Scenarios: Looking for Alternatives
Scenarios assist in identifying and exploring alternative futures. During scenario building, information about different versions of the future, the present and its change drivers are produced, analysed and built into foresight insights.
FUTURE PROOF – BLOG BY FUTURES PLATFORM
When thinking about studying the future, it is easy to get stuck into pure forecasting activities which only extrapolate the current trends. Scenarios help to expand the time horizon, aid in looking beyond the usual extrapolations and improve thinking about the potential unexpected developments. Being descriptions of possible, probable or preferable futures, they help organisations prepare for various contingencies and plan accordingly.
This is the third part of our Futures Intelligence blog series, which discusses the creation and use of futures intelligence and how it can benefit your organisation. Remember to read the first article and the second article of the series.
FUTURES – NOT A SINGLE FUTURE
The future is not predictable because it is not predetermined. We can influence it and build a preferable future through our choices; but to be able to understand where the choices we make today might lead us years later, we need to map the changes in our environment to form an understanding of their potential, and formulate our plans based on this understanding.
By changing the perception of a single, fixed future towards multiple futures, the organisational understanding of a singular path of development is broken into several future options. Scenario building represents one method for conducting foresight activities that help in understanding and describing our future as a plural.
As the picture below illustrates, Futures Intelligence can be divided into four groups based on the type of Futures Knowledge that is used. Scenario work makes alternative futures concrete and maps out potential options. It uses objective historical knowledge to form well-founded but still imaginative descriptions of what could come to pass.
Looking for alternatives – The second type of Futures Intelligence © Futures Platform 2020
SCENARIOS – WHAT?
Scenarios were created to overcome the limitations of pure forecasting. Whereas forecasting can extrapolate the existing trends, it fails to take into account the various changes that could take place if trends change directions, collide with other trends, or if the developments become disrupted by improbable events.
The term scenario comes from the world of cinema. Scenario work has retained its old context’s requirement for a vivid imagination and the use of intuitive logic. Scenarios can be described as combinations of robust facts with imaginative projections of their future developments and interlinkages.
Future Scenario Planning as an Essential Tool of Management | Arianne Caoili | TEDxMoskovyanSt – Source: TEDx Talks YouTube
The need for scenario work arises from the necessity to prepare for potential changes in the environment which cannot be deduced from direct trend projections, as they are usually shaped by several (surprising) uncertainties. Scenarios can take into account things that are hard to put into numbers, or whose probabilities are low. In organisations, scenario work enables the creation of mutual images of potential developments, thus helping to form a shared understanding of relevant issues, and share future-related thoughts, threats and opportunities between individuals.
STRATEGY WORK – BENEFITS?
When moving the focus from predicting one possible future to mapping various alternative futures, we end up with a complex situation where you need to manage different ever-moving targets instead of one. The logical question arises: how to conduct strategy work if you must manage multiple options instead of a single image of the future?
In this case, mapping the images of probable, plausible and possible futures could be the minimum recommendation. These images are based on information about phenomena that are changing both the immediate operational environment of the organisation as well as more distant issues that could affect its future.
You can categorise and map phenomena in your operational environment, for example, based on their timeframes: immediate future (1-3 years), medium-term (4-6 years), and long-term (7-9 years and beyond).
Start a free trial of Futures Platform to explore 900+ future-focused phenomena categorised into timeframes and get a head-start in your scenario work. Are you already a user? Log in here.
Figure: The exponential nature of global change © Futures Platform 2020
SCENARIOS – HOW TO?
Follow these steps below to start creating scenarios yourself. We here at Futures Platform are also happy to help you conduct any scenario exercise, workshop or planning activity. Book a free consultation with our foresight expert.
1. DEFINING THE TOPICS. First, define the main themes and topics you want to reflect in your scenario work and set them as your radar sectors. You can also use existing frameworks, such as PESTLE. At this point, also determine the year you will be describing in your scenarios, e.g., 2030.
2. HORIZON SCANNING. Scan for strengthening trends that can be verified from trustworthy sources and are relevant to your organisation. Also, search for wild cards, weakening trends, and weak signals to ensure diversity in your environmental description. Add these on your radar. Start a free 15-day trial of Futures Platform to see futurists’ database of trends, wild cards and weak signals.
3. VOTING AND RATING. To form a comprehensive picture of your findings during the horizon scanning phase, involve your organisation’s members and ask a selected team to vote for the important trends and signals. Rate the content according to specified criteria (for example, the level of uncertainty and threat) to find out the most uncertain and threatening trends and signals.
4. BUILDING THE SCENARIOS. Define two axes that describe the core assumption that forms the very foundation of your business logic. Use them to create a simple 2×2 matrix.
Example: in the case of an oil firm, the oil price (as an axis: high price vs low price) and the consumption of oil (as another axis: consumption high vs low) could be essential since they relate to the demand and profitability of the business. Select the top 4-6 most uncertain trends (part of results in step 3) and describe their different development options in each of the four boxes that would be formed in the matrix between the two axes.
DON’T SETTLE WITH PREDICTIONS, CREATE ORGANISATIONAL PREPAREDNESS
Remember that, in scenario building, you don’t need to predefine or forecast future events. Even if none of the scenarios you have discussed is going to happen just as described, your strategy work now involves an inbuilt activity that creates flexibility, agility and makes you see the opportunities in future changes. Once the scenario work is in place, you only need to decide how to utilise and test the ideas and opportunities (explored during scenario work) in practice.
After conducting scenario building activities, your organisation will be more alert and prepared for future changes. The work itself creates a mutual understanding of what futures could look like and what potential disruptors you may be facing. If you want to discuss ways of using foresight methods to benefit your organisation, ask our foresight experts to be in contact with you, and we will help you get started.
The blog series on Futures Intelligence continues soon! Remember also to read the previous articles to not miss out on relevant information. The series has five parts:
1. Futures Intelligence: Types of Futures Knowledge
2. Megatrends, Trends and Change Drivers: Understanding the Larger Picture and Path-Dependencies
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To stay ahead, organisations must widen their lens, exploring not just their own industry but what’s happening on the edges.