30 THE FUTURIST

January-February 2006

Scenarios in Practice:Futuring in thePharmaceuticalIndustry

By Eric Garland

A consulting futuristoffers insights on how a key foresight tool,the Impact/ProbabilityMatrix, enableddecision makers in thepharmaceutical industryto see how certaintrends could changehow they do business.

P H O T O S . C O M

uture scenarios are useful toolsto stimulate strategic thinking because they produce detailedstories about what the future couldlook like. When a decision makerunderstands where we might beheading, he or she can decide whereto lead the organization.Scenario building is like journal-ism, except in reverse. Instead of col-lecting rigorous data about the pastto write a story, in the scenario wemake projections based on trenddata that indicate the future. Basedon rigorous trend data, futurists candraw pictures of the kinds of worldthat the trends could lead to.Trends alone are not enough forthe decision maker. Theyare the

abstract

forces thatwill act on us and our com-petitors. They show asliver of the future, butthey are not completeenough to deliver a pictureof the market in which wewill be competing.Take these disparatetrends, for example:•The cost of health careis increasing.•The baby boomers will be the largest group of people over the age of 65 inAmerican history.•The Indian middleclass is growing in number.•Businesses outsourcing workoverseas is increasing as a strategy tokeep costs low.•Diagnostics equipment is fallingin 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 strategictool all alone. But when the trendsare crafted into a scenario, a story jumps out:

Scenario for the Year 2016

America, fiscally burdened by thecost of its massive retired population, begins to outsource some health-careduties to doctors in India.Telemedicine becomes more wide-spread, involving the use of remotediagnostic machines, located in Amer-ican clinics, to take readings and doc-ument a patient’s symptoms and vitalsigns.Much of the mundane work of theprimary-care physician is outsourcedusing the Internet, although toughcases are still referred to Americanspecialists.

This brief scenario tells a story—one that should give health-care ex-ecutives something to think about.Though it may not come true exactlylike that, the implications of thatstory

as it develops

will change howthe executive thinks about the com-ing competitive pressures on the in-dustry. This scenario asks importantquestions:•Is globalization going to impactthe American hospital?•Is the U.S. health-care industryinvesting enough in cutting-edge in-formation technologies? What aboutother countries?•Will foreign medical studentswho come to America stay, or willthey return to their home countriesto practice?•How much pressure is the baby boomers’ aging going to put onhealth-care practices? Can organiza-tions minimize the discomfort byplanning ahead?Realistically, we cannot plan todayall the way out to 2016. Too muchwill change between now and then.But the tools of the futurist help toexpose our assumptions and our blind spots. They serve to show usnot only what we assume to be trueabout how the future will play out, but also some of the things of whichwe are ignorant.These insights are useful in busi-ness because they help point to com-petitive threats and opportunitiesthat are over the horizon.

Using Future ScenariosIn Real-Life Situations

Just as there are numerous ways totell stories—film, kabuki, standupcomedy—there are a number of ways to develop and presentscenarios to a group that is thinkingabout a problem.One effective tool for scenario de-velopment is the

Impact/Probability Matrix

(Figure 1, page 32). The ma-trix presents four potential scenarioscomparing each one’s potential im-pact and its probability of occurring.

Impact

is the estimation of whether atrend could be mildly dis-ruptive (requiring a fewnew practices) or disturb-ing (requiring perhaps acomplete change of busi-ness strategy).

Probability

isa measurement of howlikely a scenario is andwhat events would need totranspire in order to bringit about.The Impact/ProbabilityMatrix is useful for severalreasons. It is a quick way todevelop four individualscenarios with different im-plications for the organiza-tion. Four is a good number to work with because it gives arange of possibilities without over-whelming the decision maker withcomplexity. Offering two scenariosonly would introduce a football-match mentality—our side or theirside. Three lets people choose a mid-dle ground, an often falsely moder-ate position to take. And five ormore scenarios get difficult to un-derstand. With four scenarios, theImpact/Probability Matrix offersviews of distinctly different out-comes:•

Flash in the pan—low probabil-ity, low impact.

