Scenarios

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What are scenarios?

Scenarios are stories about the future.

Scenarios are images of the future, projected from multiple perspectives on the present and the past. These images intertwine the unpredictable with elements of relative certainty in coherent stories.

Scenarios are a set of organised ways for us to dream effectively about our own future. (P. Schwartz, 11, p. 4)

Scenarios help to perceive different futures in the present. They illuminate the future, but they do not predict it. This is very important to keep in mind.

The best scenarios arent necessarily those that come true; they are the ones that subvert expectations, providing deep insights into the changes happening all around us. The better scenarios are, the more they penetrate into the deepest possible understanding of the present. (P. Mc Corduck and N. Ramsey, 16, p.18)

Scenarios are a tool for ordering ones perceptions about alternative future environments, in which decisions might be played out. (P. Schwartz, 11)

History

The use of scenarios as a tool for strategic decision making has its roots in the military. The U.S. Air Force used scenarios in war games. During and after WOII, scenario thinking was taken up by the RAND corporation a research institute in the U.S.A. http//www.rand.org. Herman Kahn further developed the scenario method at the Hudson Institute http//www.hudson.org, which he established after his resignation from RAND. In his famous book The Year 000 (167), Kahn reworked scenarios to a tool for business strategy. From the 160s onward, scenarios found their way into the corporate world.

Shell was one of the first corporations, which started and continued to use scenarios. Theres a famous story about Pierre Wack and Ted Newland, who introduced and used scenarios to warn Shells executives for a possible dramatic rise in oil prices. Therewith, successfully preparing Shell for the oil-crisis of 17. Both were members of the Group Planning division of Shell out of which originated Global Business Network (GBN) http//www.gbn.org. GBN is a network of - so called- remarkable people and corporate members. GBN functions as an international think-tank and consultancy firm. One of its leading figures is Peter Schwartz who wrote one of the most famous books about scenario thinking and its history The Art of the Longview (11)

Nowadays the scenario method is used in a wide variety of fields and professions. Not just for business strategy, but also in conflict mediation projects - among others in South Africa http//www.gbn.org/ and Colombia http//www.gbn.org/ for policy preparing processes as in this Dutch example http//www.minvenw.nl/, for the analysis of the future of countries http//www.gbn.org/, for the analysis of the future of social issues, such as education, and for the film script of Deep Impact http//www.movie-page.com/18/deep_impact.htm.

METHOD

HOW TO

The Scenario Method

The scenario method is a tool for coherent thinking about the future. Scenarios are developed in order to provide deeper understanding of present options for actions - and their consequences - in the light of possible future environments.

Nobody can predict, therefore one should not try. The only relevant discussions about the future are those where we succeed from shifting from the question whether some-thing will happen to the question What do we do if it happens? (A. de Geus)

Note Scenarios are not predictions of the future.

The scenario method is based on the assumption that the future is unpredictable.

In order to prepare for future possibilities it is necessary to consider uncertainties and make them part of your reasoning. This is in contrast with forecasts, which aim at finding the right future. Forecasts neglect uncertainty and thus often fail when they are needed most, namely when sudden unforeseen changes occur.

The world around us in infinitely complex. The scenario method aims at structurally incorporating uncertainty in our thinking, through the reduction of complexity to manageable proportions without ignoring alternatives by oversimplifying it. Using the form of stories to develop a number of consistent pathways into the future does this.

Scenarios are made in order to increase understanding of current options in the light of possible futures. (P.M. Schütte)

How do you do it?

Why and What?

Before you start, you will have to ask yourself a number of questions. The most important of which is

·Why do I/we want to make scenarios?

·What do I/we hope to achieve with it? [Finding a balance between content & process]

·What are the objectives

·Who is the self in relation to which we are composing scenarios?

Once you've answered these questions, you will have to think about the design of your scenario project. Who to involve, etc. Once you have done this, too. It's time to get going.

Rules of Thumb

First of all, there are a three 'rules of thumb' to which scenarios must conform they must be relevant, novel and substantial.

Scope

Scenarios focus mainly on the 'contextual' environment , a number of categories have been distinguished to which cover most of what is going on in the world, as a guidance for your research. Furthermore, scenarios deal with possible futures, and not with probable or desirable ones.

Horizons

Scenario horizon

Before you start you should determine a horizon year, in which your scenarios take place. You usually try to put the horizon year as far away as possible. It should not be so far away, that it is virtually impossible to say anything sensible about what could happen. In other words, we are not writing science fiction. On the other hand, in order to stretch the mind and include some 'out of the box' thinking, one should get out of the 'comfort zone' (period of time, about which we feel confident as to what will most probably happen). Therefore it is necessary to go as far into the future as you can.

Strategy horizon

If you are going to develop strategic options by using scenario thinking, you should also determine a strategic horizon year. This is usually not so far ahead. Strategy focuses on concrete actions you can take in the near future. You will have to evaluate and revise your strategy frequently to check whether you are still on the right track.

