Future Scenario Planning Success Steps Unveiled

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Step1: Uncovering the decision
Management has to understand its choices. For this it has to know, what will be “on the agenda”. So in the first step these strategic decisions that might have to be made in the future have to be uncovered. This is done by asking the right questions related to the mission and business purpose of a company such as: where is our industry going? What is the path of development of our industry ? What events might influence it and will force us to change ? Under which circumstances might we become incredible successful, under which circumstances will the company be at risk ? It takes persistent work to penetrate the internal mental defences of human beings. Therefore this task includes examination of existing mind-sets of managers, so that prejudices and assumptions become obvious, and careful thinking whether those mind-sets would keep these managers from seeing the right future. The best way is to begin with important decisions that have to be made anyway and then built out to the environment. This step also should include an identification of the key factors of the business system influencing the success or failure of the decision.

Step2: Information-hunting and –gathering
To create scenarios, stories, that resonate in some ways with what people already know and leads them from that to question their assumption of how they see the world, observations from the real world must be built into the story. The scenario process thus involves research – skilled hunting and gathering of information. This is practiced both narrowly – to pursue facts needed for a specific scenario – and broadly – to educate the scenario planner, so that he is able to pose more significant questions. Flexibility of perspective is critical in doing it. The scenario planner has to simultaneously focus on what matters in a given decision situation, but keep awareness open for the unexpected. Because some research subjects emerge again and again in the work of a scenario planner, some planners recommend to move along these typical topics during research before looking for others. Such typical topics are: science and technology developments; perception-shaping events, that shape or change the perception of the public; new ideas that emerge in the “fringes” (that means not in the mainstream) and are spreading further.

Step3: Identifying the driving forces of a scenario
The first task in building the scenario itself is to look for driving forces of the macro-environment that influence the key factors identified earlier. For example government regulations might influence them. But beside government regulations, there are many less obvious external factors as well. Identifying and assessing these fundamental factors is both the starting point and one of the objectives of the scenario method. Driving forces are the elements that move the plot of a scenario, that determines the story’s outcome. Driving forces often seem obvious to one person and hidden to another. Therefore the identification of driving forces should be done in a team, by brainstorming together. By looking on such driving forces, it is helpful to run through this common list of categories of driving forces: social forces/demographic developments, technological developments, economic developments and events, political developments and events, environmental developments. Normally, companies have little control over driving forces. Their leverage for dealing with them comes from recognizing them, and understanding their effect.

Step4: Uncover the predetermined elements
Predetermined elements are developments and logics that work in scenarios without being dependent on any particular chain of events. That means, a predetermined elements is something, that seems certain, no matter which scenario come to pass. For example the most commonly recognized predetermined element is demographics, because it is changing so slowly. Identifying such elements is a tremendous confidence builder in strategic decision making. Managers can commit to some policies and feel sure about them. There are several useful strategies for looking for predetermined elements. For example you could look for slow-changing phenomena like the growth of populations or the building of physical infrastructure. You could look for constrained situation, where companies, nations or even individuals have, at least for a certain time, no choices.

Step5: Identify critical uncertainties
In every plan critical uncertainties exist. Scenario planners seek them to prepare for them. Critical uncertainties are often related to predetermined elements. You find them by questioning your assumptions about predetermines elements and chains of predetermined elements. So critical uncertainties are the variables in scenario planning and are the basis to create different scenarios in parallel. One method to identify the most important critical uncertainties is, to rank key factors and driving forces on the basis of two criteria: first, the degree of importance for the success of the focal issue or decision identified in step one; second, the degree of uncertainty surrounding those factors and trends. The point is to identify the two or three factors that are most important and most uncertain. These factors are forming then the basis for the different scenarios, because the goal is to end up with just a few scenarios whose difference makes a difference to decision-makers.

Step6: Composing scenarios
To explain the future, scenarios describe how the driving forces might plausibly behave, based on assumption of predetermined elements and critical uncertainties. To describe the different scenarios, their plots, you use the uncertainties that have seemed so important. So driving forces, predetermined elements, and critical uncertainties give structure to the exploration of the future. To create the scenario stories, the plot lines, the recommendation is, to bring a team together that is aware of the decision that is considered. Each member of the scenario planning team has done his or her research. Then they sit together talking and developing ideas in response to the questions: What are the driving forces? What we feel is uncertain? What is inevitable? How about this or that scenario? The goal is to select plot lines that lead to different choices for the original decision. The challenge is to identify the plots that best captures the dynamics of the situation and communicates the point effectively. The scenario planner’s task is then; to define the forces inside and outside the company, and analyze which plots they fit. Having gathered the variations that are possible, the scenario planner would select five or six variations that fit the case. Eventually he or she narrow and combine those into two or three fully detailed descriptions of what might happen – the scenarios.

Step7: Analysis of implications of the decisions according to scenarios
Once the scenarios have been developed in some detail, then it is time to return to the decision identified in step one. How does the decision look in each scenario? What vulnerabilities have been revealed? Is the decision or strategy robust across all scenarios, or does it look good in only one or two of the scenarios? If a decision looks good in only one of several scenarios, then it qualifies as a high-risk gamble, especially if the company has little control over the likelihood of the required scenario coming to pass. The question what should be discussed then by management is how the strategy should be adapted to make it more robust if the desired scenario shows signs of not happening.

Step8: Selection of leading indicators and signposts
It is important to know as soon as possible which of several scenarios is closest to the course of history as it actually unfolds. For that, as soon as the different scenarios have been finished and their implication for the decision determined, then a few indicators should be selected, to monitor the strategy or decision in an ongoing way. Monitoring these indicators will allow a company to know what the future holds for a given industry and how that future is likely to affect strategies and decisions in the industry. If the scenarios have been carefully developed, then the scenarios will be able to translate movements of few key indicators into an orderly set of industry-specific implications. The logical coherence that was built into the scenario will allow logical implications of leading indicators to be drawn out of the scenarios.

-Anshumali Saxena www.soilindia.net