While all companies learn, the crucial element is to be able to learn fast enough to sustain a competitive advantage. This is becoming increasingly important in today's fast-changing world. Unfortunately, teaching is a very ineffective way to communicate information. Sometimes changing or suspending corporate rules can accelerate learning. A very effective learning tool, which can be described as a form of game playing, is developing "what if" scenarios and planning responses to them.
Companies have begun to enhance their learning capabilities through the use of scenarios as tools to adjust managers' mental models so as to allow them to reflect on looming changes in their competitive environment. Scenarios compel managers to begin the planning process by considering what could be, not what has been. They explore different future business patterns, not extrapolations of historic behavior. Scenario-based planning allows them to deliberately try to break the rules of their business.
The purpose of scenario planning is not to pinpoint future events but to highlight large-scale forces that push the future in different directions. It is all about making those forces visible, so that if they do happen, the planner will at least recognize them. It is all about helping make better decisions today. Scenarios provide a fresh perspective, and a new language and framework that can be used to encourage dialogue and strategic thinking on the challenges and opportunities we face. Scenario planning can be a powerful tool for forcing us to abandon previously fixed ideas. Scenarios help by legitimizing a dialogue, challenging conventional wisdom, initiating widespread discussion, and creating the possibility of genuine transformation.
Scenario planning is the application of visual dialogue. It is a way to structure and facilitate strategic thinking in management teams and multi-organizational corporations where there is increasing uncertainty in the business environment. The beauty of scenario thinking is that it allows us to tell each other stories about how the world might work. The key element is not whether we are "right" or "wrong," but rather, that we dig deep down to understand that it is our assumptions and perceptions that underpin the imaginations in each scenario, and evaluate their plausibility. Scenarios are not linear or mechanistic; they are displays of exponential connections.
Although scenario planning is the current new buzzword in strategic planning offices, scenarios are not new management tools, since the basic concepts originated in the military. The United States Military first used them after World War II for strategic planning. Military think tanks such as the RAND Corporation have been using scenario type thinking and simulated war games of military strategy for decades. At the RAND during the 1950s, Herman Kahn and others pioneered the so-called scenario technique for analyzing the relationship between weapons development and military strategy. Later Kahn applied this technique in On Thermonuclear War (1960), a book that examines the potential consequences of a nuclear conflict.
Herman Kahn was the founder-director of a think tank called the Hudson Institute, located in New York. Herman Kahn, along with Max Singer and Oscar Rubenhausen, established the Hudson Institute as a research organization dedicated to thinking about the future from a contrarian point of view. From 1961 to 1983, Kahn maintained and depended on a research staff committed to engaging in intellectual exchange and analysis that offered predictions about the future. Trained as a physicist, Kahn applied his skills and unconventional thinking to examine issues in economics, national security and international affairs.
He challenged convention but stayed optimistic about society while his nation went through the throes of nuclear angst and Cultural Revolution. Ultimately, Kahn is best known for having the idea that the best way to prevent nuclear war from taking place was to think about what would happen if such a war occurred. He truly believed he could help change public opinion by using scenarios.
In business, the experience of Royal Dutch Shell, starting with the work of planning directors Pierre Wack and Ted Newland in the mid 1970s, was the first widely documented and recognized success story of scenarios. Pierre Wack (1922-1992) is considered one of the greatest teachers of scenario planning. He was a student of mysticism, the power of Will, he had a guru, and was said to be clairvoyant. However, he disagreed with those who connected him with clairvoyance, and insisted that intuition was the difference that could make the difference.
When Pierre Wack and Ted Newland offered their first scenarios to Shell executives, the managers seemed to become paralyzed. When told that there could be a future potential oil market that might be either 56 or 87 million barrels per day, they lacked the necessary perception to clearly see this New World. And without that perception, there was no way they could act. Wack and Newland realized if they truly wanted to make their future world tangible, they would somehow have to reach the part of the managers' minds that held their perceptions of the world. The brilliance of Wack was that he figured out how to design scenarios that would accomplish that goal. Or as Art Kleiner writes in The Age of Heretics:
The old, materialistic Western mindset is embedded within people's tacit points of view. As the mindset falls away, as people leave the attitudes of industrialized society behind, they become more aware of the most exciting prospect of their time: designing a postindustrial, participate society no longer hamstrung by the tired values of the industrial era.
