Scenarios in Practice: A consulting futurist

offers insights on how

Futuring in the a key foresight tool,

the Impact/Probability
Pharmaceutical Matrix, enabled
decision makers in the
Industry pharmaceutical industry
to see how certain
trends could change
By Eric Garland how they do business.

PHOTOS.COM

©2005 World Future Society • 7910 Woodmont Avenue, Suite 450, Bethesda, MD 20814, U.S.A. • All rights reserved.

30 THE FUTURIST January-February 2006 www.wfs.org

F
uture scenarios are useful tools
to stimulate strategic thinking
because they produce detailed
stories about what the future could
look like. When a decision maker
understands where we might be
heading, he or she can decide where
to lead the organization.
Scenario building is like journal-
ism, except in reverse. Instead of col-
lecting rigorous data about the past
to write a story, in the scenario we
make projections based on trend
data that indicate the future. Based
on rigorous trend data, futurists can
draw pictures of the kinds of world
that the trends could lead to.
Trends alone are not enough for
the decision maker. They
are the abstract forces that
will act on us and our com-
petitors. They show a
sliver of the future, but
“The tools of the futurist
they are not complete
enough to deliver a picture
help to expose our assump-
of the market in which we
will be competing.
tions and our blind spots.
Take these disparate
trends, for example: They serve to show us . . .
• The cost of health care
is increasing. some of the things of which
• The baby boomers will
be the largest group of
people over the age of 65 in
American history.
• The Indian middle
class is growing in number.
• Businesses outsourcing work
overseas is increasing as a strategy to
keep costs low.
• Diagnostics equipment is falling
in price and increasing in connectiv-
ity to the Internet.
These are interesting observations,
but the information by itself is so ab-
stract that it isn’t useful as a strategic
tool all alone. But when the trends
are crafted into a scenario, a story
jumps out:
Scenario for the Year 2016
America, fiscally burdened by the
cost of its massive retired population,
begins to outsource some health-care
duties to doctors in India.
Telemedicine becomes more wide-
spread, involving the use of remote
diagnostic machines, located in Amer-
ican clinics, to take readings and doc-
ument a patient’s symptoms and vital
signs.
Much of the mundane work of the
primary-care physician is outsourced
using the Internet, although tough
cases are still referred to American
specialists.
This brief scenario tells a story—
one that should give health-care ex-
ecutives something to think about.
Though it may not come true exactly
like that, the implications of that
story as it develops will change how
the executive thinks about the com-
ing competitive pressures on the in-
dustry. This scenario asks important
questions:
• Is globalization going to impact
the American hospital?
we are ignorant.”
• Is the U.S. health-care industry
investing enough in cutting-edge in-
formation technologies? What about
other countries?
• Will foreign medical students
who come to America stay, or will
they return to their home countries
to practice?
• How much pressure is the baby
boomers’ aging going to put on
health-care practices? Can organiza-
tions minimize the discomfort by
planning ahead?
Realistically, we cannot plan today
all the way out to 2016. Too much
will change between now and then.
But the tools of the futurist help to
expose our assumptions and our
blind spots. They serve to show us
not only what we assume to be true
about how the future will play out,
but also some of the things of which
we are ignorant.
These insights are useful in busi-
ness because they help point to com-
THE FUTURIST
petitive threats and opportunities
that are over the horizon.
Using Future Scenarios
In Real-Life Situations
Just as there are numerous ways to
tell stories—film, kabuki, standup
comedy—there are a number of
ways to develop and present
scenarios to a group that is thinking
about a problem.
One effective tool for scenario de-
velopment is the Impact/Probability
Matrix (Figure 1, page 32). The ma-
trix presents four potential scenarios
comparing each one’s potential im-
pact and its probability of occurring.
