Scenario Planning

So far we have been trying to identify some trends and then develop the stories around those trends. We have also covered some tools to help you develop the stories that you will be telling about the possible futures you’ve identified.

But scenarios can also play an important role in telling us what our values are, since the scenarios you develop will be based on (i) what is important to either the organisation or yourself and (ii) help identify what you are striving for.

But enough of the philosophical stuff. Let’s get onto how to do scenario planning.

1. Scenarios for the Future

One way to put all of the activities we’ve been discussing together is by using scenario planning. So what exactly is scenario planning? As I’ve mentioned in a couple of previous blog postings, the idea of Future Studies isn’t to try predict a single future. Again, it’s about identifying the possible, probable and preferable futures. Scenario planning is about attaching a vision of what those possible, probable and preferable futures could look like and what each of these futures could mean for the organisation.

One of the best examples, for me, of a scenario exercise was the work done by the mining company Anglo-American in the 1980s about the possible futures of South Africa, given the political upheaval at the time. The scenario planners identified three possible futures: the middle road, the high road and the low road. Each of these scenarios painted a story about a possible future for South Africa. The exercise really resonated with South Africans at the time and indeed, when you speak to South Africans of a certain generation, most people have heard of this scenario exercise.

What made this exercise work and stick in people’s minds is that the scenarios and the process of developing the scenarios had the following characteristics, they were: relevant, coherent, plausible and transparent.

2. Scenarios for the Present

But at the same time, using scenario planning and Future Studies is also about trying to understand the present and start working towards preferable future you’ve identified, bearing in mind the possible and probable futures. At the end of the day though, reality, as the acid test, should guide futures thinking.

3. Product Label Ahead!

But there is an important caution that I need to mention upfront about scenario planning: often scenario planning is viewed by organisations as an end in itself. The approach I’ve seen often before is when companies think that just because they’ve done the scenarios, they’re now prepared for the future.

But scenarios only become relevant to an organisation once they have been incorporated into real action.

I used to work for an organisation that was pretty impressive insofar as its forward thinking was concerned. However, it was only once I had reached a specific level of management that I found out that the organisation had conducted a scenario exercise and those scenarios were used to guide the strategic management of the firm. In fact, the organisation had even developed, and publically announced, its vision statement based on the scenario exercise. That’s all well and good, but since no one outside the upper levels of management knew about the scenario exercise, no one else knew what the strategic thinking of the firm was, other than the banal vision statement.

I personally think it would have been better for the organisation if those scenarios had been packaged up and communicated out to the rest of the organisation so people could see what the thinking behind the vision statement was. Otherwise the much vaunted vision statement would remain where it always was – on the wall.

4. Putting Together the Scenarios

So how should you go about putting together your scenarios?

The first step is to imagine a possible future event, i.e. one of the trends you’ve identified and have been working on, and develop plausible scenarios to show how this event could play out. This can be done using backcasting, as well as the Futures Wheel, that I discussed last week. The aim of this baseline scenario is to create your preferable future.

In the next step you will want to create three alternative scenarios:

  1. The first scenario assumes that current trends will continue pretty much “as is” (this is the probable future);
  2. The second scenario is based on the assumption that things will go better in the future than your baseline scenario (this is the possible future); and
  3. The third scenario assumes that things get worse in the future (a “worst case” scenario, if you will).

In addition to these scenarios, it is possible to develop “disaster” and “miracle” scenarios. But remember these scenarios need to be relevant, coherent, plausible and transparent.

Having developed four possible futures, you now need to consider why each scenario may / may not happen and identify key factors why these scenarios may / may not happen. These key factors can also be used to test and assess the likelihood of each scenario occurring based on how the current environment is trending.

It is often advisable to limit each of the scenarios to 4 – 6 key factors. The reason why you want to try limit the number of key factors is that anything beyond these numbers could result in a multiplicity of possibilities that are impossible to manage.

5. Timing, They Say, is Everything …

Bear in mind that scenario planning, like most futures work, takes time. Undertaking a scenario approach can be time consuming and can take 12 – 18 months to complete, if it’s done properly.

At the same time it’s important to bear in mind the structure of the team that will be doing the exercise. There should be several persons involved in the process. This helps to establish a team context and make the process viable.

You now have your four scenarios in place that will be guiding the organisation into the future. But this is not the end of the road for the scenario process. You still need to look at how you communicate these scenarios out and get people to buy into them.

So this is the barebones stuff of scenario planning. In the coming weeks, I will be exploring the scenario process (from start to finish) in more detail.

Thought from the Lifeguard’s Hut

Be realistic. Plan for a miracle.

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