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Doing Scenarios

Scenarios are imaginative pictures of potential futures, but the future they picture is just a means to an end. These conversations, at once free-flowing and rigorously constrained, are designed to help a group of people trick themselves to see past their own blind spots. Herman Kahn, one of the founding innovators of the practice, developed scenarios to see past the cultural blind spot that thermonuclear war must never happen. What if it did happen? asked Kahn. What sort of world might the survivors face? One dismayed critic, Gerard Piel of Scientific American, coined the phrase "thinking the unthinkable" to describe Kahn's approach, but Kahn gleefully embraced the phrase. Thinking the unthinkable, he argued, was the only way to keep one's strategic vision from getting stale.

Pierre Wack refined Kahn's methods at Royal Dutch/Shell in the 1970s and early 1980s. He used to talk of future study as an analogue to Zen archery, a way to hone your senses until you can see the world as it really is, not as you would like it to be. Scenario planning forces us—not just corporate people, but activists, artists, nonprofit staffers, and just about anyone—to learn to visualize the possible worlds in which the unimaginable, the unthinkable, the ungodly, and the unpredictable actually come to pass. If we can imagine such worlds we can partially prepare ourselves for whatever future does come to pass.

Confronting the future with rigor tends to leave most people energized and enthusiastic about facing their future—even if the future looks grim. The steps, methods, and "scenario lingo" are easy to learn and use (sometimes deceptively so); they're practically jargon-free, especially by the standards of usual management practice.

The practice is, however, time-consuming. People often want to condense scenario work to a half-day or weekend, but it's becoming clear that such efforts usually don't give people enough time to delve past their preconceptions. At Royal Dutch/Shell, Wack's group took almost a year to develop each set of scenarios. In contemporary business, about five or six full-time days seems necessary, ideally spread over a three-month period to allow time in between for research and reflection.

The practice of constructing stories of the future has no single method and dozens of techniques. The French, comme toujours, follow a very different path. Science fiction writers have been very effective in exploring future utopias and dystopias. Kees van der Heijden has identified several general types: project-specific scenarios (What's the best way to outcompete a rival or clean a polluted river?); crisis scenarios (How can local, independent bookstores survive in the face of Amazon.com?); exploration/consensus-building scenarios (What are the possible futures for Colombia as a nation? How can we build democratic institutions in South Africa? How can American elections become free of financial influence?).

1. The Scenario Question

Scenarios only provoke genuine learning and strategies when they answer genuine concerns. If they are not responding to a specific crisis, figuring out the key question or issues is a crucial step. If the group doesn't care about the question they're trying to answer, the rest of the exercise is a waste of time. In the class I teach, with twenty people in the room, I generally spend at least three or four hours on this step. Sometimes you can "jump-start" this process by interviewing people ahead of time: if they could answer one or two real questions about the future or could reach a decision on one or two issues confronting their organization, what would they ask?

Part of this stage involves picking a year from which the scenarios will look back. How long a time frame do we care about? Scenarios for next year may be so close to current reality that they may not reveal much; scenarios for twenty years out may embody so many "wild card" possibilities that it's difficult to care about them, though some corporations like Shell try scenarios for sixty-year futures.

2. The Proximate Environment

The group usually tries to depict the environment in which the decision will be made. Some-times called key factors, this is the group's internal nitty-gritty. It is not the big picture. It's about the starting line, the micro-picture of the familiar and close, not how participants may think after the scenario process. Participants ask: What in the local environment seems well-defined? How do we define success or failure? How do we make decisions? Is the process structured so that our decision can have an influence? One technique uses giant Post-its on which everyone writes two or three ideas and sticks them on a wall. The Post-it technique can be revealing. Many times participants discover that they see their environment with completely different worldviews.