Impact is the estimation of whether a
trend could be mildly dis-
ruptive (requiring a few
new practices) or disturb-
ing (requiring perhaps a
complete change of busi-
ness strategy). Probability is
a measurement of how
likely a scenario is and
what events would need to
transpire in order to bring
it about.
The Impact/Probability
Matrix is useful for several
reasons. It is a quick way to
develop four individual
scenarios with different im-
plications for the organiza-
tion. Four is a good num-
ber to work with because it gives a
range of possibilities without over-
whelming the decision maker with
complexity. Offering two scenarios
only would introduce a football-
match mentality—our side or their
side. Three lets people choose a mid-
dle ground, an often falsely moder-
ate position to take. And five or
more scenarios get difficult to un-
derstand. With four scenarios, the
Impact/Probability Matrix offers
views of distinctly different out-
comes:
• Flash in the pan—low probabil-
ity, low impact. This scenario shows
how events could turn out to be less
of a disruption, and thus any over-
reaction on our part would be
wasted energy. This scenario often
surmises that the coming change
will not really be a big deal, or will
blow over quickly.
• Business as usual—high proba-
bility, low impact. A change is com-
January-February 2006 www.wfs.org 31
ing, but we can adjust to it without GlaxoSmithKline was recently sued For the industry decision makers,
suffering big growing pains. We by New York Attorney General Eliot we used an Impact/Probability Ma-
need to observe the forces at play to Spitzer for fraudulently withholding trix to explore how much disclosure
see if some things will change information on trials of the use of the might be mandated and how such
around us, but our business will antidepressant Paxil in children. As mandates would change strategies at
remain fundamentally unchanged. part of its settlement, the company is pharmaceutical companies. Figure 2
• The brewing storm—high prob- disclosing all trials, regardless of shows how the scenarios played out.
ability, high impact. This
is often what executives Scenario 1: False
focus most on, a scenario Alarm—Low Probability,
that would mean a real Low Impact
problem. You can see the “Lots of people will downplay American business has
path to this “brewing a short attention span,
storm,” and the explo- the effects of a wild card. . . . and there are sometimes
ration of this future will fads and short-lived ob-
point to signs we need to But wild-card scenarios play sessions that quickly dis-
watch for. appear. In the False Alarm
• Wild card—low out in reality all the time, scenario, the news cycle
probability, high impact. churns on and the media
Wi l d c a rd s a re t h o s e
scenarios that are un-
especially in response to get tired of discussing
something as arcane as
likely but could arrive if
a couple of events come
catastrophic events.” clinical trial design and
disclosure. Political inter-
in rapid succession and est, too, moves on when
change everything. It’s the election year is over.
the “We never saw it coming” outcome, on a public database. This The whole thing goes away in a few
scenario—something on our blind has spurred many stakeholders, months.
side that would result in severe con- from medical journal editors to Con- In this scenario, the politicians
sequences due to our lack of prepa- gress, to consider a permanent, have scored their victories and
ration. industry-wide, mandatory database moved on to reform industries other
Lots of people will downplay the for all trials so that companies are no than pharmaceuticals. The election
effects of a wild card. Sometimes, if longer able to hide unflattering data. year passes, and no political points
you propose one of these scenarios Proponents argue that this would are left to win. The news media find
out of context, people will think you improve the access that doctors and that the only details of the story left
are an overreacting alarmist. But patients have to information about to debate are so specialized and
wild-card scenarios play out in drugs. complicated that only pharmaceuti-
reality all the time, especially in re-
sponse to catastrophic events. PHOTOS.COM

