scenario planningv1 2003 1

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An Introduction to

Scenario Planning

Rohit Talwar ± FastFuture

[email protected]

www.fastfuture.com

+44 (0)20 7435 3570

+44 (0)7973 405 145

Accelerating Innovation




Agenda Open the Door and Let the Future in

± The future ± what does it hold, why should we care, how can we study it? ± Using the µdriving force¶ approach to scenario planning to create fast insights

into alternative futures

Accelerated Scenario Planning Exercise ± Defining the Driving Forces ± Identifying the driving forces shaping our

environment ± Crafting Scenarios

Assessing the Scenarios - implications and options for our customers andthe industry

Assessing the implications ± How well do our current strategies stand up to these scenarios

± What will stay the same, what will need to change?

Markets, Products, People, Processes, Infrastructure, Finances,Knowledge Management, Innovation

Closing discussion ± how do we apply these tools in our day jobs?




Our ClientsPanasonic

IceTek




Our Services

Analysis of Future Trends,Drivers & Shocks / Technology Watch

Accelerated ScenarioPlanning & FutureMapping

Identification of

Opportunities forInnovation and StrategicInvestment

Strategy Creation &Development ofImplementationRoadmaps

Design & Facilitation ofInnovation, Incubation &

Venturing Programmes

Expert Consultations &Futures Think Tanks

Personal Futuring forLeaders and LeadershipTeams

Public Speaking, In-Company Briefings,Seminars and Workshops




The Challenge - Developing

Strategies in an Uncertain World

What factors should include when bidding for and planning long term projects?

How do we cope with risk and uncertainty?

How do we select the right indicators to track?

How do we identify key trends and developments?

How do we spot the potential for major discontinuities?

How do we plan, operate and survive in a turbulent and fast-changing world?

How do we handle those not playing by µour rules'?




Time Periods for Viewing the Future

Near Term Future - Up to one year from now

Short Term Future - One - five years from now

Mid-Term Future - Five - twenty years from now

Long Range Future - Twenty - fifty years from now

Far Future - fifty plus years from now

Source Earl Joseph




7 Attitudes Toward the Future

P rovidential / Fatalistic - what will be will be

Conventional - tomorrow will be much like today

P essimism - decline from past µGolden Age¶

Discontinuity - the future will be nothing like the present

Optimism - faith in progress / technology cures all

Unknowable - futile to attempt to go beyond the present

Futurist - tempered optimism / the future is rich withpossibility resulting from human planning and action

Source Prof. Howard F. Didsbury Jr




8 Dimensions in Most Futures

Physical Environment including health

Socio-Cultural

Legal, Moral and EthicalPolitical

Economic

Military, Defence and Security

Science and Technology

The Commercial World




Forecasting Methods

Genius Forecasting

History

Trend projection

(Extrapolation, Growth

Curves)

Correlation

Causal Methods

Polling / Scanning

Technology Forecasting

Scenarios Delphi Studies

Morphological Models

Relevance Trees

Mission flow diagrams

Technology Assessment

Trend Impact Analysis Cross-Impact Analysis

Systems Approach

Simulation

Cycles (e.g. Kondratieff)

Social Indicators

Chaos Theory

Source Prof. Howard F. Didsbury Jr




The CIA¶s Global ScenariosInclusive Globalisation

A virtuous circle develops, enabling a majority of the World¶s people to benefit fromglobalisation. Conflict is minimal within and among states benefiting from globalisation.

Pernicious GlobalisationGlobal elites thrive, but the majority of the world¶s population fails to benefit from globalisation.Internal conflicts increase, fuelled by frustrated expectations, inequities, and communal tensions

Regional CompetitionRegional identities sharpen in Europe, Asia, and the Americas, driven by growing politicalresistance to US economic hegemony. Military conflict among and within the three major regions does not materialize, but internal conflicts increase among the countries left behind.

Post-Polar World

US domestic preoccupation increases as its economy stagnates. Economic and politicaltensions with Europe grow, and US-European alliance deteriorates. Instability in Latin Americaand Asia force those regions to also turn inward. Given the priorities of Asia, the Americas andEurope, countries outside those regions are marginalized, with virtually no sources of political or financial support.