Wack claimed that if the rules of the world were constantly changing, it was hopeless to get the "right" forecast. Hiring more or better forecasters to project existing realities in a straight line was also pointless. The stakes were too high, the changes too widespread. Just look at the unexpected upheavals caused by information technology, to pick one example. The only stability, Wack argued, was in accepting uncertainty, and organizations would have to be systematically open to heresy.
Currently, there are two schools of thought in scenario planning. One school suggests that the goal of scenario-based planning is to enable large organizations to respond swiftly in turbulent times. This can be called the risk-reduction school. The other school believes that the goal of scenario-based planning is to set up a vision that not only the organization, but also an entire industry can aspire to as being best among competing visions. This can be called the revolutionary school.
The Risk-Reduction School approaches scenarios as tools for generating creative debate and discovering weak trends. Scenarios should enable managers to respond more effectively to change as the future unfolds, and help them to reduce their risk of running the rapids of change. By going company-wide with the insights gained from scenarios, the organization builds a critical mass of intent around key events. This enables a fast, organized response should any of these events occur, because the review about what to do has already taken place.
The Revolutionary School approach uses scenarios as tools to help large organizations reach the goal of achieving a vision they believe is best for the future. Scenarios are used to structure deliberations about choosing among alternative visions for an organization and to identify the tasks that are required to achieve it. Scenario-based planning, as practiced by this school, has all the benefits and uses of the reduced risk school, but they take the next dynamic step of addressing how to make what they consider to be the right future, actually happen.
The Shell process uses both. One goal is to create what its former chief planner, Kees van der Heijden, calls a "critical mass of intent" concerning possible upheavals in an industry. To meet this goal, scenarios are used to provide a way to experience upheavals before they actually occur, thus preparing managers to react quickly if and when the real events arise. The second goal is to spur debate and thus provide a context for further planning. For example, some major capital investments might be required to perform reasonably well under all the scenarios currently being considered. If an investment only works in one scenario, then it might be deemed too risky. In the context of Shell's unique global organization, scenarios provide a way for organizational conversations to develop at a level of sophistication that would otherwise never occur. Today, Shell's scenarios are clearly a unique resource for the organization to develop the future they want.
1. Trend-impact analysis is concerned with the effects of trends in markets or populations, over a period of time. The work that is subsequently done to isolate important trends is similar to that used in scenario planning, but they differ in that scenario planning is looking for the unexpected -- as in what is likely to upset trends.
2. Cross-impact analysis is a technology used for analyzing complex systems. It concentrates on the ways in which internal and external forces of an organization may interact to produce effects bigger than the sum of the parts, or to magnify the effect of one force because of feedback loops. This system can be used successfully when the dominant forces can be identified, and the modeling mechanism can be used to increase management's understanding of the relative importance of various factors.
3. Decision scenarios or what is sometimes called the 'Pierre Wack Intuitive Logics.' The essence of this approach is to find ways of changing mindsets so managers can anticipate futures and prepare for them. The emphasis is on creating a coherent and credible set of stories of the future so as to test business plans or projects. In decision scenarios, management has been involved in the creation of the scenarios from the beginning. Many are using this approach.
Scenario exercises that look at various possible future macroenvironments have been used by a number of companies seeking to prepare for tomorrow's markets. However, according to reports from planners and line managers, these exercises often fail to stimulate better short-term decision-making. A more effective methodology is the decision scenario. These are studies of future possibilities that analyze the specific choices involved in managing scarce resources. Because they involve managers' imagining operating in markets that are drastically different from today's, they are a tested way to successfully avoid what L. C. van Wachem, recent Chairman of the Committee of Managing Directors of Royal Dutch/Shell, labeled "the trap of the corporate one-track mind."