Research research_proc.htm

Every scenario project starts by doing research. Naturally, the amount and scope of which will depend on your time and resources.

Scenario building blocks

The future consists of predetermined elements and uncertainties. Also called driving forces.

Scenario Framework

Once you have gathered al your data and transformed them into clusters, you create a Scenario structuring space. In this space you place all the clusters according to impact and predictable outcome. Once you have done this you consider the driving forces in the outmost corner bottom right and infer two main driving forces, which are independent of each other, to form the axes of the scenario matrix.

It is very important that the driving forces on the axes are as independent as possible of each other. The axes form the framework in which your scenarios will take place. They should leave as much space as possible to contain developments without becoming hollow phrases. If they are dependent on each other you will actually have only one axe of the matrix covered, since a development on the one will have a consequence for developments on the other.

Following this you will have to determine the extreme outcomes of each axe.

And finally you should come up with a name for each of the four scenarios. A good name for a scenario is very important. It should be a concept or a short sentence, which is easy to remember and captures the content of the scenario. (Convergence)

Creating the story

Summarising Scheme for scenario construction

New insights

Revised scenarios

GO TO THE FORUM

Finding a balance between Content & Process

Scenarios can help with

·Surmounting blind spots

·Understanding whats happening around you

·Articulating important questions

·Increasing awareness of insufficient connection

·Clarifying strategic options

·Articulating strategy

·Solving problems

·Directing mental models towards action

Some Rules of Thumb for Effective Scenarios

Relevant

·Illuminate current issues

·Respond to certain circumstances

·Link to current mental models (link naar mental models pagina)

Novel

·Contain new ideas or perceived old ideas

·Challenge existing mental models and strategies

·Provide fresh perspectives

Substantial

·Improve understanding of the present

·Be well researched

·Be internally consisten

Scope I

The scenario method distinguishes three levels of analysis the self, the transactional environment and the factual environment.

Click here for an example of a Corporation as the self.

The first level of analysis is the self. This is the starting point from which you look into future. The basic question here is How will possible future events influence the self? The self can be you as a person, an organisation, a village, a family, or even a nation state. The self is the level in which you have most direct influence in comparison to the other levels.

The second level; the transactional environment (link naar transactional environment) is the environment directly surrounding and interacting with the self. In case the self is you as a person, then your family and friends would be part of the transactional environment. When the self is a village, then the region and nation state, of which that village is part, will be placed in the transactional environment. In the case of a company as the self, the transactional environment will be formed by all the stakeholders of that company, such as shareholders, clients, suppliers and so on. At this level elements can still influence each other, but less so and often more indirectly than on the level of the self. This is the level of actors.

The third level is the contextual environment. This level contains the rest of the world which influences the self, but which the self cannot influence very easily or at all (in case of the weather for instance). At this level the world presents itself as facts to the self, since it can do little to change it. It is the context in which we live. This context might include technological developments, such as the spread of Internet. Furthermore, this level contains larger and often slowly changing structures in society, such as ecological changes, the development of nation states or the capitalist system on which most of the worlds economies are based. This is the level of factors.

Note Scenarios are stories about the third level. They explore the world around us as it presents itself to us and influences our scope of action. By using scenarios to make sense of this world you try to look from the outside to the inside. In other words, the movement of thought goes from a broad view of the context to a more focused view of the self.

Scope II

Another way of categorising the scope we deal with using scenarios is

PESTE

Which stands for the

·Political environment

·Economical environment

·Social environment

·Technological environment

·Ecological environment

By exploring important developments in all these categories you will be able to cover a large part of what is going on in the world. Of course these categories are not so neatly divided as they seem to be in this model. Most developments can be placed in two or more categories. Most importantly, these categories are interconnected and interactive. It is this dynamic relationship, which offers useful information. The scenario method tries to capture the complex dynamics of these interactions in the scenario stories.

Scope III

Yet another way of categorising the scope of scenarios concerns

POSSIBLE, PROBABLE & DESIREABLE Futures

Scenarios deal with POSSIBLE futures. If you want to find out about the PROBABILITY of certain future developments you will have to use other methods of analysis. The reason scenarios deal with POSSIBLE futures instead of PROBABLE ones is because the scenario method aims at thinking structurally about uncertainties. In order to be able to do so, it is important to take into account as many possibilities as you can. Therewith developing a feel for the complexity of the world around you. By looking for PROBABILITIES youll have to give priority to a number of possibilities, therewith reducing the number of uncertainties. Basically, using the scenario method is diametrically opposed to searching for PROBABLE futures, which you do using forecasting methods.

Note Because, the human mind can handle only a number of possibilities at the same time, the scenario method prescribes the creation of three or mostly four scenarios. The stories should structurally differ from each other in terms of content. This is the reason why it is not advisable to create two scenarios, because they will tend to become opposites of the same spectrum. For example, in one scenario all will go well, and in the other all will go wrong. You end up with an Utopia and a Worse case scenario. Even when writing three scenarios one should be careful to avoid Utopia, Worst case & The Avarage between them.