CIA Global Trends 2015




Scenarios - A Definition

³T he precise definition of µscenario¶ is:

a tool for ordering one¶s perceptions about

alternative future environments in w hic h

one¶s decisions mig ht be played out.

Alternatively:

a set of organised ways for us to dream

effectively about our own future.´

Peter Schwartz, The Art of The Long View (Doubleday Currency, 1992) p4




An Effective Scenario

Tells a story about possible future changes in a particular µsystem¶, domain, environment, society, etc.

Engages the imagination

Is written in the past or present tense - as if the forecasted

trends and events had already happened Helps clarify the causes and consequences of key

developments

Challenges our current thought processes and assumptions

about the future Enables us to define and assess a range of alternative

policies, strategies and actions

Is seen as relevant and an important element of the strategic

process




Scenarios Challenge us to

µRehearse the Future¶

Peter Schwartz, The Art of The Long View

E ngaging the Future - ³using scenarios is rehearsing the future. You run

through the simulated events as if you were already living them. You train

yourself to recognize which drama is unfolding. That helps you avoid

unpleasant surprises and you know how to act.´ (p.200)

Role Playing - ³by the end of the session, managers (at Shell) understood the

implications of each possible future, because they had literally rehearsed

them´ (p.205)

C hallenging Beliefs - ³that was the reason for creating the scenarios in the

first place´ (p.202)

C hanging Behaviour - ³the test is not whether you got future right... The real

test is whether anyone changed his behaviour because he saw the future

differently. And did he change his behaviuor in the right direction?´(p.214)




S cenario P lanning may be Valuable but...

We don¶t have enough time

We haven¶t got the budget

We¶re not convinced

Our people are very cynical

We have a long term plan

We are too busy with current projects

We are a numbers organisation

«S o is t here a way we can prove t he value quickly?




How Can Accelerated Scenarios Help?

To introduce and help µsell¶ the value of future thinking

To help shape strategy and drive fundamental change

To µopen the door and let the future in¶ - and thus help

overcome resistance to change

To help focus teams on their goals at the start of key projects

To surface and sense check assumptions




Applying Accelerated Scenario Techniques

BellSouth - Understand impact of the µNew Economy¶

Thames Water Utilities - Introducing and Assessing the Concept

Environment Agency - Management Team Development

Yellow Pages - Development of Business Blueprint

Capture Thinking on Fast Forward

programme

Chloride - Senior Management Development

µShort Sharp Shock¶ to Drive Growth

East of Scotland Water - Initiation of Business Review

Orange - Knowledge Sharing and InnovationProgramme Launch




An Example Scenario - Britain 2006

Britain today is a thriving economy that has recovered well from the recession of 2001-2. Although its about turn

on the single currency remains a source of tension with its European partners, Britain remains a major influence in

the 40 member EU.

The economy has experienced continuous growth over the the last three years and a significant transformation in

employment patterns. London in particular has responded well to the continued migration of financial services

operations to Frankfurt, Yorkshire and the Internet. The capital is now the centre of Europe¶s multimedia industry -

with over 2 million of its working population now involved in Internet / multimedia related businesses.

The general level of Internet usage in Britain has risen dramatically over the last three years as a result of the joint

venture between BT&T, Microsoft and Amazon.Com to provide free PC¶s to every home and office. Take up has

been particularly strong amongst the wave of new businesses created on the back of the re-elected Labour

government¶s innovative programme to create a million new businesses in the five year period 2003 - 2008.

Of the 600,000 new businesses created so far, many have been in the fields of new media, professional services,

construction related trades and the booming fields of personal development, coaching and therapy. The need to

create these new businesses was driven by the construction boom and continual trend towards Globalisation and

the shift of production and service jobs to lower cost countries in Eastern Europe and Asia.