For each of us, decisions loom in the near or immediate future. The response we make to them will shape our lives and businesses, possibly for years. For decisions to take on meaning it helps for them to become tangible. As Peter Schwartz has stated:
I believe that people often persuade themselves that their decisions do not matter, because they feel powerless to make the best decision. Some of us feel that, no matter what we do, our decisions won't matter much. We don't plot the course of North Sea oil development -- only our lives. The world is too big, and we are too small. But I believe that we know at heart that decisions do matter. I am not the first to suggest that we ourselves are arguably the sum total of the decisions we have made. That sum, in turn, gives us whatever power we have to affect the world.
The scenario process involves great amounts of research, both broad searches that facilitate educating the planner, and narrow focuses needed for a specific scenario. Each scenario requires specific research, although there are some constant subjects that need to be studied at all times such as science and technology, and music. Peter Schwartz says that, "music is a window onto freedom in the future." (So pay attention to the music!)
Flexibility of perspective is also critical because a scenario planner must simultaneously focus on questions that matter to him/herself and also keep awareness open for the unexpected. Since most of us have built up a set of rigid filters, we pay attention only to what we think we need to know. To do a good job, therefore, one must become aware of where the filter lies and be able to continually readjust it to let in more data about the world.
The great Pierre Wack believed scenario planners must train themselves to look at the world as horses do: horses see the peripheral very sharply. Human beings see peripheral objects in a blurred and distorted way, lacking the horse's vision. Why should planners worry about this? Because new knowledge develops at the fringes -- at the outer edges stand the ideas that the majority reject out-of-hand. (Avatar technology comes to mind here.) This is because our vital beliefs are at the protected center and innovation is the center's weakness. The structure and the power tend to inhibit innovative thinking and thinkers, driving them to the edge. The great innovators start at the fringe. Einstein, being a case in point, and Steve Jobs, another. Scenario planners need to be aware of the fringes.
Clients need a facilitating team that provides an extensive knowledge base, and interdepartmental cooperation. They need team members who have a commitment to learning and the ability to blend highly disciplined analysis with free-spirited, imaginative thinking. Scenario planners need a great deal of intuition, inspiration, and passion to be among the best in the world. Or so Pierre Wack believed. Finally, a good scenario planner needs to be a lover of constant education, a collaborator, and committed to the work.
The process of building scenarios starts with looking for driving forces: forces that influence the outcome of events. Driving forces are the elements that move the plot of a scenario, that determine the story's outcome; they may seem obvious to one person and hidden to another. Without driving forces, there is no way to begin thinking through a scenario. Every enterprise, personal or commercial, is propelled by particular key factors, such as your workforce and goals. Others, such as governmental regulations, are external. Identifying and assessing these fundamental factors is both the starting point and one of the objectives of the scenario methodology. And often, identifying driving forces reveals the presence of deeper, more fundamental forces behind them.
Driving forces are things such as social dynamics, technological issues, economic issues, political issues, and environmental realities. We have little control over driving forces, and the only way we can leverage them is to recognize them for what they are, understand their effects, and contribute to creating new driving forces if we do not like what we find.
Once the driving forces are listed, you can see that some of them can easily be called predetermined elements, or 'what we know we know' such as demographics. Not predetermined in a philosophical sense, but in that they are completely outside our control and will play out in any story we tell about the future. For example, the number of high school students in Ontario ten years from now is more or less predetermined by the number of elementary school children now. As GBN principals will tell you, "predetermined elements are fearful sometimes because people tend to deny them. The chickens coming home to roost is a predetermined element. So is the next payment on our loan." The predetermined can be equated with the inevitable in real life.
After you have identified the predetermined elements from the list of driving forces, you should be left with a number of uncertainties. You can then sort these to make sure they are critical uncertainties. A critical uncertainty is an uncertainty that is key to your issue. Critical uncertainties are closely associated with predetermined elements, and you can find them by questioning your assumptions about predetermined elements. The goal is to understand all the uncertain forces and their relationships with each other. Some planners group them into broad headings:
For example, what might happen to change the deficit? Or real income growth? One of the biggest uncertainties about technology will be its effect on cultural differences. Will it bring people together like television has, or will it increasingly be something only the well-to-do have access to?
