Preface
THE FUTURE OFTEN ACTS like a drunken monkey stung by a bee—it is confused and disturbing, and its behavior is completely unpredictable. Organization leaders are struggling with an uncertain and fast-changing environment. Many are frustrated by the promise of tools for managing the future that come up short. A variety of terms has been used to describe the environment, such as whitewater, the rapids, VUCA (volatile, uncertain, complex, and ambiguous), and turbulent. These terms all emphasize that business decision making is an activity that has reached high levels of frustration and confusion. Signs point to increasing complexity and uncertainty. This means choosing among options will become even more challenging, and carving a path into the future will require more diligent use of better tools.
Traditional approaches to business planning have had their day. Linear approaches to strategic planning worked in the 1950s and 1960s because the environment was relatively stable. Linear approaches only lead to disappointment in today’s environment because they cannot account for uncertainty—they assume that the environment of tomorrow will be the same as today’s. Scenario planning is a revolutionary alternative to traditional strategic planning because it recognizes the unpredictable nature of the future. Early scenario planners helped organization leaders see that the future was not going to consist of historic trends, projected forward. Instead, recognizing their problematic assumptions of a stable environment, decision makers found a way to think about alternatives in scenario planning. Scenario planning makes uncertainty a part of the plan. Many companies have been able to avoid major strategic losses due to the alternative way of thinking found in scenario planning.
The most valuable advantage of creating and using scenarios is the recognition that uncertainty is a basic feature of organizational environments. By accepting the reality of uncertainty—and making it a part of how planning happens—decision makers can widen the scope of what is assumed to be true about what the future might hold. A more open view of what is possible allows decision makers to be more prepared and adjust with minimal delay and disruption. An expanded view of the terrain is developed by changing perceptions among key people in organizations. A primary outcome of scenario planning is to shift perceptions. Scenario planning is a tool for helping decision makers reperceive the potential future in alternative ways. Having these alternative ways of seeing helps decision makers avoid surprises and prepare for a variety of plausible futures.
Over the last thirty years, scenario planning has been used in a variety of contexts and organizations (Ogilvy, 1995, 2002; Ogilvy & Schwartz, 2000). For example, scenarios have been employed with great success in anticipating the oil shocks in the 1970s, potential outcomes of Hurricane Katrina, the events of September 11, 2001, and developing responses to bridge collapses and other emergencies. Certainly, each of these events had numerous management issues, and some were more effectively directed than others. In each case, scenarios were developed that told stories quite similar to how reality unfolded (D’arcy, O’Hanlong, Orszag, Shapiro, & Steinberg, 2006; Hoffman, 2002; Lynch, 2005). Although there are many anecdotes of scenario use, few have rigorously studied scenario planning, and the process has been modified and changed as needed. As a result, scenario planning means different things to different people, and the reported approaches are incomplete.
The purpose of this book is to provide a complete approach to scenario planning that includes key pieces missing from existing literature. These missing pieces are the theoretical foundations of scenario planning, a detailed guide to using scenarios once they have been developed, and a structure for assessing the impact of scenario projects. The theoretical foundations of scenario planning are important for understanding how scenario planning works. Such an understanding is critical for anyone serious about using scenario planning to steer an organization into the future. Precisely how to use scenarios is not well covered in the literature, either. This book provides detailed suggestions for putting scenarios into practice and using them to support organizational change. Finally, not a single text on the topic deals with how to assess the impact of scenario projects. This book provides a clear, concise guide to assessing the benefits of scenario planning in organizations. These three contributions make a complete scenario planning system that is the focus of this book.
AUDIENCES
This book is for thoughtful people trying to move their organizations forward—leaders, managers, decision makers, practitioners, consultants, and executives. This book provides the tools for facilitating scenario planning in organizations and is therefore a guide. This book is also a text for university courses focused on organization and business planning. Although this suggestion may indicate two separate audiences, I argue that they are one and the same. Students in business planning courses are usually also managers, decision makers, practitioners, consultants, or executives. Again, these are people struggling to move their organizations forward amid a great deal of chaos and uncertainty.
STRUCTURE OF THE BOOK
This book features three parts: (1) Foundations of Scenario Planning, (2) Phases of the Performance-Based Scenario System, and (3) Leading Scenario Projects.
Part One is focused on the foundations of scenario planning. These chapters review scenario planning, its history, development, and influential figures. Performance-based scenario planning—the contribution of this book—is described and explained. Chapter 1 describes the development and evolution of scenario planning. Key definitions, outcomes, and major approaches are reviewed. Chapter 2 is a synthesis of the theoretical foundations of scenario planning, and is a comprehensive review of the major content disciplines that inform the practice of scenario planning. Chapter 3 situates scenario planning in the organization system, and Chapter 4 presents a case study. Part One provides a sense of the context in which scenario planning was developed as a strategic tool, as well as an understanding of the position of scenario planning inside organizations.
Part Two presents the phases of the scenario system. These are Chapters 5 through 9, covering the major phases of scenario planning: (1) project preparation, (2) scenario exploration, (3) scenario development, (4) scenario implementation, and (5) project assessment. These are the chapters that become a guide for using the scenario system. Detailed examples are provided, and the core case study that is presented in Chapter 4 is expanded further in each subsequent chapter. The examples illustrate key outcomes of each phase.