The population has become almost immune to the regular terrorists attacks on infrastructure and essential

services. The Government continues in its attempt to create a coherent homeland security policy and approach

spanning all of the key Departments involved in Defence and Security. The politics of Whitehall continue to

hamper real progress. The shift in Defence policy towards combating terrorism continues but effectiveness is

hampered by lengthy procurement cycles and the extra administrative overhead created by the latest µquality,

value and effectiveness¶ targets and reporting requirements. The tensions between Britain and the USA continue

despite efforts by President Hilary Clinton to heal the rifts that developed during the conflicts in Iraq, Saudi Arabia

and Kashmir and in the subsequent peace stabilisation efforts.




Typical Approaches to

Scenario Development

Discussion and debate -

with or without source data

System Change -

evaluation of every parameter

under different conditions (e.g.

treasury model)

Driving Force -

identification and assessment of

the fundamental influencing factors




Developing Scenarios Using Driving Forces

Gather

Data

Identify

Driving

Forces

Build

Scenarios

Political

EconomicSocial &

Demographic

Technological

& ScientificEnvironmental

Commercial

& Business




The Basic Scenario Process

1. Assess t he Current S ituation

2. Gat her t he Data

3. Identify t he Driving

Forces

4. Generate Alternative

S cenarios

5. Assess t he

Implications

for your

Environment

6. Assess t he

Implications for your Organisation

7. Define S trategy and P lans

8. Implement and

Monitor




Example Driving Forces

Political

DF1 - Britain¶s Attitude to t he EU

Total harmonisation

Gradual alignment

Growing divergence

Fortress Britain

DF2 - P olitical S tability of Europe

Technological and Scientific

DF1 - Impact of Wireless Tec hnology

µRemote control for life¶

Gradual take up of 3G/4G services

Technology slow to deliver

Health concerns restrict usage

DF2 - Genetic Medicine





Economic

DF1 - Level of Growt h

Wired¶s µLong Boom¶

Consistent increases

Zero growth

Unshakable recession

DF2 - Economic Healt h of Japan

Physical Environment

DF1 - Impact of Environmental Legislation

Encourages shift to paperless business Drives up costs

Eliminates business sectors

Negligible effect on most businesses

DF2 - P ollution Levels





Social and Demographic

DF1 - Work - Life Balance

24/7 Society

60 hour working norm

Resurgence of 9 to 5

3 Day working week

DF2 - P opulation Growt h

Commercial & Business

DF1 - P revailing Business P hilosophy

Short term shareholder returns

Long term value creation

Socially responsible business

Family friendly businesses

DF2 - Impact of Globalisation





Legal, Moral and Ethical

DF1 ± P ersonal Identity

Identity chip inserts by 2007

Identity cards for all

Immigrants forced to carry ID

No personal ID¶s

DF2 ± Attitudes to War

Military, Defence and Security

DF1 ± P rivatisation & Outsourcing

All services brought back in-house

Only non-core services outsourced

Transport, logistics and property outsourced

Everything bar combat outsourced ± including peace keeping

DF2 ± T h

reat of Terrorism




Defining Driving Forces

Working in syndicates, you will be allocated a heading (e.g.Political)

Define two driving forces within that heading which you think

will have a major impact on shaping the environment for your

customers over the next 5 years (e.g. extent of regulatory

control, political stability)

For each driving force define at least four different possible

outcomes

Write the name of each driving force and the outcome on a

separate post-its (you should have at least four post-its per

driving force)




Defining Scenarios

Working in syndicates, select one of the outcomes from each of the driving forces defined earlier - the outcomes chosen do not

have to fit together logically

Using the set of outcomes as a start point, develop a plausible

scenario of what your firm¶s µstate of our world¶ report would

look like on January 1st 2007

You can present your scenario back in whatever way you think

most appropriate - picture, one act play, news report, day in thelife, etc.




Assessing the Implications

What will there

strategic priorities be?

How will they do

business?

What will be their key

requirements of

suppliers?

How will they evaluate

supplier performance?

What pressures will the

industry face?

What new entrants

might emerge?

What will the trends be

in size and scope?

What capabilities will be

critical?

Who could be best in

class?

For Customers For Suppliers




Evaluating The Scenarios How well do our current strategies stand up to your scenario?

Target Markets

Core Offerings

People

Processes

Team Structures

Infrastructure

Project Financing

Knowledge Management

Innovation

S tay the S ame Change

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