You can now return to the list of driving forces that were generated in the beginning. They become the characters in the stories or scenarios that will be developed. The goal is to write the desired number of scenarios, recognizing from the start that the real future will not be any of the scenarios, but that it will contain elements of all the scenarios. Create a set of scenarios structured around critical drivers, environmental forces, and uncertainties associated with the client's decision focus.
Typically, the scenario descriptions include an extended story line of two to three pages, a tabular description of scenario differences and selective quantification of key factors. Together with management, the scenarios are role-played to help the team relate the potential outcomes to their own strategic business initiatives.
The process of creating scenarios is aided by interviews, feedback, and workshops led by facilitators. The importance of feedback cannot be understated because it is critical to successful research for the scenarios. When the interviews are done, prepare a presentation on what was learned and go over it all with each interviewee, asking them if this was what they meant to say? Are these facts correct? Do I understand what you have said, and do you think our group has effectively identified what the critical uncertainty is for you?
It all depends on the company you choose to use, but make sure you have a base case. The base case is the conventional wisdom, the official future, and establishes management thinking before beginning the scenario process. It is difficult to implement change when the current thinking is not clearly articulated. The scenarios need to challenge the base case. If they cannot, you should not be doing scenarios.
Some companies use two scenarios because they believe the use of two scenarios is a tactic to make them easier to implement. GBN tends to use four scenarios, while NCRI has used as many as eight business models but they are paired sets of alternatives. The workshop is critically important to NCRI, so it often structures the number based on the number of attendees, limiting each team to five or six, so that everyone gets sufficient air time. Several times it has been recommended that the number of scenarios should be limited to two. Is this always true?
The use of two scenarios is a tactic to make them easier to implement. Two scenarios are often sufficient to demonstrate fundamentally different worlds. However, the number of scenarios should arise out of the thinking process, and should not be predetermined. GBN tends to use four scenarios when introducing the methodology into an organization. Even then, two may be collapsed together, resulting in two or three final scenarios. Scenario planning is gracefully described in The Art of the Long View, by the man who in the 1980s held Wack's old job at Shell -- GBN co-founder Mr. Schwartz. He believes that:
Scenario planning is the methodical thinking of the unthinkable. It searches for wisdom in unusual places. It assumes that there will never be enough information on which to base a decision, if that decision requires certainty about the future. Therefore, it is important to prepare a wide range of possible decisions based on an entire range of possible futures. Never being wrong about the future is better than occasionally being exactly right.
Scenario planning can help overcome the tendency to interpret new information in terms of old beliefs. The pace of change in large corporations has reached stunning speed. Only the scale and scope of decisions being made by management match this speed, decisions that often change the very nature of the company, and may even alter the structure of its industry and markets. How are such momentous decisions actually made in large businesses?
What usually happens is executives will test a critical decision against their mental models of how business and the market work. We each carry mental models in our heads, and they are the products of our accumulated individual experience. If the decision is compatible with our mental model, we act on it. When we read objective reports and forecasts, we interpret them through the filter of our experience. This is acceptable in relatively stable industries, where the wisdom inherent in an experience-based mental model has lasting value.
However, this approach can be extremely dangerous in fast-changing environments. The biggest pitfall is obvious: an experience-based mental model is based on past knowledge and may not be carrying critical new information. If the rules of competing in the market change, a past-oriented mental model will not be able to acknowledge the shift, and ultimately, wrong decisions will be made. A critical task of planning is to provide tools that adjust managers' mental models to reflect the rapid changes in their competitive environment. A key success factor is how fast the whole company--not simply individuals--can learn. In fact, this is the central management challenge of the 1990s. The corollary, of course, is the requirement that the organization be able to forget the outmoded information and concepts. Adjusting mental models has everything to do with knowledge management, learning organizations, and future scenarios.
Senior managers have learned to trust their mental models especially when they have produced successful results. Managers must make lots of decisions, and some are tougher than others. Anything that can help make a decision in the midst of uncertainty is a very valuable tool. A growing number are using scenarios to make big, hard decisions more effectively. Scenarios allow management to get beyond the question of "What future is most probable?" to more powerful questions like "What future do we fear the most?" and "What future do we want to create?"