The Impact/Probability Matrix in Figure 1: Impact/Probability Matrix

Action: Clinical Trial Disclosure
Let’s see how the Impact/Proba-
bility Matrix works in real-life situa- High
tions where nobody knows the out- Impact
come of trends and potential
disruptions that will affect an entire
industry. Wild Card Brewing Storm
The matrix was put to use recently
for a group of pharmaceutical indus-
try decision makers concerned about Low High
a potential shift involving clinical Probability Probability
trials and their disclosure to the
public. In the past, drug companies
have been able to conduct clinical Flash in the Pan Business as Usual
trials to learn about drugs they are
developing or marketing, but they
have been under no obligation to Low
publish their findings. Impact
Recently, several events have led
government agencies to call for
mandatory disclosure of trial data.

32 THE FUTURIST January-February 2006 www.wfs.org


Figure 2: Scenarios for Clinical Trial Disclosure
High
Impact
Total Disclosure
Low Probability
False Alarm
Low
Impact
cal company executives, physicians,
and FDA regulators are willing to
tune in.
This scenario is unlikely, as aging
Americans, Medicare budget battles,
and rising drug costs keep pressure
on all aspects of the pharmaceutical
business. The public probably won’t
simply turn away at this point.
Scenario 2: Self-Regulation—
High Probability, Low Impact
If no additional major events oc-
cur, and pharmaceutical companies
step to the plate to increase their
own disclosure, the government may
allow the industry to police itself re-
garding its disclosure of information
to the public. This is the low-govern-
ment-intervention scenario, Self-Reg-
ulation.
In this scenario, pharmaceutical
companies all agree to post the re-
sults of completed Phase III trials
that are material to understanding
marketed drugs. Phase II and III
trials of compounds not yet on the
market will be conducted without
any requirement for disclosure,
though often the investment commu-
nity will learn of these so as to un-
derstand the impacts of R&D and
products in the pipeline on a com-
PHOTOS.COM
Government
Regulation
High Probability
Self-Regulation
pany’s future.
Scenario 3: Government
Regulation—High Probability,
High Impact
The scenario with the greatest like-
lihood and impact for the industry is
one of federal regulations mandating
the disclosure of clinical trials.
In this scenario, legal actions con-
tinue to pile up, along with contin-
ued pressure on the health-care in-
dustry in general. The voluntary
database PhRMA (Pharmaceutical
Research and Manufacturers of
America) fails to become a useful
tool because of a lack of voluntary
participation. Public and govern-
ment discontent continues to grow.
To avoid further legal actions,
drug companies agree to a govern-
ment-run database disclosing data
on all Phase III and IV trials, regard-
less of their results. There would be
penalties for a lack of disclosure.
Scenario 4: Total Disclosure—
Low Probability, High Impact
(Wild Card)
If there are more scandals involv-
ing drug safety or obfuscation of
trial data, the public could become
so distrustful of the pharmaceutical
THE FUTURIST
industry that government agencies
might move to demand full registra-
tion of all research activities, from
preclinical to Phase III and IV trials,
irrespective of the market potential
of the drugs.
All participation would be manda-
tory. Other drug company activities
would likely be monitored as well,
including whatever the sales repre-
sentatives tell prospective customers
and how much doctors are paid to
provide clinical information.
Business Implications of Clinical
Trial Scenarios
The Impact/Probability Matrix has
delineated a range of scenarios, all
with varying degrees of disclosure
imposed on the pharmaceutical in-
dustry. There are scenarios in which
business won’t change much, and
others where pharmaceutical compa-
nies must operate with unprece-
dented transparency.
The next step is to look at the po-
tential impacts of these scenarios.
Here are a few:
• Silence might win. If the move-
ment toward more disclosure of
drug-trial results is only a flash in
the pan, then the smart companies
are followers, not leaders. If GSK
and Eli Lilly put forth a clinical trial
database with full disclosure, they
will be stuck with it, while other
companies still have options.
• Disclosure becomes a way of
life. The pharmaceutical industry is
certainly regulated, but we could see
a new era of government oversight.
There may be new regulatory boards
added to government agencies, and
companies will need to augment
their government relations depart-
ments, because the regulations are
now mandatory.
• First to market not always
preferable; fast followers gain new
advantage. The new era of disclo-
sure will change how companies
come first to market. It is conven-
tional wisdom that the first to mar-
ket gets increased brand recognition.
Now there is a trade-off. Later en-
tries into markets may be able to
structure Phase III programs more
cheaply because companies will
learn from their competitors about
blind alleys not to go down.
January-February 2006 www.wfs.org 33
 • Learn from every lab in the
world. There will be a loss of secrecy,
as competitors can observe trial de-
sign, patient populations, endpoints,
and eventually results. Drug compa-
nies will be able to reap greater effi-
ciencies as companies learn from
other labs in all other drug compa-
nies. The total costs of drug develop-
ment could be reduced as competing
laboratories avoid duplicating each
other’s mistakes and improve the de-
sign of their clinical trials.
• Fewer studies. Companies may
potentially limit studies if all trials
must be registered and all results
disclosed. A faulty or even ex-
ploratory trial design could result in
immediate exposure to criticism by
one’s competitors. Post-marketing
studies are typically more open, but
head-to-head trials will instantly sig-
nal to a competitor of an attack on its
market share. Head-to-head studies
may become riskier, as it will be less
possible to conduct trials such as the
PROVE IT statin study by Bristol-
Myers Squibb, which inadvertently
showed the superiority of Pfizer ’s
Lipitor. Pharmaceutical companies
may adopt a more targeted approach.
• More-successful studies. Even
well-designed trials may result in
unfavorable results due to poor en-
rollment, uncertain methodology, or
endpoints of disease that are not uni-
versally accepted. Learning the pit-
falls of other laboratories could help
companies avoid them.
Futuring for Decision Makers
This is only a partial list of impli-
cations. Once the decision makers
are engaged in developing these
futures tools and analyzing the
scenarios, their open discussion
about possible implications leads
them to consider potential impacts
they could have been denying.
For these reasons, futures tools are
useful not because they are some
sort of crystal ball, but because they
inspire people to consider what they
already know about their world—
whether it’s a business, an agency, a
school, a community, or even a fam-
ily—and how it will change. In busi-
ness, these tools get leaders a step
closer to anticipating how their mar-
ket will be different in the future.
They can thus become better equipped
to handle the competitor of tomorrow.
Competitive intelligence is all
about the future, whether 10 years or
10 weeks from now. Learning what
may be around the corner is essen-
tial to strategy, and the tools of the
futurist are ideal for improving other
models of competitive assessment. ■
About the Author
Eric Garland is the principal
of Competitive Futures
Inc., a futures consultancy,
www.competitivefutures.com;
e-mail egarland@competitive
futures.com.
This article draws from his
forthcoming book, Fast Forward Thinking.
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