This present moment

Used to be

The unimaginable future

Stewart Brand

The Clock of the Long Now

An Introduction to Scenario Planning

Foresight Methodologies Workshop 28 September 2003 Maree Conway

Welcome!
Who am I?
25+ years as a manager in tertiary education institutions. Internal re-structure at Swinburne in 1999 appointed to position of Director, Foresight, Planning and Review. Foresight journey for both me and Swinburne. Now strong interest in developing ways to embed foresight into universities in particular, and organisations in general. Practitioner focus how to ensure outcomes of foresight are relevant to staff, and can be used by them.

Before we start
Suspend disbelief for a moment. Imagine that you part of the senior executive group at your institution you are meeting to consider the future viability of your institution which has been affected negatively by the Nelson Reforms. In walks Universitas, the renowned and proven clairvoyant. She says:
You can ask me three questions about your future.

What would those three questions be?

Welcome!
Overview What is Foresight? The Scenario Planning Process Implementing Scenario Planning in Organisations Close

Overview
An introduction to scenario planning within the broad context of foresight. Scenario planning is a foresight methodology it helps make sense of an uncertain future. The focus is on making better decisions. Additional references so you can explore the methodology after the workshop.

So, why do it?

The world is more complex than that envisaged when many of our institutions were created, and those institutions are now creaking, facing significant new challenges and pressures. It is tough to be a manager in a time of such uncertainty. Decisions taken today will have effects years into the future, but in what sort of world? Never mind the future, it is increasingly difficult to discern trends and realities, and to make wellinformed decisions today!

So why do it?
The future is not pre-determined or predicable. If it were, there would be no point in taking action today, because it would have no effect on the future. Full information about the future is never available. It makes sense to look for ways to understand the future to deal with uncertainty.

What is Foresight?

What is Foresight?
All our knowledge is about the past, but all our decisions are about the future. We create our future by what we do or dont do today; it makes sense to try and understand as best we can what that future might be like before we act. Foresight is not prediction! It is about getting an idea about what plausible futures might look like. We are good at learning from the past; we need to learn from the future as well we need to develop a history of the future as we do a history of the past.

Why think about the future?

All our knowledge is about the past, but all our decisions are about the future.

What we dont know we dont know

What we know we dont know What we know

Most of what we need to know to make good decisions today is outside our comprehension: we dont even know its there.

Types of Futures
Possible - might happen
Plausible could happen
(future knowledge)

(current knowledge) (current trends)

Probable - likely to happen

Preferable - want to happen

(value judgements)

Types of Futures
Wildcard Scenario

Possible

Plausible Probable Preferable

Today

Time

Types of Futures

Plausible (Deep Drivers) Probable

(Trends)

Today

Time

What is Foresight?
So, foresight, put simply, is an approach to thinking about the future which lets you:
free up your thinking beyond the here and now; explore plausible futures (ie always more than one, because the future is not pre-determined); and think about implications for decision making today.

Foresight is a way of thinking that enhances our understanding of our current and plausible future strategic operating environment(s).

What is Foresight?
An attribute, competence or process that attempts to broaden the boundaries of perception by:
assessing the implications of present actions, decisions etc. detecting and avoiding problems before they occur (early warning indicators) considering the present implications of possible future events (proactive strategy formulation) envisioning aspects of desired futures (normative scenarios)

Foresight, Strategy & Planning

Three inter-dependent but quite different elements:

Strategic Thinking
exploration, intuitive, synthesising, creative, inductive, disruptive, incomplete/ambiguous info; generating options

Strategy Development
assessing options, examining choices, making decisions and/or setting a destination or direction

Strategic Planning
implementation, analytical, deductive, making it happen, getting things done, pragmatic, can do; actions

Foresight, Strategy & Planning

Foresight is a strategic thinking process, not a strategic planning process. Its about options not actions. Asks the question: what might we need to do? not the questions: what will we do? or how will we do it?

