How Red Cells Shed Light on Blindspots in the Strategic Planning Process
By
David Klubes, Distinguished Analyst, ANSER
Surprised by a sudden turn of events? Are unexpected developments throwing your organization’s plans into disarray? Are these developments really unexpected?
These situations are often explained as “Black Swans” that are unpredictable and highly unlikely phenomena. The real issue, however, is not that unlikely events happen. It is that strategic decisions makers never make room for the possibility that unlikely events can unfold.
Most executives -- in the public and private sector -- tend to focus on the most likely and logical series of events over time. As a result, they tend to erect blinders that prevent basic consideration of how unlikely developments can affect their plans, operations, even their ability to continue existing.
One of the unappreciated dimensions of successful future planning revolves around incorporating unlikely scenarios into the analytical process. This is because the possibilities are so daunting. There are far more “unlikely” scenarios than there are “likely” scenarios. It is easy to believe that an organization can grind to a stop considering hundreds or thousands of improbable possibilities.
But that should not stop leaders from putting in place an analytical structure that tests the strength behind the underlying assumptions of a strategic plan. In an increasingly complex, interconnected world where seemingly minor actors and events can create disproportionate risk, successful strategic planning is more challenging than ever.
That is where Red Cells come in.
David Klubes, Distinguished Analyst, ANSER
Red Cells Defined
Red Cells -- also known as Red Cell Teams -- are made up of interdisciplinary experts that engage in focused alternative analysis in order to help organizations break from intellectual ruts and blindspots that often accrue over time. Their mission is not just to think about the future, but to highlight the potential for unlikely events to derail -- or enhance -- an organization’s position.
Red Cell analysis challenges conventional wisdom to provide new perspectives on issues. Expertly done, it systematically probes beliefs and questions assumptions by applying skepticism and creativity in a structured manner. Red Cells explore how things may be different than perceived and how things may turn out differently than expected. It provides a basis for understanding the impact of both.
Red Cell analysis is an art. It must be applied judiciously and expertly. Every situation is different and must be approached differently. The key is to adroitly argue for the unlikely and/or demonstrate that an organization’s plans may be more vulnerable than all would like to admit. It requires a good degree of skill to know when to overturn the apple cart or when merely to make some applesauce.
Red Cells are not the “Department of No.” They provide a mechanism for ensuring that organizations ask the hard questions in a systematic manner to avoid ignoring scenarios under the guise of “we know that isn’t the way it is” or “that can’t possibly happen.”
Overcoming Biases and Ingrained Assumptions
Regardless of how many times organizational leaders call for innovative, out-of-the-box thinking, at the end of the day, most decision-making processes end up afflicted with various biases and ingrained assumptions that render them susceptible to surprises and missed opportunities.
By expanding the scope of thinking that takes place organizational planning processes, effective Red Cell analysis has helped organizations avoid catastrophic failures and take advantage of opportunities that might otherwise have gone unnoticed. At a minimum, it mitigates the impact of “surprises” by helping organizations build resiliency into their strategic plans.
Red Cell analysis can trace its origins back to the 19th century Prussian wargaming activities. However, it came into its own when the Central Intelligence Agency (CIA) established a formal Red Cell program in the wake of 9/11 (literally the day after). Then-CIA Director George Tenet personally created the unit to be the source of out-of-the-box thinking and to question -- and occasionally supplant -- analysis made by the mainstream Intelligence Community. Demand for the unit’s work has been high; President George W. Bush was a keen customer as were senior National Security Council officials in his and President Barack Obama’s administrations.
In the private sector we have seen a similar alternative future analysis initiatives yield impressive results. During the early 1980s, a major player in the oil and gas industry routinely used the alternative futures approach as a strategic planning tool. One key, albeit seemingly implausible, scenario their team developed was the collapse of the Soviet Union and attendant impact on the energy industry. As a result, when that development did occur, the company’s leadership was able to move nimbly ahead of the competition.
Despite the positive track record posted by effective Red Cell programs, it remains largely ignored by most organizations -- large and small. This is beginning to change as decision makers respond to the increased volatility across geopolitical, economic and technological vectors.
There is evidence of an uptick in government agencies and private sector companies exploring the efficacy of Red Cell analysis. The U.S. Intelligence Community formalized a requirement for alternative analysis as part of the post-9/11 reforms and the U.S. Army created the University of Foreign Military and Cultural Studies (UFMCS) in 2004 its curriculum incorporates some Red Cell-type analysis. Meanwhile, commercial companies appear to be investing more heavily in understanding risk, especially political risk, which may include some Red Cell-like activities.
Red Cell Deliverables
Red Cell products should be plausible narratives based on transparent logic. Sometimes they are scenarios that describe potential futures, sometimes they explain why the current situation may be different than perceived. While focused on the unlikely, they should not be fanciful stories concocted via a web of improbabilities. They are best described as analytic scalpels, precisely dissecting a widely-held belief or assumption.
Not every Red Cell will provide clear-cut, immediately actionable insights, e.g., all an organization needs to do is x and everything will be okay. Instead, Red Cells are better viewed as ways to broaden an organization’s perspective and stress test their strategies and plans.
Instead of trying to answer what will happen, Red Cells seek to answer what may happen. But, like most things, the devil is in the details. Successful Red Cell analysis requires significant finesse to describe why mainstream analysis may be wrong and provide a critical supplement.
Red Cell analysis must be more than just contrarian analysis or so “out-of-the-box” that readers dismiss it as fanciful musings. It should not be a compendium of everything that could go wrong. Red Cells can also highlight how things may turn out for the better. Nevertheless, it absolutely should often skewer sacred views. There is a fine line between questioning the mainstream without becoming the rote, designated naysayer.
Implementing Red Cell Initiatives
Dedicated Red Cell analysts and units have proven to deliver the best results to leaders who want access to the best insights about the most relevant possibilities in their decision-making process. This approach creates an intellectual center-of-gravity that fosters ingrained skepticism, creativity, and proper use of different analytic techniques.
Effective Red Cell analysis needs access to organizations’ strategies and plans. They must also have the support and engagement of key leaders. This is critical to ensuring that the analytical output yields relevant insight and organizational buy-in.
There is no cardinal rule about whether Red Cell units should be internal or external. There are pros and cons for each of these situations. Internal Red Cells have greater institutional knowledge, but external Red Cells are less bound by institutional culture. Internal might produce too much in order to justify their existence, but organizations can fail to recognize when an external Red Cell should be used.
Regardless, Red Cell analysis should be an integral part of every decision maker’s long-term process of devising and implementing strategies and plans. It will not make organizations bulletproof from failure. It will, however, shed light on weak assumptions and drive better resilience and adaptability.
Used regularly, Red Cell analysis will help push organizations out of the ruts that inexorably develop as strategies and plans are developed and implemented. While the harsh questioning and seemingly odd ideas generated by Red Cells can be disconcerting at first, organizations soon learn to appreciate the value of Red Cell analysis – and the benefits it provides.
David R. Klubes, P.h.D., worked for the National Intelligence Officer for Warning from 2002 to 2007 and since has helped a wide range of national security and commercial clients think better about the future. He currently is a Distinguished Analyst at ANSER. The views expressed in this article are his own and do not necessarily reflect the views of the United States government or ANSER.