Although it is critical to identify a specific decision focus, the benefits extend well beyond that one decision. Scenarios create a language with which to communicate as an organization, allowing a light to shine in on it. Through the identification and observation of events and patterns of behavior and by stretching the boundaries of possibility, scenario planning can imbed thinking and learning processes into an organization.
1. Lack of decision focus. Despite the best intentions of the scenario team, scenarios may be irrelevant to any specific decision or to the strategic planning process.
2. Lack of decision-makers' involvement and commitment. The journey is critical to the process. If senior management is not culturally ready to become involved, there is little point in proceeding. The team's efforts may be perceived as a waste of time and money, producing few results.
3. Scenarios become the products of the exercise. If participants try to communicate the elegance of the scenarios without defining the decision context, the audience is lost and the effort fails.
4. Scenarios are not planning friendly. Scenarios challenge everyone's view of the way the world works and reveal the ignorance of both the staff and the decision-makers.
5. Scenarios are difficult to use. It takes a commitment of at least three to four months to develop and use scenarios. Then there is the practical problem of carrying several outlooks forward into practice.
6. Problems can arise when members of the senior team are not able to share their mental models with each other because of lack of time, comfort, or know how.
7. Management feels best when decisions are data-based. While this may be possible in current situations, a problem arises in strategic planning when collecting definitive facts about the future is impossible.
8. There are also problems with wishful thinking and denial, a lack of intuition on the part of the facilitators, and when those involved ignore basic driving forces and feedback loops.
1. While the scenario method is an important tool, the real key to success with using it is the quality of the people and their willingness to open their minds to rediscover the world.
2. Develop a receptive culture. This is the biggest issue and creates a basic choice: if you do not have the right culture, you may be wise to try something else. If there is an opportunity to develop the right culture, be sure to tailor the scenarios to the organizational needs; make them simple and relevant to management's concerns; and involve the decision-makers.
3. Target the opportunity. Some issues lend themselves to the scenario-planning approach more than others do. For example, using scenarios to develop a corporate strategy may be difficult, while an investment decision would be easier. Both contingency planning and explicit challenges to your planning assumptions are good scenario-planning applications.
4. Develop a strong communications program. Write imaginative stories but not too many of them. Most facilitators support having few scenarios but feel that the actual number should evolve from the analysis.
5. Create explicit links to the rest of the strategic management process. Scenario planning is not an overnight process. It involves a fairly large commitment of time and resources. It is also a process that is difficult to understand before going through the experience. The scenarios can be linked to modeling or simulation efforts going on in the company in order to gain visibility, credibility, and acceptance, and to imbed the scenarios into the decision-making process.
6. Fit the scenario to the task. Remember that you will need good scenarios to achieve effective results. The scenarios must have a clear purpose and focus. Interviews with each member of the senior management team are critical in identifying a clear strategic decision or question that will have credibility within the organization. You need to imbed the relevant trends, and not issues that are off the mark. Assumptions must be laid bare and be openly challenged.
7. The scenarios must be internally consistent. Be sure to check the logic of each plot, testing whether it hangs together and makes sense. Identify the predetermined elements and the critical uncertainties, and be sure to address them totally in each of the scenarios.
8. Once you have the scenarios, ask yourself what the scenarios really mean for the company, for the employees, and for the shareholders. Companies often have no idea what to do with the scenarios and, therefore, do not achieve desired results. Develop a list of options. If a clear risk or opportunity has been identified, develop a means for attacking it. Then move into the action-planning process.
9. Communicating scenarios is an important part of the process. Gill Ringland has concluded that to communicate scenarios in organizations, particularly those having no history of using them, the following are needed:
10. Somehow reach the part of the managers'minds that harbor their perceptions; good scenarios can help change mental models.
11. The scenario must resonate in some way with what managers already know, giving them the ability to re-perceive the world.
12. Make sure that observations from the real world are built into the process.
A company in the telephone industry was enthusiastic about a scenario that depicted a world of no regulation. After trying on the end state and exploring the implications, the managers decided that what they really wanted was a world of less regulation -- not no regulation -- because they were competing with some pretty heavy players. After the session, they immediately changed their lobbying policy in Washington.