Inputs Foresight

Strategic Intelligence Scanning

Foresight Work

Outputs
Copyright 2000 Joseph Voros

Expanded Perceptions of Strategic Options

Strategy

Strategy Development Strategic Planning

Inputs

things happening

Analysis
Interpretation

what seems to be happening? whats really happening?

Foresight

Prospection
Outputs
Copyright 2000 Joseph Voros

what might happen?

what might we need to do?

Strategy

what will we do? how will we do it?

Foresight Process at Swinburne

Inputs

Strategic Intelligence Scanning, Near-Future Context Trends, Issues, Themes Deep Drivers of Change (System Structure / Dynamics) Scenarios Expanded Perceptions of Strategic Options

Analysis
Interpretation

Foresight

Prospection
Outputs
Copyright 2000 Joseph Voros

Strategy

Strategy Development Strategic Planning

The Future as a Strategic Landscape

The Star
Our enduring and guiding social role The purpose of the organization
A future-focused role image Not completed or used up

The strategic objective:

The Mountain
What we hope to achieve

A compelling, relevant future BHAGBig Hairy Audacious Goal A concrete, specific goal A challenge, but achievable

The Chessboard
Issues and challenges we are likely to face

The strategic environment:

Strategic implementation and tactics Threats and opportunities Actions of other strategic actors Driving forces Mapped and understood using scenarios
The self journeys across the chessboard to the mountain, which lies in the medium term future

The Self
Our values and attributes as a strategic player

Strategic identity:
Current reality Self-knowledge Strengths and weaknesses Values Preferences and experience

Star, mountain, chessboard, self image 1999

Synthesys Strategic Consulting Ltd

Foresight in Organisations
Foresight is a normal capacity of the human mind. Everyone thinks about the future every day, and plans ways to deal with the uncertainty inherent in that future.
BUT, that thinking is usually unconscious, and usually stays within the brain of each person.

The challenge is to take it from being an implicit, unconscious process taking place in a single mind to being an explicit conscious process taking place in many minds
In other words, from implicit & unconscious to explicit & conscious and from individual to collective.

In organisations, this requires explicit foresight processes be created to support existing strategic processes.

Implementing Foresight
Five levels to implement foresight:
Level 1: recognition of foresight as an innate human capacity every individual has the capacity for foresight Level 2: immersion in foresight concepts using foresight concepts and ideas to generate a futures discourse Level 3: using foresight methodologies use of key methods to make foresight real Level 4: creating organisational niches permanent, purpose-built areas to focus foresight Level 5: foresight at the social level where long-term thinking becomes the norm.
Richard Slaughter

Practical Strategic Foresight

Choose an appropriate method or two from each level. Refine the flow of information leading from Inputs to Strategy. Aim for a deep foresight process. Always Ask: Are our proposed strategic actions wise when considered from a future perspective? The Goal: to act with wisdom in the present informed by a perspective from the future, not only the past.

Scenario Planning

What are Scenarios?

Scenarios are possible views of the world, described in narrative form (stories) that provide a context in which managers can make decisions. By seeing a range of possible worlds, decisions will be better informed, and a strategy based on this knowledge and insight will be more likely to succeed. Scenarios do not predict the future, but they do illuminate the drivers of change: understanding them can only help managers to take greater control of their situation.
Gill Ringland Scenarios in Business, 2002

Why Scenarios? (The Chessboard)

One of many foresight methodologies. Well developed and tested across government, business and education. Provides structured process for people to start consciously thinking about the longer-term future and possible implications for strategy today (ie navigating the chessboard). A creative and shared process that allows time for reflection about the organisation and its future.

Why Scenarios?
Scenarios strengthen a managers strategic management tool box:
traditional methods focus on the past scenario planning focuses on the future

Combining both the past and the future makes thinking about strategy stronger and promotes:
responsiveness flexibility competitive advantage

Why Scenarios?
Scenarios allow a shared view of the future to be developed, and then Provide the opportunity for an organisation to consider how it wants to position itself in that future.

