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Strategizing and Managing on Multiple Timescales: A Meeting of Minds

To better understand the problem of managing on multiple timescales, we assembled a dozen experts from different fields to discuss examples of multi-timescale problems, common challenges and possible solutions.

Businesses are generally operated on a single rhythm, which is set by the annual planning cycle. But many challenges in business actually form and play out on multiple timescales. For example, a company aiming to maintain growth must consider pricing and demand management on timescale of days and weeks, branding and positioning on timescale of months and quarters, and new product innovation on timescale of years.

Furthermore, the relevant timescales in business are expanding in both directions. Increases in the power of AI and the volume of available data have made algorithmic timescales relevant, enabling pricing and promotion to be adapted in milliseconds. At the same time, slow-moving contextual forces that play out over decades, such as climate change and inequality, are becoming more relevant to businesses. Furthermore, timescales are beginning to intersect — long term issues like climate change are beginning to have impacts in the present.

Managing on multiple timescales simultaneously is therefore an increasingly important challenge for business leaders. Although companies have some traditional approaches for doing so, the current toolkit is insufficient and new perspectives and approaches are needed.

To better understand the problem of managing on multiple timescales, we assembled a dozen experts from different fields in science and business to discuss examples of multi-timescale problems in different fields, common challenges and possible solutions.

The participants were:

  • Philipp Carlsson-Szlezak, BCG’s Chief Economist and a Managing Director and Partner in the firm’s New York office
  • Anne Maria Eikeset, a researcher at Norges Bank Investment Management with a particular focus on climate and environmental change and their impact on investments
  • Stephanie Forrest, Professor of Computer Science at Arizona State University, where she directs the Biodesign Center for Biocomputation, Security and Society
  • Maria Hancock, an angel investor who has two decades of experience in technology, risk management and asset management
  • Peter Hancock, the former President and CEO of AIG
  • Georg Kell, Chairman of the Board of Arabesque (a technology company that uses AI and big data to assess sustainability performance relevant for investment analysis and decision making) and the founding Director of the United Nations Global Compact
  • Simon Levin, the James S. McDonnell Distinguished University Professor and Director of the Center for BioComplexity at Princeton University
  • Martin Reeves, Chairman of the BCG Henderson Institute and a Senior Partner and Managing Director in the San Francisco office of BCG
  • Nick Silitch, Chief Risk Officer of Prudential Financial
  • Peter Turchin, an evolutionary anthropologist at the Complexity Science Hub Vienna and the University of Connecticut who works in the field of historical social science that he and his colleagues call Cliodynamics
  • Elke Weber, the Gerhard R. Andlinger Professor in Energy and the Environment and Professor of Psychology and Public Affairs at Princeton University and founder and director of the Behavioral Science for Policy Lab
  • David Young, a Senior Partner and Managing Director in the Boston Office of BCG and a Fellow of the BCG Henderson Institute, where he looks at the role of the corporation in society and sustainable business model innovation

Over the course of a half-day discussion, we discovered that a wide variety of phenomena across fields are fundamentally multi-timescale problems. For example:

  • In evolutionary biology, species face an implicit trade-off between getting rid of old capabilities that are no longer relevant under current conditions or maintaining them in case they become necessary to survive or reproduce in the future.
  • In pest management, farmers face a trade-off between the short-term benefits of pesticide use (killing off pests) and the long-term costs (selecting for pesticide-resistant strains that will become harder to treat in the future).
  • In cancer management, the timescales on which treatments such as chemotherapy operate overlap with the timescales on which the genetic configuration of a tumor evolves, so the beneficial short-term effects of treatment must be balanced against the selection pressure that may shorten the period over which the drug is likely to be effective.
  • In cybersecurity, reacting too early or broadly against a threat can serve to accelerate the arms race with attackers, and thus undermine the effectiveness of initial measures.
  • In macroeconomics, policymakers often face trade-offs and contradictions between doing what is optimal in the short run (for instance, reducing bank capitalization requirements to stimulate credit during a crisis) and what is optimal in the long run (strengthening bank capitalization requirements to maintain financial stability).