Part Three presents tips for managing and leading scenario projects. Chapter 10 describes several pitfalls in scenario planning and how they can be avoided or overcome. Chapter 11 summarizes some cutting-edge neurology research and how it relates to cognitive activity and human perceptions in the scenario process. Finally, Chapter 12 offers suggestions for getting started on your own scenario projects, followed by a summary of the book.
MY OWN FASCINATION WITH SCENARIO PLANNING
What continues to fascinate me about scenario planning is its potential application to almost any context, problem, issue, or situation, and its evolving nature. There are many nuances throughout the facilitation of scenario projects. As a result, there are always opportunities for improving scenario planning and finding ways to increase its effectiveness. For timely examples, Noah Raford is studying how to maintain dialogue over electronic media such as Twitter, Facebook, and other Web 2.0 technologies in scenario planning (see http://news.noahraford.com/?p=129). Others are working on how scenario planning is used in nonprofit organizations, communities, and nations. As the world’s problems evolve in their complexity, there is only increasing utility for scenario planning.
Scenario planning is a decision-making tool that can be used to explore and understand a variety of issues in a variety of organizations and issues. For example, scenarios can be used to consider the future of global climate change, global water supply, natural resources, as well as business and community decisions (such as in the Mont Fleur scenarios that explored the end of apartheid in South Africa). These are all issues that involve complex dynamics including diverse sets of stakeholders and varying knowledge bases, and they are likely to require interdisciplinary collaboration to address. Any situation in which a group of people is trying to work out how to create aligned movement toward a common goal can consider scenario planning a potentially useful tool.
Human perceptions in scenario planning are another fascinating topic for me. As I continue to witness strategic insights among participants in scenario projects, I wonder why some participants have them and some don’t. What are the characteristics of individuals that lend them to thinking deeply about problems? What are the characteristics of scenarios that help people open up their thinking? These questions pose challenges to what is known about scenario planning and how to maximize its impact. Neuroscience research is getting close to helping us understand how the brain learns and what happens physiologically during these strategic insights, but there is still a long way to go.
A lot about scenario planning remains unknown. Each scenario project I work on reveals more about how to do it better next time. This book introduces scenario planning and its foundations, explains how to do it, and describes how to tell whether it produces benefits. This is a book for people who want to improve the way their organizations prepare for the future. Readers are encouraged to access the latest research on scenarios from my website (www.thomaschermack.com) and to e-mail me reports of their experiences. I have also recently established the Scenario Planning Institute at Colorado State University, and readers who want to get more involved can engage at www.scenarioplanning.colostate.edu.
Finally, scenario planning is a lot of fun! Scenario planning is a blend of creative and analytical activities. There’s nothing like arranging complex variables into stories that make sense, are rigorously researched, and can move an audience. Seeing the moment when new understanding comes together for a participant is exciting and rewarding. Indeed, helping people think in new and interesting ways has immediate impact that can be applied in a variety of situations. Wack (1984) may have put it best when he wrote, “In our times of rapid change and discontinuity, crises of perception—the inability to see a novel reality emerging by being locked inside obsolete assumptions—have become the main cause of strategic failures” (p. 95). Scenario planning is a way to avoid such crises of perception by learning how to see the environment differently and perhaps a little more completely.
ACKNOWLEDGMENTS
Some people say that writing a book is an inherently personal endeavor. Mine has been a humbling experience. This book is the result of thousands of interactions, conversations, scholarly debates, e-mails, and other exchanges with a variety of people over the last ten years. So, while it has been a personal experience, I could not have written this book by myself.
Richard A. Swanson’s name should appear as the second author of this book. I offered it to him, but he would not accept it. He read, critiqued, edited, moved, improved, shifted, guided, and reviewed every word on these pages. His contributions made the final product much more useful than it would have been without his generosity. Thanks are not enough to cover my appreciation for his direction and guidance, but it is all I can do in this preface. Thank you, Dick.
Thanks to Susan A. Lynham and Louis van der Merwe for their mentorship and guidance. Many conversations, experiences, and stories from Susan and Louis have been foundational to my thinking about scenario planning. I am grateful for the guidance and advice of two such accomplished professionals. Thank you, Susan and Louis.
Thanks to Evie Chenhall, Janet Colvin, Jennifer Fullerton, Maggie Glick, Lea Hanson, Chris Harper, Stacey Herr, Martin Kollasch, Kyle Stone, and Joy Wagner. Their contributions appear in some of the materials for the Technology Corporation case, and their comments, suggestions, and reviews have improved this book.
Thanks to Ziad Labban, Dave Peck, John Weatherburn, Paul Grimmer, Steve Beck, Joanne Provo, and Monica Danielson. Writing a book about scenario planning requires experience in using its tools. These individuals all provided learning opportunities and gave me access to situations in which to learn how to apply scenario techniques.
Thanks to Kees van der Heijden, Art Kleiner, Peter Schwartz, Napier Collyns, George Burt, George Wright, Paul Schoemaker, and Louis van der Merwe. These individuals have influenced and inspired me, and their efforts have established the scenario planning discipline. Thank you.
Thanks to the late Pierre Wack and Ted Newland. These two visionary thinkers sought a way to think differently about the future. Their work has inspired many and is certainly the foundation of my own thinking about scenario planning in organizations.
Finally, thank you to the outstanding team at Berrett-Koehler and, in particular, Steve Piersanti and Jeevan Sivasubramaniam.
Thomas J. Chermack
December 2010
Fort Collins, Colorado
www.thomaschermack.com
www.scenarioplanning.colostate.edu