A paper company was considering an investment in a paper plant in the early 1980s, early for technology to affect that industry. They wanted to explore the implications of electronic communications on the demand for paper. What they learned was that there would be a resilient demand involving color for magazines, catalogues, etc. Based on this insight, they shifted their investments to support this product line where formerly they did not have a presence. Investment decisions are a good application for scenario planning. It is possible to tweak investments to make them more resilient across the scenarios.
One astonishing example of scenario planning in action is the South African Success Story that occurred in the early 1990s. At the invitation of a multiracial group of South Africans, Adam Kahane, a Global Business Network member and alumnus of Shell Group Planning, shouldered no less a task than seeing whether scenario planning could help turn that troubled nation into a multiracial democracy. The Mont Fleur Scenarios were named after the small town near Stellenbosch, South Africa where they were first devised in 1991. The scenario facilitators were the first in the world to attempt the turnaround of an entire country.
The Mont Fleur tales tried to describe nothing less than the ways the world might be tomorrow. The amazing thing about them is that their narrative power was so compelling that they caused everyone from the radical African National Congress to the crypto-fascist National Party to agree objectively that they were accurate descriptions of the possible future realities. There were four main futures for South Africa. Everybody, after intensive discussion, agreed that the following were logical and plausible:
1. The Ostrich Scenario: If the white power structure just stuck its head in the sand and did not face the world economic and political isolation, there would be major problems. And if it did not deal with internal black unrest except by repression, and did not conduct negotiations with the majority, the result would be massive internal resistance, international condemnation, violence, flight of capital and skills, and economic deterioration. Then things would get really ugly.
2. The Lame Duck Scenario: If negotiations did occur, but the result was a grudging transition to the new, in tiny steps and dragged out indefinitely, the country would be marked by indecision, lack of confidence, and lowest-common-denominator waffling. There would also be uncertainty, and a resultant lack of outside capital infusions to either turn the economy around or solve social problems. Nobody would be truly satisfied.
3. The Icarus Scenario (fly now, crash later): Suppose negotiations occurred, and the transition to the new was rapid and decisive, but the result was a populist government that went on a huge spending spree to try to cure all the problems of generations overnight. As has happened so often in Latin America, deficit spending would cause a brief boom, but ultimately the country would become an economic basket case, and the poor as well as the wealthy would end up worse than before.
4. The Flight of the Flamingos Scenario: Flamingos take off slowly, but fly high and together. In this scenario, negotiations and a quick transition lead to effective, sustainable, clean, inclusive government, generating the economic growth that allows social problems to be addressed. Everyone lives happily ever after.
The beauty of such scenario thinking, whether in South Africa or elsewhere, is that it basically allows people to tell each other stories about how the world might work. It is nice to know they were all smart enough to choose the Flight of the Flamingos Scenario as their collective future. Bravo!
In the early 1990s a group of senior Canadian public sector officials, private sector executives, and researchers began to look at how to develop more effective ways of governing in the context of the emerging Global Information Society. Their context was a sense of crisis in how countries govern themselves in the face of complexity and change. The first phase concentrated on gathering information to identify the social, economic, and technological changes that were leading to the Information Society. Some of the changes included globalization, democratization, the loss of boundaries, the end of the bureaucratic model of organization, and fundamental restructuring.
Meetings were held to discuss reports and case studies, and it was decided that they would construct scenarios of how Canadian governance could be shaped considering the impact of the Information Society over the next decade. They decided that four broad issues would be closely studied: the knowledge-based economy; the social contract in the Information Society; people, culture, and values in the Information Society; and the changing relationship between private citizens and those who govern them. Steven Rosell and Adam Kahane facilitated while the group developed their ideas into four scenarios.
1. The Starship Scenario envisions a booming economy coupled with the development of new social consensus. The difficulties of the early 1990s turn out to be transitional and as institutions learn to adapt to the requirements of the information economy, a new, global economic boom develops in which Canada plays a leading role. Institutions and individuals have reached the point in their learning curve where they can begin to realize the full potential of the new information technologies. Measures are taken to enhance social cohesion, while strengthening the work ethic.