By discussing these problems and the response measures observed across fields, we identified several general principles for managing on multiple timescales that we believe business can learn from:

1. Develop simple rules for balancing across timescales. Behavioral science has shown that individuals tend to focus on one goal at a time when making decisions under uncertainty. In the context of managing on multiple timescales, this is likely to lead to a myopic focus on the short term, because longer-term issues are less pressing and less certain. We can overcome such biases by designing “choice architectures” (such as rules or principles to follow or structures that reinforce them) that promote balanced decision-making.

However, if decision processes are designed to precisely optimize the trade-off across all timescales, they are likely to become complex, slow, and reliant on assumptions which are hard to calibrate. Instead, simple heuristics can be deployed to achieve good-enough outcomes over plausible scenarios. Examples of such heuristics might include a “balanced scorecard” (addressing all timescales to some degree), “avoiding lock-in” (always making decisions that can be reversed if necessary), or “never bet the whole bankroll” (avoid existential risk on any timescale).

2. Create metrics and information to manage longer timescales. The most commonly used metrics in business show what has happened in the past. On shorter timescales, past outcomes are likely to be pretty good predictors of the future, but on longer timescales they are less meaningful. Some existing metrics have a forward-looking component: for example, asset prices in financial markets generally reflect an aggregate expectation of future events. But such instruments are currently available for only a narrow range of financial risks. Leaders should create new metrics, within their business or collectively through financial markets, that make future expectations or potential visible.

3. Map and understand the system in which you operate. Businesses are not islands — they are embedded in and depend upon a broader economic, social, and ecological context. Feedback loops from different levels of the system have activating or inhibiting effects on businesses, which may operate on different timescales: for instance, technological innovation and adoption is accelerating, but social reaction and regulation tend to happen more slowly. These forces are complex and often non-intuitive, so mapping the full system and feedback loops is important to understand where leaders can most effectively intervene.

Experimentation is an important tool in understanding the system. Businesses commonly run experiments on shorter timescales (such as A-B testing of pricing or promotion), but it is also necessary to experiment on longer timescales — such as varying business models and selecting the most promising ones — to better understand the context and navigate it. This principle could also be adopted in social or political realms, such as by experimenting with policies across geographies and identifying what seems to work best and extracting insights on underlying mechanism

4. Facilitate collective action. In systems science, longer-term phenomena tend to involve larger groups. This means that effective action on longer timescales is likely to require collective action that stretches beyond a single business. Collective action problems can involve many unique challenges: individual actors may have different time horizons, different incentives, or different beliefs about what is or is not important in the first place and about what others believe.

To overcome these challenges, business leaders should promote mechanisms for aligning beliefs and behaviors across multiple companies. This may involve lobbying for changing incentive structures to more effectively balance different timescales, or creating common information sources to facilitate alignment of beliefs. It may also involve reducing the uncertainty around long-term goals or objectively quantifying progress toward them, which has been shown to improve coordination among different actors. And it is likely to require reaching beyond the organization to collaborate with external partners. For our most challenging commons problems, the sum of the optima for each company may not constitute the best overall solution for society.

5. Expand leadership. Metrics and incentives are not necessarily sufficient to prompt effective action on long timescales — narratives also play a crucial role in bringing the future into the present. When John F. Kennedy famously announced a goal of putting a man on the moon within a decade, he established a goal to focus collective action. Business leaders can similarly channel the efforts of the entire organization productively by setting and reinforcing a compelling vision. Leadership can also play a crucial role in resolving competing interests, transforming a zero-sum game into a context where cooperation is rational.

Such efforts do not need to be limited to issues within the business. In our discussion of multi-timescale issues in society, the role of government was not at the forefront; there was strong sense that bottom-up action from small groups can also play an effective role. Businesses need to be embedded within healthy societies to thrive, so business leaders should also aim to promote collective action on societal issues, such as using technology for a positive purpose and tackling pressing issues like climate change.

The challenges of managing on multiple timescales are significant, and more work will be done on understand the challenge and what can be done about it. But we hope these principles can provide a starting point to identify elements of a solution. A more detailed account of the ideas emerging from the Meeting of Minds will follow shortly.

Sources & Notes