Why Scenarios? (Ranges of Usefulness)

U Uncertainty F S

Predictability

Forecasting

Scenario Planning
Distance into the future

Hoping
t

Adapted from K. van der Heijden

Your turn
Imagine you are back in your senior executive group meeting. Universitas, the clairvoyant, has left, promising to return soon with a detailed report on her findings. As a group, you are now considering what you think will be the most important, but uncertain, external forces (drivers of change) that will affect your institution over the next 10 years. What are the top 3 drivers of external change on your list?

The Scenario Planning Process

Identify the focal question Environmental scanning internal and external Selecting drivers of change and ranking Building the scenario matrix Developing the scenarios Presenting the scenarios Considering the strategic implications

The Scenario Planning Process

Identify the focal question Environmental scanning internal and external Selecting drivers of change and ranking Building the scenario matrix Developing the scenarios Presenting the scenarios Considering the strategic implications

The Focal Question

Identify a focal area or issue such as a decision or question that is critical to the future of your unit now. Useful foci often emerge from major challenges of today, or from questions such as what one question would you ask a real psychic? Choose a horizon year as the distance into the future that the scenarios will extend (at least 10 years):
allows suspension of disbelief (the that wont happen reaction); will you be in the same job you are in today in 10 years?

The Scenario Planning Process

Identify the focal question Environmental scanning internal and external Selecting drivers of change and ranking Building the scenario matrix Developing the scenarios Presenting the scenarios Considering the strategic implications

Things Change ...

Inventions have long since reached their limit, and I see no hope for future development: Roman engineer
Sextus Julius Frontinus, 1st Century AD

Heavier than air flying machines are not possible:

Lord Kelvin, President of the Royal Society, 1895

I think there is a world market for maybe 5 computers: Thomas Watson, Chairman of IBM, 1943 Space flight is hokum: Astronomer Royal, 1956 Stocks have reached what looks like a permanently high plateau: Irving Fisher, Professor of Economics, Yale
University, 1929

Things Change ...

We dont like their sound, and guitar music is on the
way out: Decca Recording Co. rejecting The Beatles, 1962. 640K [of RAM] ought to be enough for anybody: Bill
Gates, 1981

The fact that conflicts with other countries [producing civilian casualties] have been conducted away from the U.S. homeland can be considered one of the more fortunate aspects of the American experience:
Quadrennial Defense Review (QDR) for the US Dept of Defence, 2001

Inputs

things happening

Analysis
Interpretation

what seems to be happening? whats really happening?

Foresight

Outputs
Copyright 2000 Joseph Voros

what might we need to do?

Strategy

what will we do? how will we do it?

Whats Really Happening?

Foresight

Interpretation

Deep Drivers of Change (System Dynamics/Structure)

Copyright 2000 Joseph Voros

News Items

Events

Recurring Themes

Patterns, Trends
System Structure Mental Models

Underlying Drivers

Mindsets, Worldviews, Metaphors, Myths

Core Human Intelligences

Copyright 2001 Joseph Voros

Thinking Systems

Levels of Structure

News Items

Events

Recurring Themes

Patterns, Trends
System Structure Mental Models

Underlying Drivers

Mindsets, Worldviews, Metaphors, Myths

Core Human Intelligences

Copyright 2001 Joseph Voros

Thinking Systems

Levels of Structure

Whats Really Happening?

The Interpretation step means the Prospection step is better informed (in this case, the scenarios you will develop).

So, look beneath the events, news items, themes and trends for the deep drivers of change.