The Research process

Focus

The research process, with which each scenario study starts, aims at an analysis of the present and the past. This analysis focuses on

·Speed of change

·Cause and effect and other relations

·Driving forces

·What's already in the pipeline?

·What can still be influenced, or what is uncertain?

Mental Models

Mental models refer to our perceptions of the world. Our 'image of reality'. Scenario's aim to stretch these mental models. In order to do so, a self-reflecting attitude is very important throughout the scenario process.

Brainstorming and Clustering ideas

In the scenario research process you will have to look for driving forces forces which propel change in the world. In order to find these driving forces it is useful to start with a brainstorm. You don't want to overlook things thus you try to get as many ideas on the table as possible (divergence). Because too many loose ideas are unworkable the next step will be to group ideas in clusters by combining them into a smaller number of broader concepts, which can be related to each other (convergence). While forming and studying these clusters, you should be able to detect the driving forces of the system you are dealing with.

Interviews

A good way of gathering information and ideas is interviewing people. Try to interview people from diverse backgrounds, whom are related to the area of the issue concerned. (divergence)

After you have been through the whole process of creating scenarios, it is usually a good idea to invite some interesting people over to get their opinion on the subject. You can digest their reaction into the scenarios to enrich them.

Scenario Building Blocks

Driving Forces. Predetermined Elements & Critical Uncertainties

In the research process you will have to look for driving forces forces which propel change in the world. In order to find these driving forces it is useful to cluster ideas and combine them into a smaller number of broader concepts, which can be related to each other. While forming and studying these clusters, you should be able to detect the driving forces of the system you are dealing with.

Kees van der Heijden defines a driving force as 'a variable which has a relatively high level of explanatory power in relation to the data displayed in the cluster.' Driving forces can be placed in a continuum from predetermined elements to critical uncertainties. They are usually outside our direct personal control. A number of examples of driving forces are political or economical trends, technological developments or large-scale environmental degradation. (scope I and scope II) It is very important to recognise and understand the driving forces and the impact they have on the question you are dealing with.

Both predetermined elements and critical uncertainties are closely related. Initial uncertainty is not the same as indeterminacy; understanding of underlying structures can contain uncertainty. Furthermore, by questioning assumptions about perceived predetermined elements they might turn out not to be as predetermined as they seemed and the other way around. This process of questioning might lead you to change your 'mental map' of reality. Or at least, your will be able to consider your actions in advance for, when something you never thought would happen, does occur.

Driving forces are the building blocks of scenarios. They help to structure the exploration of the future.

Scenario Building Process

Creating the story

A SCENARIO IS

AN ARCHETYPE OF THE PAST

+

AN INTERPRETATION OF THE PRESENT

+

AN INTERNALLY CONSISTENT STORY DESCRIBING A ROAD FROM THE PRESENT TO A FUTURE.

In order to write a scenario, as described above, you need the following elements

·Driving forces or 'scenario building blocks' Behaviour over time from key variables

·An end-situation This is a description of what the future will look like in the horizon year. It is the end of the story.

·A key event This is an event or happening, which gives impetus to the story. The key event gives a major impulse to the changes, which are about to take place in the scenario. Key events mark the beginning of a process or a change of direction; therefore, it is useful to start the scenario with a key event.

·The plot or storyline(s) This is the internally consistent development from the present to the future.

Directing mental models towards action

What is

Scenario Planning?

Scenarios are specially constructed stories about the future. Each scenario represents a distinct, plausible world. The purpose of scenario planning is not to predict the future; but rather, to show how different forces can manipulate the future in different directions. It is very important to realize this, for this procedure helps to identify these forces if and when they happen. The utility of scenario planning lies in its ability to anticipate the future. When this is accomplished, the ability to better respond to future events is increased.

How to write scenarios...

First, we needed identify the focal issue or decision. Of course, we could simply tell stories of what we think may happen in the future, but our task was to narrow the scenarios down to a specific issue. Only then could we build, expand, and learn from our scenarios, enabling us to make better decisions. We found that sometimes the questions can be quite broad (e.g. What will be the future of technology in banking?) or quite specific (e.g. How will technology change and reshape the physical structure of present-day financial institutions?).

We then had to identify the primary driving forces of today to predict the events of tomorrow. These forces are detailed in the sidebar to the left. Scenarios are not necessarily good or bad; they are, in fact, a potpourri of circumstances and events.

It [scenario planning] can prepare us in the same way that it prepares corporate executives it helps us understand the uncertainties that lie before us, and what they might mean. It helps us rehearse our responses to those possible futures. And it helps us spot them as they begin to unfold. (Wilkinson, Scenarios Special Wired Edition, January 16 )

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