This scenario showshow events could turn out to be lessof a disruption, and thus any over-reaction on our part would bewasted energy. This scenario oftensurmises that the coming changewill not really be a big deal, or will blow over quickly.•

Business as usual—high proba-bility, low impact.

A change is com-

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January-February 2006

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“The tools of the futuristhelp to expose our assumptions and our blind spots.They serve to show us . . .some of the things of whichwe are ignorant.”

ing, but we can adjust to it withoutsuffering big growing pains. Weneed to observe the forces at play tosee if some things will changearound us, but our business willremain fundamentally unchanged.•

The brewing storm—high prob-ability, high impact.

Thisis often what executivesfocus most on, a scenariothat would mean a realproblem. You can see thepath to this “brewingstorm,” and the explo-ration of this future willpoint to signs we need towatch for.•

Wild card—lowprobability, high impact.

Wild cards are thosescenarios that are un-likely but could arrive if a couple of events comein rapid succession andchange everything. It’sthe “We never saw it coming”scenario—something on our blindside that would result in severe con-sequences due to our lack of prepa-ration.Lots of people will downplay theeffects of a wild card. Sometimes, if you propose one of these scenariosout of context, people will think youare an overreacting alarmist. Butwild-card scenarios play out inreality all the time, especially in re-sponse to catastrophic events.

The Impact/Probability Matrix inAction: Clinical Trial Disclosure

Let’s see how the Impact/Proba- bility Matrix works in real-life situa-tions where nobody knows the out-come of trends and potentialdisruptions that will affect an entireindustry.The matrix was put to use recentlyfor a group of pharmaceutical indus-try decision makers concerned abouta potential shift involving clinicaltrials and their disclosure to thepublic. In the past, drug companieshave been able to conduct clinicaltrials to learn about drugs they aredeveloping or marketing, but theyhave been under no obligation topublish their findings.Recently, several events have ledgovernment agencies to call formandatory disclosure of trial data.GlaxoSmithKline was recently sued by New York Attorney General EliotSpitzer for fraudulently withholdinginformation on trials of the use of theantidepressant Paxil in children. Aspart of its settlement, the company isdisclosing all trials, regardless of outcome, on a public database. Thishas spurred many stakeholders,from medical journal editors to Con-gress, to consider a permanent,industry-wide, mandatory databasefor all trials so that companies are nolonger able to hide unflattering data.Proponents argue that this wouldimprove the access that doctors andpatients have to information aboutdrugs.For the industry decision makers,we used an Impact/Probability Ma-trix to explore how much disclosuremight be mandated and how suchmandates would change strategies atpharmaceutical companies. Figure 2shows how the scenarios played out.

Scenario 1: False

Alarm

—

Low Probability,

Low Impact

American business hasa short attention span,and there are sometimesfads and short-lived ob-sessions that quickly dis-appear. In the

False Alarm

scenario, the news cyclechurns on and the mediaget tired of discussingsomething as arcane asclinical trial design anddisclosure. Political inter-est, too, moves on whenthe election year is over.The whole thing goes away in a fewmonths.In this scenario, the politicianshave scored their victories andmoved on to reform industries otherthan pharmaceuticals. The electionyear passes, and no political pointsare left to win. The news media findthat the only details of the story leftto debate are so specialized andcomplicated that only pharmaceuti-

32 THE FUTURIST

January-February 2006

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Figure 1: Impact/Probability Matrix

HighImpact

Wild CardBrewing Storm

LowProbabilityHighProbability

Flash in the PanBusiness as Usual

LowImpact

PHOTOS.COM

“Lots of people will downplay the effects of a wild card. . . .But wild-card scenarios playout in reality all the time,especially in response tocatastrophic events.”