Major Drivers of Change

Social Technological Economic Environmental Political

Major Drivers of Change

Globalisation
cheap travel & instant transfer of information/communications, trans-national commerce, student diversity

Economics
massification of education in OECD percentage of population in post-compulsory education rising rising funding costs to government

Technology
internet, online instruction, e-commerce, cost and complexity of science

The knowledge project itself is changing

from dualist objectivism to participatory worldviews

The Scenario Planning Process

Identify the focal question Environmental scanning internal and external Selecting drivers of change and ranking Building the scenario matrix Developing the scenarios Presenting the scenarios Considering the strategic implications

Impact-Uncertainty Classification
I m p a c t
High

Mod

Low Low Moderate High

Uncertainty

What is Uncertainty?
Low means we are reasonably certain that it will play out or continue in ways that are fairly well understood
eg. population

High means that we have no clear idea which of a number of plausible ways it might go
eg. government legislation and policy

Mod means somewhere in between

The Scenario Planning Process

Identify the focal question Environmental scanning internal and external Selecting drivers of change and ranking Building the scenario matrix Developing the scenarios Presenting the scenarios Considering the strategic implications

Impact-Uncertainty Classification
I m p a c t
High Critical Planning Issues Important Scenario Drivers Critical Scenario Drivers

Mod

Important Planning Issues

Important Planning Issues

Important Scenario Drivers

Low

Monitor
Low

Monitor
Moderate

Monitor & reassess High

Uncertainty

Building the Scenario Matrix

High Impact, Low Uncertainty = predetermined elements (or trends)
should be present in every scenario

High Impact, High Uncertainty = critical uncertainty

choose the two most uncertain of these to create the scenario matrix

And the blue drivers?

include in your scenarios if you like, & if it makes sense to, particularly if you think that they will be significant in the future.

Your turn
Take your 3 key internal issues (the clairvoyant questions) and your 3 most important but uncertain drivers of external change. Plot them on your impact-uncertainty matrix. Pick two from the upper right hand corner.

Building the Scenario Matrix

Choose two drivers that are most uncertain and most critical in terms of impact on your organisation.

Critical Uncertainty 1

Critical Uncertainty 2

Building the Scenario Matrix

Critical Uncertainty 1

World 2

World 1

Critical Uncertainty 2
World 3 World 4

The Scenario Planning Process

Identify the focal question Environmental scanning internal and external Selecting drivers of change and ranking Building the scenario matrix Developing the scenarios Presenting the scenarios Considering the strategic implications

Developing the Scenarios

In a scenario workshop, small groups would flesh out each world. The requirements for this step are to suspend disbelief, trust your intuition, look for plausibility, surprises and novel elements. Scenarios must be internally consistent and plausible they have to make sense to the people creating them, and to the people in the organisation who will read them.

Your turn
Build your scenario matrix. and Consider what your worlds might look like.

Developing the Scenarios

What is the world like in your scenario in 2013? How did your world develop? Stand in 2013 and look back over the major events that have occurred; list the events. Developing the timeline in 5 year intervals saves time, but you can also simply prepare a list of the events you think created your world. Would your organisation exist in 2013? What do you look like? Are you physical or virtual? Global? Specialist? Major characteristics of your customers? What do staff do? Title of Scenario Be creative! Imagine a title that describes the essence of your world, and that is memorable. Narrative the scenario story Write up a paragraph or two to describe your world (skip this if you are running out of time). Presentation Decide how you will present your scenario to the rest of the group. Youll have about five minutes, so focus on the key elements of your world as they relate to tertiary institutions.

Further Development
In a real-life project: The first set of scenarios usually needs further development and refinement. Occurs over time, and is designed to make the scenarios understandable to the organisation (to deal with the fact that most staff wont be directly involved in their development).

The Scenario Planning Process

Identify the focal question Environmental scanning internal and external Selecting drivers of change and ranking Building the scenario matrix Developing the scenarios Considering the strategic implications

From Scenarios to Strategy

The Scenarios are not the only purpose of the exercise!
the resulting freeing up of thinking while creating them is!