2. The Titanic Scenario envisions a world with low or no economic growth, coupled with growing social fragmentation. The Information Economy does not produce nearly enough high-paying jobs to replace those being lost and there is persistent high structural unemployment and low or no growth. Some countries have been successful in recognizing and adapting to the new realities, but Canada is not among them. Canadians become increasingly inward looking and cling to visions of the past, as the situation deteriorates. Canada falls behind.
3. The HMS Bounty envisions a booming economy combined with continued social fragmentation and polarization. One image is Los Angeles: high tech and dynamic, with many people doing very well, but with society very polarized and very difficult to govern. As in the Starship scenario, the Information Economy ushers in a new global secular economic boom. IT transforms the economy and work, and Canada is well placed to take advantage of this and is a success story. The scenario sees that by 2005 the social and regional disparities and conflict between the haves and have-nots is threatening to derail further economic growth, and tensions are increasing.
4. The Windjammer scenario envisions a new social consensus emerging around a low or no-growth economy, at least as conventionally measured. As in the Titanic scenario, the information economy does not produce enough high-paying jobs to replace those being lost, and there is low or no economic growth. But, unlike Titanic, a series of events triggers growing public awareness and concern, and action is taken in time to change course. The government leads a national process, involving the public, private, and voluntary sectors, to develop and implement a new national strategy to take Canada into the 21st century.
Scenario planning is not a substitute for traditional or classical approaches to change management, however, part of planning should be about studying the future to make sure the company takes the right action now to be successful later. The emphasis for planners has moved from forecasting to foresight -- scenario planning encourages and harnesses foresight. In many ways, scenarios are a management development and learning tool that is used to create a shared vision and better plans. To quote political scientist Aaron Wildavsky:
Planning concerns man's efforts to make the future in his own image. If he loses control of his own destiny, he fears being cast into the abyss. Alone and afraid, man is at the mercy of strange and unpredictable forces, so he takes whatever comfort he can by challenging the fates. He shouts his plans into the storm of life. Even if all he hears is the echo of his own voice, he is no longer alone. To abandon his faith in planning would unleash the terror locked in him.
Systems thinking and organizational mapping are examples of tools that have been used successfully as a complement to scenario planning. Metaphors and scenario logic are consistent with systems thinking, and organizational mapping is a tool that can be used to help organizations that may not be well positioned to implement the results of the scenario process.
No, there is no magic formula, you still need to know the basics of the business world, while understanding that the techniques used for business planning over the past decades are no longer sufficient, and may even be misleading. As Henry Mintzberg explains it:
Why? Because good planning requires a view of the future, and since forecasts based on current trends or estimates of growth based on history will be dangerous to organizations if their environment is changing fast. And as we know, everything is changing fast. A major source of change in the world today is the adoption of information technology. The changes visible in the last few years, as the financial services industry reinvents itself, are expected to change the way we work, play, shop, are governed, bank, and the communities we belong to. In this environment, scenario planning is a must, and is on the rise in the private and public sectors. Always keep in mind that the successful organizations are those which have found ways of looking for early warning signs -- the significant through the noise.
The other thing to consider is that many types of scenario facilitations are very expensive, but thankfully not all are in the league of GBN. There is currently scenario software on the market to aid in the process. Since this researcher believes that scenario planning is very important, and also believes it should not just be for those with unlimited amounts of money like Shell Oil, a look into some of the companies offering alternative scenario simulation packages is the right step to take. For example, Battelle's Basics might be interesting. As far as simulations and scenario software are concerned, the future seems to include avatar technology.
Other pitfalls to keep in mind are twofold: the decision focus identified by midlevel management is often not useful and not supported at the upper level. The pitched battle between these two management levels often causes the most difficulty. And finally, scenario planning is a useful tool, but since it does not show up on the bottom line, it is difficult to convince a CEO or VP that it needs to be done.
Future scenarios are stories aimed at helping people adjust their mental models to allow them to consider unthinkable futures. That is also what a comprehensive knowledge management system will do for you. As Art Kleiner says:
We each design our own future behaviour, and the behaviour of our organizations in ways that we are not fully aware of. That is why it is so important not just to recognize our mental models but to actively try to change them.
