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Lawrence Wilkinson’s article 'How to Build Scenarios' [1] outlines the basic components necessary to create an effective scenario strategy within an organization. Scenario planning is a highly sophisticated tool for planning an organization’s future. Put simply, it allows an organization to become more aware of how both the present and the future impact upon it.
Wilkinson describes three main stages to scenario planning:
- Identify the focal issue/decision
- Define the primary ‘driving forces’ at work in the present day
- Set out the critical uncertainties.
1. Identify the Focal Issue/Decision
The most important first step is to decide on a single defining question which will characterize the direction of the scenario planning process. This may be broad (What will be the effects of the global downturn on Western economies?) or highly specific (should we introduce a new product?).
2. Define the ‘Driving Forces’
In order to understand those forces which will shape the future, we must firstly define those that shape the present. Wilkinson suggests these fall into four groups:
- social dynamics
- economic changes
- political issues
- technological advances.
In order to build reliable scenarios it is necessary to consider the broader forces which evolve constantly but which we do not necessarily consider to be a major influence on our everyday lives. Their effect on any long-term decisions is critical.
Wilkinson also points out that some of these forces are predetermined. He gives the example that the number of high school students in California in 2010 can be predicted by the number of elementary school children now. While most forces are far harder to predict, the reliability provided by such predetermined influences is essential when constructing scenarios.
3. Set out the Critical Uncertainties
Unlike the driving forces, uncertainties are impossible to predict. The most relevant uncertainties are what Wilkinson terms ‘critical uncertainties’, namely those uncertainties most likely to impinge upon our focal issue. By taking a broad view, it should be possible to distill the critical uncertainties into two groups, setting them out on orthogonal axes in a matrix such as that set out below:
Source: Wilkinson, L., 2000, 'How to Build Scenarios' at: www.wired.com/wired/scenarios/build.html
This matrix relates to the focal issue, “What will be the general tenor of commercial life on a global scale in the year 2020?” The horizontal axis depicts two contrasting ways people may view themselves, as distinct individuals, ‘I’, or as members of a wider community, ‘We’. The vertical axis demonstrates the extent to which our social fabric will strengthen or fragment. Taken together, these axes allow us to create four contrasting scenarios or ‘futures’:
I Will
‘I Will’ is the combination of a fragmented society lacking the central control provided by the state and individualism. Centralized institutions have given way to a ‘many-to-many’ landscape where the individual acts as both producer and user, coproducing those products and experiences which you consume.
Consumerland
Here individual desires exist within a cohesive centralized structure of government and corporate regulation. The internet dominates commercial life, utilized by large corporations to serve the individual consumer, to ‘mass-customize’ products according to your wishes.
Ecotopia
Here the collective ‘we’ exists within a robust social core. Government, while important, shares influence with widely held and voluntary ecological values and the use of technology to reduce consumption.
New Civics
Here the importance of community is retained, but without the cohesive structure of Ecotopia. Instead, individuals group together in small groups, communities of individuals who recognize that they can achieve more collectively than alone. These groups conflict with attempts by centralized government to retain influence, often with violent consequences. Pride in one’s group and a sense of belonging are contrasted with sectarian violence and bitterness between communities.
Conclusion
It is important to note that these scenarios should not be viewed as more than brief summaries. It is common in major corporations such as Shell/Royal Dutch to produce immensely detailed scenarios covering everything from projected World GDP Growth to new organizational models for business structures. Scenarios similar to those outlined above are used as benchmarks against which to compare possible company strategies – if a strategy is able to stand up against all four scenarios, the chances are it will be robust enough to perform well in actual future scenarios.
Further information can be found at the Shell website: https://www.shell.com/about-us.html
[1] Lawrence Wilkinson, 2000, 'How to Build Scenarios' at: www.wired.com/wired/scenarios/build.html