Expanding understanding of what options might be available in the long term:

shifts frame of reference 10-20 years out. examining implications for the services provided by your unit in each of the scenario worlds looking to see what your unit would need to do to stay viable

From Scenarios to Strategy

Main Uses for Scenarios
A common language for strategic conversations ongoing future-oriented discussions

Risk Assessment - specific decision Strategy Evaluation - existing strategy Strategy Development - new strategy

From Scenarios to Strategy

Scenarios provide clues about what might be important drivers of change in the future, and how those drivers might interact and affect the organisation. Aim is to identify strategies that are robust across all scenarios, given what we know about how the future might develop. Also, to identify early warning indicators that events in the scenarios are happening how will we respond? Within the context of the focal question.

Approaches to Strategy
Robust - Perform well over the full range of scenarios considered - Blue Chip Flexible - Keep options open and / or wait for as long as possible before committing - Hedging Multiple Coverage - Pursue multiple strategies simultaneously until future becomes clear Scattergun Gambling - Select one strategy which works very well, but in only one or two scenarios - Bet the Farm

Bet the Farm is the common default

In the absence of well-developed set of scenarios, single-point forecasting and / or a reluctance to allow uncertainty (ie. the predict and control mentality) leads to a (usually unconscious) projection of an official future, which is the one assumed to be coming ... This approach is functionally equivalent to (and an unconscious form of) the Gambling / Bet the Farm approach

From Scenarios to Decision / Strategy

The scenarios can help you to imagine the consequences of different choices of decision / strategy in each of the different scenario worlds without having to live with the consequences of a wrong decision or strategy for the rest of your life! Which of the types of decision / strategy do you want to develop in the real world?

The Scenario Planning Process

Identify the focal question Environmental scanning internal and external Selecting drivers of change and ranking Building the scenario matrix Developing the scenarios Considering the strategic implications AND, ONE MORE!!

Suddenly, the World Changes ...

Wild Cards are low-probability, very-highimpact events that are
wide in scope and directly affect the human condition potentially disruptive (negatively and/or positively)

intrinsically beyond the control of any single institution, group or individual

rapidly moving

eg: asteroid impact; stock market collapse; terrorist attack; disrupted water, gas or electricity supply; etc

Types of Futures
Wildcard Scenario

Possible

Plausible Probable Preferable

Today

Time

Suddenly, the World Changes ...

If you dont think about Wild Cards before they happen, then all of the value in thinking about them is lost (horse has bolted / stable door).
If we accept that there will be Wild Cards in the near future, then the only effective defence is to begin to systematically think about them now, and examine their implications.

Using Scenario Outputs

Does your organisations existing strategy stand up to all of the future worlds presented in these scenarios? What rationale would you have for pursuing various strategic options in each scenario? What can you influence? What early indicators will we monitor? After considering the strategic implications of the scenarios, what actions might we recommend? Deciding on an implementation plan.

Your turn
Given your scenario worlds, and your brief exploration about how those worlds might have developed over time, And, remembering your focal question, What are the implications of your scenarios for your institution today?
Would you still be in business? In what business? Who are your customers and what do they want? Where are the gaps in your knowledge? What do you need to know more about?

Implementing Scenario Planning In Organisations

Implementing Scenario Planning

Implementing scenario planning is exciting for those who do it it changes the way you think. Need open minds, tolerance for ambiguity and fishing expeditions. Commitment to understanding the future better. Implementation has to take place within broad foresight framework scenario planning is a tool to help improve thinking about the future, not an end in itself.

Implementation
Organisations are changing From Command and control Structured life Importance of size Predictability Clarity Slow change Reliance on processes Hierarchical or managed organisations Avoiding risk To Empowerment Unstructured life Need for speed Uncertainty Ambiguity Rapid change and obsolescence Reliance on people Alliances and coalitions Managing risk

Traditional strategic planning processes are no longer enough!

When to implement
When the power of the external environment is great when the forces at work on an organisation require outside-in thinking. When the organisation needs a shared context; shared vision; shared forward view. When functional teams need to collaborate working together on scenarios may held current working relationships.

