Counterfactual reasoning in strategy context : a theoretical investigation of the role of hindsight in strategic foresight

Abstract

The purpose of this doctoral thesis is to deepen theoretical understanding of the role that hindsight plays in foresight. The thesis argues that the past is not an isolated static state, but one that is intimately connected with the future. However, there are several biases that influence our perceptions and conceptions of the past. These biases act as constraints on strategic learning by limiting our ability to understand the driving forces that emerge from the past, play out through the present and become critical uncertainties in the future. They can result in misperceptions about events or processes, and as such, may impair foresight methodologies such as scenario thinking. Such foresightful thinking flaws are characterised by a combination of hindsight biases and creeping determinism, which result in searching for information that corresponds to people's views about both the past and the future, logical path-dependencies, misaligned dominant logics, routines, recipes and paradigms, and over-confidence and defensive pessimism. Drawing on received research in psychology, the role of counter-to-factual reasoning as a heuristic is discussed and analysed as a possible antidote to foresightful thinking flaws. The judicious use of such a heuristic device as counterfactual reasoning, both as a sense-making process and as an analytical reasoning tool applied to the analysis of historical data, the thesis concludes, is a method for investigating and discovering the past and fortifying foresightful strategic thinking.