Looking into the future.
The value of ‘if’.
The best possible scenario.
Speculation has to do with conjecture and hope. Investors are by their nature speculators even if the word tends to be reserved for builders and currency operators. A speculative builder builds a house without already having a customer. Then he sets out to find a customer.
Any speculator must have a strong sense of potential benefit. There also has to be hope.
Yellow hat thinking is more than just judgement and proposals. It is an attitude that moves ahead of a situation with positive hope. Yellow hat thinking sets out to glimpse possible benefits and values. As soon as there is a glimpse of these, exploration takes place in that direction.
In practice there is a big difference between objective judgement and the intention to find positive value. It is this reaching out and reaching forward aspect of yellow hat thinking that I am indicating with the word Speculation.
… There is a new type of fast food that is becoming popular. It is a sort of flattened chicken cooked in a Mexican style and offered as ‘polo’. Put on your yellow hat and tell me what you see in this.
… There are so many different types of insurance that people get confused. Could we have some sort of ‘overcoat’ insurance that takes everything into account? Take that idea away and give it some yellow hat attention. Come back and tell me what you find.
This speculative aspect of yellow hat thinking is pure opportunity thinking. It goes beyond problem solving and improvement. People are forced to solve problems but no one is ever forced to look for opportunities. However, everyone is free to look for opportunities – if they so wish.
Speculative thinking must always start off with the best possible scenario. That is the way one can assess the maximum possible benefit from the idea. If the benefits are poor with the best possible scenario, then the idea is not worth pursuing.
… In the best possible scenario, the other store is forced out of business and we take over the whole business for the area. But I do not see that this would be especially profitable. As it is, the other store is struggling.
… In the best possible scenario, the interest rate rises rapidly and the value of our fixed-rate transferable mortgage makes the house very saleable.
If the benefits seem attractive enough in the best possible scenario, it becomes a matter of seeing how likely that scenario is – and how likely are the benefits to flow as assumed.
In its speculative aspects, yellow hat thinking envisages the best possible scenario and the maximum benefits. Yellow hat thinking can then scale these down in a ‘likelihood’ manner. Finally, black hat thinking can indicate the areas of doubt.
Opportunities can arise from the extrapolation into the future of the present scene. Opportunities also arise ‘if’ some particular event takes place or some condition changes.
… Bond prices will rise ‘if’ interest rates fall.
… ‘If’ fuel prices fall, big cars will become more saleable.
It is part of the speculative function of yellow hat thinking to explore possible ‘if’ changes.
It is never a matter of basing action or decisions on the basis of an ‘if’ exploration – although defensive action may need to be taken as with the hedging of funds or the taking out of fire insurance. It is part of yellow hat exploration.
Part of the black hat function was also to explore ‘if’ in the sense of risk and danger. The corresponding part of the yellow hat function is to explore the positive equivalent of risk, which we call opportunity.
… Under what conditions would this hotel chain be profitable?
… If satellite broadcasting gets established, what new opportunities is it going to offer to advertisers?
The speculative aspect of yellow hat thinking is also concerned with vision.
I mentioned the role of vision and dreams in yellow hat thinking in an earlier section. In a sense vision goes beyond speculation because vision can set a goal which there is little hope of reaching.
In any design there is some sort of vision that comes first. Just as a good salesman makes a sale by putting forth a marvellous vision which the client is invited to share, so the designer sells himself a positive vision of what he is trying to do. The vision comes first and then the form and detail follow. This vision includes both the benefits and the feasibility of the project: it can be done and it is worth doing.
It is very difficult to do anything at all without some sense of achievement and value.
… I have this vision of attractive low-cost housing, and I think I can also see how it could be done.
… I have this vision of a different type of economics which will handle wealth and productivity in a new way.
… I have this vision of thinking being taught as a fundamental subject in every school. It has already started in some countries.
The excitement and stimulation of a vision go far beyond objective judgement. A vision sets direction for thinking and for action. This is a further aspect of yellow hat thinking.