To initiate a comprehensive Knowledge Management system, the organization must be one in which learning forms the basis for workflow. The process requires mental models to be managed because they can prevent new and powerful insights and organizational practices from becoming implemented. The process begins with self-reflection, unearthing deeply held belief structures and generalizations, and the ability to understand how they dramatically influence the way we operate. Until there is realization and a focus on openness, real change can never be implemented. Scenario thinking also requires just this kind of change.
Scenario planning is an immensely powerful and variable tool, adaptable to many different situations. But developing useful scenarios is a long process. It requires good analysis that includes reading, thinking, and research. It requires investment time for the research and interviews to make sure the decision issues are relevant. Scenario planning requires a sharp focus on objectives for each session, even if that objective is just to confirm the boss's opinion. Consider what the output should be. Without a clear objective, the chances of failure increase dramatically. Many kinds of outcomes are possible.
Life is not going to be easy in the 21st century for people who insist on black-and-white descriptions of reality. The shape of the truth is not static; it shifts depending on where one stands. Bottomless truth lies in the gray. We assume we must be reactionary, and that we can only react to things once they happen. But as Adam Kahane writes, "we must move away from pure adaptation and reactivity, towards intentionality and generativity." In fact, if we have the courage, we can create our own future. Can you help create the future you want? I think we should give Peter Schwartz the last word:
When I began my career as a futurist I believed a free society required promises and dreams -- not just by experts, but by everyone. How could we, the people of a society, choose wisely if we did not know where we were headed? But now I see uncertainty as the necessary handmaiden of freedom. For freedom to have meaning, our choices must have consequences. If we could always be sure that everything would turn out well, then what we think and do would not matter much. We must be able to get it wrong.
Related Papers
Avatar TechnologyDuncan, Norman E., and Pierre Wack. "Scenarios designed to improve decision making." Planning Review, Jul/Aug 1994, Vol. 22, No. 4, p. 18.
Kleiner, Art. 1996. "The Age of Heretics." New York: Currency Doubleday.
Mason, David H. "Scenario-based planning: Decision model for the learning organization." Planning Review, Mar/Apr 1994, Vol. 22, No. 2, p. 6.
Pine, B Joseph II. "Peter Schwartz offers two scenarios for the future." Planning Review, Sep/Oct 1995, Vol. 23, No. 5, p. 30.
Quinn, Lucia Luce, and David Mason." How digital uses scenarios to rethink the present." Planning Review, Nov/Dec 1994, Vol. 22, No. 6, p. 14.
Ringland, Gill. 1998. "Scenario Planning: Managing for the Future." Chichester: John Wiley & Sons.
Rosell, Steven et al. 1995. "Changing Maps." Carleton University Press.
Schriefer, Audrey. "Getting the most out of scenarios: Advice from the experts." Planning Review, Sep/Oct 1995, Vol. 23, No. 5, p. 33.
Schriefer, Audrey. "Getting the most out of scenarios: Advice from the experts." Planning Review, Nov/Dec 1995, Vol. 23, No. 6, p. 37.
Schwartz, Peter. 1991. "The Art of the Long View: Planning for the Future in an Uncertain World." New York: Currency Doubleday.
Schwartz, Peter." Post-Capitalist." Wired Magazine, July/August 1993, Vol. 1, No. 3.
van der Heijden, Kees. 1996. "Scenarios, the Art of Strategic Conversation." Chichester: John Wiley & Sons.
Wack, Pierre. "Scenarios, uncharted waters ahead." Harvard Business Review, September/October 1985.
Wack, Pierre. "Scenarios, shooting the rapids." Harvard Business Review, November/December 1985.
Whole Earth. "Scenarios: A Heartful Look at Thinking the Unthinkable." Spring 1999.
Wilkinson, Lawrence. "How to Build Scenarios: Planning for Long Fuse, Big Bang Problems in an Era of Uncertainty." Wired (Special Edition, Scenarios: The Future of the Future): 74-81.