In some more focused or crisis scenarios, it is also important to reflect on who you are. The crucial question to ask is: What are the organization's distinctive competencies? These might include brand name (Sierra Club or Nike), patents, knowledge of customers or citizens you want to serve, charismatic leadership, or access to power. Without consensus on what you are good at and what gaps exist in your abilities, thinking about the future can drift into group fantasy or cheerleading.

3. Driving Forces

My classes next list as many potential driving forces as we can. We follow the familiar "brainstorming" principle of permitting no critical, deflating comments (e.g., "That's stupid"). We downplay our feelings and assumptions about the forces—how much we like or hate the implications, or how probable we think they might be. Drawing up the preliminary list requires intensive give and take. These are the big picture forces—the "macro," the forces we have to adapt to. We can miss the crucial driving forces because we deny them to ourselves, wishfully think them off the screen, suffer from pessimism, optimism, or ignorance. Sometimes it helps to have a "remarkable person" who is "outside the box" and can suggest driving forces that the organization might not see. The remarkable person, selected by the scenario facilitators, can act as a kind of court jester, popping the bubbles of groupthink.

Usually, after everyone has groaned, applauded, or remained silent over all the suggestions, we cluster them into as few categories as possible. Someone might have said "birth rates," while another suggested "the aging population." We could lump them together as the "demographic driving force." An animated conversation usually occurs over when to lump. This polling/clustering technique can become a dramatic experience of collective learning.

4. Judging Importance and Uncertainty

For each driving force, we ask three questions: Is it predetermined (unchanging)? How uncertain are we about our ability to predict its importance into the future? Is this particular driving force among the most important drivers of the future — will it make a difference that makes a difference?

Predetermined forces will play the role of fates in the final scenarios. They are unchangeable destinies. In short, they must be predictable within the time frame of the scenario. For instance, we know, barring unforeseen calamity, how many twenty-year-olds will exist in any country nineteen years from now. What they will think and want may be unpredictable and uncertain. We might guess, and we even might strongly feel, that some outcomes are probable, but we can't be sure. Most forces are similarly uncertain. We can't predict them, but, as we design scenarios from these uncertainties and predetermined forces, we can become far more aware of why events might move in one direction or another.

Sometimes many bouts of between-session research are needed. After study, a "predetermined" element may emerge as quite flexible or a critical uncertainty may appear unexpectedly firm. In the end, we may have only a handful of elements that everyone accepts as predetermined, but they will be powerful; they set the boundaries for the scenarios.

Finally, a sidebar of "wildcards" should be kept. These are somewhat off-the-wall possibilities that a few participants feel could actually happen. A Green-based religious movement or global climate cooling or the opening of borders to the free movement of labor might all be considered wildcards. They hover about, tantalizing the scenario plots.

5. Composing the Stories

At this point, typically, we have papered the room walls with scribbled notes about potential eventualities, and a wave of anxiety and gloom overtakes us. It looks as if we'll never get anywhere. At this stage, the skills, imagination and openness of the facilitators, participants, and "remarkable person(s)" are tested. It might be time for more research, lunch, or the first attempts to create distinctive stories from the driving forces and critical uncertainties. A major rule: check continually to make sure that none of these stories are redundant with each other—that they truly represent different ways that the future might unfold. Another rule: reduce the number of scenarios to three or four. Five is usually too many.

Critical uncertainties can be displayed along a spectrum (one axis) or a matrix (two axes) or a volume (three axes). This approach, though used by most scenario consultants, has always seemed too formulaic to me. Except in very skilled hands, it can lead to highly conventional futures that don't offer anything.

Peter Schwartz, in The Art of the Long View, suggests a different approach. Look for archetypal plots and fit the driving forces to them. Scenarios might be "Winners and Losers," "Victims Become Heroes," or "Persecutors Prevail," or maybe Arnold Toynbee's idea of "Challenge and Response," in which civilizations (and the organizations within them) grow stronger by learning to deal with the crises confronting them. I like this approach in principle, but I personally find it difficult to facilitate. Some people take the idea of "winners and losers" too literally; they get straitjacketed by the archetypes, instead of using them as springboards for fresh thinking.

