason to assume that the trend will continue?
An executive who relies on past performance as the primary foundation for predictions of their future performance will almost certainly find themselves regretting their choice.
Prediction: A Changing World Demands a New Approach
When the world of business is changing fast having access to extensive historical data does not help an executive to develop a strategy for an unpredictable future. Think about the emergence of renewables and distributed energy resources for instance: historical data will be irrelevant if a utility wants to prepare an investment and operations strategy for their network.
Ferdinand Foch had more than a century of data which suggested that aircraft were unlikely to impact the military in any significant way. Business leaders, too, have access to similar masses of data about how things have worked in the past but basing their future strategies on this data can prove just as disastrous as Foch’s famed pronouncement. Big data, artificial intelligence, business intelligence, and data from the industrial IoT can all inform strategy but are fundamentally limited in their ability to describe a future state that has never yet occurred at some point in the past.
In truth, research has demonstrated that the only way to accurately predict the future state of a complex system such as a modern utility is to first model and then simulate that system. Through simulation it is possible to demonstrate how, at each step, the system evolves, the different sub-systems interact, and understand how any decision in the system affects all other parts of that system. Such models and simulations form the basis for a next-generation of asset investment optimization tools and decision management platforms, and a means to unlock the incredible value trapped in complex systems.
It’s an approach that Foch, the master strategist, could not have imaged but that, one imagines, he would have surely embraced.