quote of the day “almost no one expected what was coming. it’s not fair to blame us for not...
TRANSCRIPT
Quote of the day “Almost no one expected what was
coming. It’s not fair to blame us for not predicting the unthinkable.”
Daniel H. Mudd, former CEO of Fannie May
quoted in the NY Times Sunday, October 5, 2008
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Anticipating Change… To Make Better Decisions about the Future
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Today’s Learning Objectives
1. To gain an awareness of scenarios and how they
can be useful for helping leaders anticipate uncertain change and its consequences
2. To explore real world examples of how
organizations cope with and capitalize on complexity
3. To understand some of the shortcomings of the method and how to mitigate these risks of scenario mis-use
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Framework Forecasting
Baseline Forecasts
Expected Scenario
Past
Present
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Expected Scenario
“The most likely future, isn’t”
Herman Kahn
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Is your forecast robust past Thanksgiving?
Level of Turkey Satisfaction
Trend Extrapolation: The Turkey Problem
Source: Nassim Talem, 2010
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• It requires evidence - forces us to be evidence-based
• It forces us to identify driving forces and have clarity on the indicators
• It projects current trends, based on the best available data to project the most likely “surprise-free” future scenario
• It serves as a starting point for consideration of the impacts of uncertain disruptions and development
of alternative scenarios
If the probability of the expected future occurring is low, why is a baseline forecast important?
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A 2010 study based on 1500 face-to-face CEO interviews
What CEO’s are Saying About Complexity and Uncertainty
http://cde.cerosmedia.com/Capitalizing-on-Complexity-2010-IBM/1J4c175d753f64c012.cde
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Source: Capitalizing on Complexity, IBM 2010
What CEO’s are Saying About Complexity and Uncertainty
Organizations are experiencing significant upheavalChanges in the new economic environment are large-scale, substantial and drastically different.
More volatileDeeper/faster cycles, more risk
More uncertainLess predictable
More complexMultifaceted, interconnected
Structurally differentSustained change
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Source: Capitalizing on Complexity, IBM 2010
What CEO’s are Saying About Complexity and Uncertainty
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Source: Capitalizing on Complexity, IBM 2010
What CEO’s are Saying About Complexity and Uncertainty
The Complexity GapWhile eight out of ten CEOs anticipate significant complexity ahead, less than half feel prepared to handle it.
30%Complexity gap
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How CEOs can capitalize on complexity
Source: Capitalizing on Complexity, IBM 2010
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Framework Forecasting
Three simple questionsWhat is going to happen? –
Expected ScenarioWhat might happen instead? –
Alternative ScenariosWhat do you want to happen? –
Preferred Scenario(s)
Three simple questionsWhat is going to happen? –
Expected ScenarioWhat might happen instead? –
Alternative ScenariosWhat do you want to happen? –
Preferred Scenario(s)Adapted From: “Framework Forecasting”, Peter Bishop
Limit o
f Plausib
ility
Limit of Plausibility
AlternativeScenario
Preferred Scenario
Baseline Forecasts
Expected Scenario
Past
Present
AlternativeScenario
AlternativeScenario
Disruption
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The Power of Scenarios Scenarios Process Expands Your Thinking
Provides a Method for “Thinking the Unthinkable” Challenge Conventional Wisdom & Cognitive Proximity
Scenarios create “Memories of the Future” To “experience” the disruption in advance
i.e. – “flight simulator” Leverage “Intuition”
Enable Companies to “Wind Tunnel Test” Strategies Vulnerability Analysis, Gap Analysis
Identify “Signposts” as early indicators© 2013 University of Notre Dame. All rights reserved..
17
Scenarios “The person who writes scenarios
must be a good story teller”
Why? Does this add value?
http://www.shell.com/home/content/aboutshell/our_strategy/shell_global_scenarios/scenarios_videos/video/
http://www.youtube.com/watch?v=jQ2uIPeiEYQ
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18
Scenarios
“Nearly always, if the scenario development has been conducted well, the results will be disturbing”
Why is this so? How can this be useful for business?
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The Saber-Toothed Tiger Problem
Specialist
Generalist© 2013 University of Notre Dame. All rights reserved..
20
Scenarios
How can leaders use scenarios without abdicating leadership?
“Give me a one-handed economist…”
Harry Truman
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Steer a course between the false certainty of a single forecast and the confused paralysis that often strikes in trouble times.
Scenarios and Abdication of Leadership
Set forth a goal that is“Robust under different Scenarios”
1.
2.
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Scenario Development
“Double Uncertainty Matrix” [Global Business Network]
“Alt Futures” [Institute For The Future] “Aspirational Futures”
[Institute for Alternative Futures]
Deductive Method Inductive Methods
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• Foresight Forecast• Team Assignment (75 points)• Due ________________
• Assignment is Posted on _____
Next Foresight Project Deliverable
Upcoming Deliverables:• First Draft Due _____________• Peer Reviews Due _______________• Final Papers Due _______________• In-Class Presentations on __________________ • Foresight End of Semester Event on ________________
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Next Class – Scenario Development Methods
Read: 20/20 Foresight, Chapter 1Scan websites of foresight thought
leaders: Institute for the Future
▪ www.iftf.org Institute for Alternative Futures
▪ www.altfutures.com Global Business Network
▪ www.gbn.com
Scanning Post 3 Due _____________© 2013 University of Notre Dame. All rights reserved.