How to implement
Stage 1: Clarify your aims: why are you doing this? Stage 2: Engage stakeholders very important spend time on this until you have buy-in Stage 3: Understand the organisation Stage 4: Timing of scenario projects Stage 5: Developing scenarios Stage 6: Communicating the scenarios Stage 7: Using the scenarios in planning and policy development

Stage 1: Clarify your aims

Why are you doing this?
Introduce foresight into the organisation as strategic management tool? Inform strategic thinking and decision-making? Test existing strategies? A one-off strategic exercise?

Stage 2: Engage Stakeholders

Identify who will drive the process. Who needs to be consulted internally and externally? Take the time to engage these stakeholders so they are familiar with the process, its aims and expected outcomes. Address concerns about value of scenarios and how they will be used in decision-making/planning.
Subjective tool, but allows discussion and challenges to assumptions and judgements made during this process.

Stage 3: Timing is everything

Is the organisation seeking input on future directions, or the development of a shared vision to underpin decisions? Can the outputs be used in a strategic planning round, or decision making? Is the organisation facing specific challenges?
Chaotic external environment what are emerging patterns? Critical decisions to be made, including choices between new areas of activity how to decide? Business plans not being met are the assumptions still valid? Change in traditional markets threatens services?

Stage 4: Understand the Organisation

Can the project be resourced? Who might oppose the project? Who needs to be convinced of its value? Who can you work with to apply the scenarios in the organisation? What will be the scope of the project, including what time frame what will work for the organisation? Who will be involved in the project?

Stage 4: Understand the Organisation

PITCH MESSAGE HERE Pragmatists

Fence-Sitters RATS
- can smell the
cheese, but jump ship; they have good organisational diagnostics

Bridge Builders FROGS

- get it, and can use the system, very rare

Dont Get It

Get It True Believers LEMMINGS

Laggards VULTURES - dont bother,

they are looking for you to fail

Ideologues

Adapted from Andy Hines, 2002

Stage 5: Developing Scenarios

Look at other scenarios first
Get some idea of whats involved You may be able to use those scenarios as a starting point to save time

Process needs to be tailored for each project. Spend time on familiarising participants with future thinking. The process itself can take one day, or six months! Decide whether to use external facilitators.

Stage 6: Communicating the Scenarios

Who is the target audience? Who are decision makers and who are influencers? Who will benefit and who will lose under each scenario? How can their needs be met? What channel can be used to reach the target audience? What events are critical in the time sequence? What are the success criteria what do we stop?

Stage 7: Using the scenarios

Scenarios are only valuable if they are used by the organisation it is the use of the scenarios not their existence which is important. To use the scenarios you have to pay attention to dissemination tools and techniques. You need people willing to test the scenarios in a real life situation. Use the scenarios to identify emerging trends and discontinuities early indicators of change. Use the scenarios to develop awareness of challenges facing the organisation.

But, remember
Every organisation is different. The process needs to be contextualised use existing scenarios with great care and recognise they will need to be adapted for the organisation. Take heed of organisational culture and processes. This will take time, and a lot of energy and persistence.

Watch out for

Believing what we want to believe and not paying attention The tyranny of the present Asking the right question: what will force us to think differently? Overestimating ability to control the future The need to present a point of view The unreliability of experts & the value of innocent eyes Not taking the time needed to do a good analysis Assumptions and the illusion of certainty
Gill Ringland, Scenarios in Business, 2002

Close

Thank You!
Thank you for your time, energy and insights! We hope the process has been useful, eyeopening and mind-expanding for you, and will be valuable for your future planning! Complete the evaluation and tell us what you think. Enjoy your strategic conversations!

Future and Present

We shall not cease from exploration And the end of all our exploring Will be to arrive where we started And know the place for the first time. Little Gidding V Four Quartets T.S. Eliot (1943)