I favor a third approach. I give everyone three votes for the "critical uncertainties" that seem farthest "upstream" to them (the three that influence the most other factors). When we tally those votes, we end up with a short list of highly influential factors. Then we imagine them pushed to the furthest plausible extreme. The

difficulty with this approach is that majority votes do not always capture the most imaginative and relevant futures.

This crucial moment in the scenario process is successful when the stories are truly vivid and different, they can be told easily, and they capture the dynamics of the futurist worlds. What will you call each one? We want a pungent, catchy name that is both soundbite-snappy and soulfully deep, to provide a resonant handle that can enter into our common vocabulary. A scenario of great vision and belief in technology might be humorously entitled "Titanic," as opposed to a great vision but low-tech scenario called "Kon Tiki."

6. Sub-groups and Reality Checks

Except for exploratory scenarios, the ultimate step in the process will be one or more strategic decisions. Therefore, it's important to do a reality check, to insure that these stories aren't just true-romance novels or science fiction. Reality checks are often done by smaller groups. They always ask: Is the internal plot logical? Can we really get from point A in the plot to point B, C, D, or E? What plausible chain of events, actions, and counterreactions could lead to this future? What kind of economy is consistent with this scenario? What political reactions would have to take place to make it plausible? Is there a techno-fix on the horizon? Kees van der Heijden calls the step "wind-tunneling," referring to trying out a new airplane wing in a wind tunnel before letting it take off in the sky.

Reality checks for scenarios require a multitude of testing techniques: the Delphi technique; modeling; simulations that result in "influence diagrams"; decision-trees or branches that say, "If this does or doesn't happen, then what?"; cross-impact analysis, trend analysis with special attention to potential breaks in the trend; and historic (a.k.a. precursor) analysis, which looks to similar moments and trends in history (see sidebars). Some teams rehearse the scenarios as if they were pieces of improvisational theater, each participant taking the part of a different key actor or driving force. A rule: Track down the most surprising elements. Don't dismiss them as too improbable. Thinking the unthinkable may be the most rational thought.

You may find that your scenarios go through several iterations, as you get closer to the "heart of the lesson" in each. At the core of each one is a message your group is trying to tell itself, an insight that you are trying to see collectively, valuable precisely because it is so hard to see. You are never done, but you will have created a language to voice these hard-to-come-by insights.

7. Implications

Regrettably, many scenario exercises stop here. But the real work that yields real benefits is just beginning.

We must now return to the original issue, question, or decision/dilemma, and their key factors. What would our decision look like in those worlds? How do the scenarios affect the people we care about? How are we most vulnerable in each scenario? Will our present decision-making apparatus work in all scenarios? How could we adapt to each scenario or be prepared if we see one of them coming? How fast could the organization change to meet the scenario's challenge? What do they suggest about our current strategies—are we setting ourselves up for a rude awakening? If each world came to pass, what would we want to have been thinking about ahead of time?

8. Strategic Visions and Oracles

We have set the scenarios up as competing oracles. It is important to know which oracle is closest to the actual course of history as it actually unfolds. For corporations, this is the stage to select indicators that will advise the company that one of the three or four scenarios seems to be the path chosen by the world itself. It's time for to develop an early-warning apparatus to allow the company to switch faster (the competitive advantage), join with another firm (symbiotic advantage), or take other action to survive longer and better. Those concerned with a sustainable world have yet to find the best indicators, but look for weather vanes in the shapes of endangered species, numbers of educated children, or level of equitable nutrition.

Finally, I ask a question that is not necessarily part of scenarios that try to adapt to changing environments or focus on profit and survival. I ask: "What kind of world do I want to help create?" Some of the scenarios might represent warnings—futures that can be avoided if you take the appropriate steps now. Others might represent some kind of high road, an "unattainable" ideal that you now realize is indeed attainable, because the scenario has shown you how to look for the leverage you need.