Scenarios and Scenario Building: An
Introduction
A feature of many, but not all, Trust conferences is
Scenario Building. Here is a brief explanation of what is
involved.
What are
Scenarios and Why are they Useful?
How Are Scenarios Generated?
How Will Our Scenarios Be Built?
What are
Scenarios and Why are they Useful?
Scenarios are a way of thinking about the future.
They were developed within the corporate world by
business strategists concerned with the weaknesses of
existing approaches to planning. One of the dangers in
traditional planning is that it usually relies on a
forecast of future conditions based partly on the past
and partly on expected changes which should impact on the
future. The problem arises that most forecasts are wrong
and therefore strategies based on them are likely to be
at least partly flawed. Scenario planning takes an
alternative approach. Instead of trying to determine the most
likely future (forecasting), it looks at a range of
several possible futures (usually three or four
for practical reasons, although conceptually there are
limitless possible futures). We already do this in our
personal lives: when taking out a mortgage to buy a house,
individuals usually consider a range of issues - such as
what would happen if interest rates moved up or down, if
they lost employment, or if they became sick - rather
than simply deciding one most likely possibility and
ignoring all the others.
In considering a good scenario, it is best to begin with what they are not.
• They are not predictions or forecasts of the
most likely outcome (indeed, as they usually come in sets,
even if one scenario turns out exactly correct, the
others are therefore probably way off).
• They do not weigh probabilities but consider
possibilities.
• Scenarios are not a list of things we would like
to happen, or think should happen.
• Finally, scenarios are not descriptions of the
best or worst case coming true. Most planners have
considered these cases: scenarios should get people
thinking about things not previously considered, which
can strike from out of left field.
By contrast, a good scenario exercise will produce a series of stories about the future which:
• Are internally consistent and plausible
• Cover a broad range of possible outcomes
• Challenge conventional wisdom and take thinking
off in new directions
• Are memorable
• Are relevant to their intended audience f(planners,
Trust Fellows, etc)
The benefit of this approach to business planners is that it lets them prepare strategies for various contingencies, or better still adopt a more robust strategy which can meet a number of possible changes in the world. Among the most famous successes of scenarios are the strategies which Shell had pre-prepared for the collapse of Soviet power and a scenario building session attended by leaders of the apartheid-era National Party in South Africa which found that every strategy led ultimately to disaster except negotiation with the black majority. The initial overtures to the ANC began soon afterward.
The benefit for Trust Fellows is slightly different. The aim of our scenario exercise is to let them take their background knowledge and that acquired during the conference, to use it to think about the future in a variety of new ways, and perhaps to tease out thoughts and connections between ideas not fully explored before. In the process, some will become familiar with an increasingly common tool in organisational planning.
How Are
Scenarios Generated?
The creation of scenarios is typically an on-going
process in planning departments, and some of the more
complex ones take several years of consultation and
investigation. Although this sort of exercise can be a
messy one with steps frequently repeated and ideas
refined, conceptually most scenario building can be
divided into several parts.
1. First, an area for investigation (the effect of globalization, the future of the nation state, mortgage rates in Illinois, or just about anything in between) and a time frame are chosen.
2. Next the group involved gathers information on current trends and possible implications, looking both at conventional and less mainstream sources (the latter in order to try to get thinking away from already well-travelled paths).
3. Then participants identify what are called the "key drivers" - those elements which have an effect on how the future will unfold in a particular area. If, for example, someone wanted to look at how environmental issues might be dealt with in the next 20 years, some key drivers could be: the changing nature of industry and pace of industrialisation; the relative power of manufacturers versus state and international regulatory bodies; popular concern for the environment; population growth; the development of new technologies etc...
4. Of the key drivers, a small number, usually two, are selected around which to build a series of scenarios. The best way to do this is to rank the drivers in terms of uncertainty and importance. Drivers which are unimportant to the overall process involved obviously make for dull scenarios. Drivers which are important, but which are relatively certain (population figures are often cited as an example) are equally dull, as there is a relatively small range of possible outcomes. Drivers which are important but uncertain are those worth thinking about, as one would expect intuitively. Another consideration which affects the selection of drivers is which areas the organization doing the scenario finds particularly worrying or about which it is particularly uncertain.
5. In large-scale scenarios, once the key drivers have been selected more research is done so that the group involved understands the nuances of related issues as thoroughly as possible. Then comes the final stage: scenario generation. The best way to describe this is to use an example. Say for the environmental scenario described above the two key drivers selected were the relative power of corporations versus regulators and popular concern about environmental issues (obviously other drivers could have been chosen, which shows that very many useful scenarios are possible). One could then make the drivers axes on a grid and map a scenario in each of the resulting four quadrants.
With two key drivers to consider, it would then be
possible to describe four different futures based on
different sets of basic assumptions. The scenarios are
generated by thinking about how those assumptions might
play out over time and be affected by other changes too.
In the example, Scenario 1 might foresee a world in which
pollution increased, whereas Scenario 2 would probably
see conflict between corporations and NGOs at a number of
levels, which could have an influence on politics and
society in general. Not necessarily all of these
scenarios will be fully explored, just those most
interesting to the group doing the work.
How Will Our
Scenarios Be Built?
Scenario building at
Trust conferences, although taking place over a
relatively short period, will contain all of the elements
described above, if somewhat modified (the paragraph
numbers below correspond to those in the previous section).
1. For the Trust, the focus of the scenarios depends on the conference topic. As to time, we will aim to consider change up to the year 2025, which should be enough time to consider interesting alternatives without becoming too overwhelmed by excessive possibilities.
2. Rather than any formal research, the conference itself, the speakers, and the discussion, will act as the seedbed of ideas.
3. On the start of the simulation, we will devise a list of key drivers through distilling participants' and speakers' thoughts and through a process of brainstorming about the future and using the results to tease out trends.
4. After the group as a whole makes a list of key drivers, it will be up to people to choose the ones which they want to investigate more fully. There will be several different sets of drivers looked at by various small groups (which will be based on the drivers people are interested in rather than some form of pre-selection).
5. Once each small group has its drivers, it can generate appropriate scenarios.