Group 4: The Scenario Logic

INTRODUCTION

The future of the Internet in 2015 has been the subject of a group project managed by 28 RSM MBA students during the course of Scenarios and Strategies for the Internet and Organizations from October to December 2004. The process of scenario thinking has been used, where old assumptions related to the Internet were challenged to develop new ones. To come up with four plausible scenarios, various learning stages were covered, from storytelling to systems thinking to web site creation and driving forces. Some of the questions the class addressed included:

• How could the Internet be a more interactive, creative medium?

• Are you worried about privacy on the Internet?

• Do you shop online? What do you think about the E-Commerce?

• How do you see the Internet shapes the new, knowledge-based economy?

• Peter Drucker has predicted that information technology will bring about the demise of the university as currently constituted. Do you share this view?

• What changes will the Internet help bring to education?

We could keep writing many questions about the evolution of the Internet and its impact on our society. The Internet today is a widespread information infrastructure, the initial prototype of what is often called the National (or Global or Galactic) Information Infrastructure. Its history is complex and involves many aspects - technological, organizational, and community. And as it can be seen in the above questions, its influence reaches not only to the technical fields of computer communications but throughout society as we move toward increasing use of online tools to accomplish electronic commerce, information acquisition, and community operations.

The Internet has changed much in the two decades since it came into existence. However, should we conclude that the Internet has now finished changing and impacting our society? Is there a future of the Internet, and if so, what will it be?

These pressing questions are easy to ask but hard to answer. The form of the Internet and its impact will be difficult to guess, given the large number of concerned driving forces and stake-holders. Thinking of its past evolution and present situation from our mindset will lead us to default projections. Added to this, we live in a world increasingly shaken by discontinuities and sudden changes, which makes the activity of constructing the future complex. A new approach is needed to support both very short-term thinking and long-term planning with a ‘‘futures’’ methodology that escapes our mindset and contemplates multiple alternative backdrops.

In the class project, different means of communication, including the information system ‘Wiki’, workshops with speeches, and emails, have also helped to share a common language and ideas about the subject. Additionally, the project sponsor and our facilitator, Daniel Erasmus, has guided the students in the design of scenarios while helping with scenario building, especially their principles of construction, and facilitating the live workshops to ensure proper engagement with the process and effective sharing of mental models.

This report will first present the timeline of the whole process by summarising each session of the course. Then, the methodology used to vote for four final plausible scenarios:More of the Same , Real Net , Virtual Society , and Separate Directions will be described. An analysis of the key uncertainties, which may or may not make these scenarios happen, will follow. Finally, the weak signals, showing which direction the future will take regarding the Internet, will be identified and their implications will be analysed.

TIMELINE OF SCENARIO BUILDING PROCESS

It is commonly recognized that the power of complex statistical models is becoming limited for explaining past behavior, or to predict future trends. Since these models focus only on past ‘events’, they have little to say about the tomorrow’s complexity. Therefore they are reactive.

On the other hand scenario thinking is fundamentally different. It is an explanatory process creating a new language and new and distinct images of the future as a result. In scenario thinking, past events do not dictate future behavior; instead, they are the products or snapshots of behavior. What really causes behavior are interactions between the elements of the system.

Scenario thinking coupled with scenario building, therefore, constitutes a generative rather than adaptive learning process. Once the behavior of a system is understood, the patterns of behaviors are expressed in stories, the relevant research has been done, and the driving forces have been identified, it is possible to talk about a few events or snapshots that will guide further scenario building. All these components of scenario thinking create a common language between participants of the scenario building team and bridge their often divergent thinking. Below, these aspects have been elaborated in detail, in relation to our scenario building efforts for the Future of Internet in 2015.

Storytelling: Cognitive psychologists describe how the human mind, in its attempt to understand and remember, assembles the bits and pieces of experience into a story -- beginning with a personal desire or a life objective -- and then struggles against the forces that block that desire. Stories are the best ways to remember, since we tend to forget lists and bullet points. Stories are also the best ways to imagine the future. You create scenarios in your head about the possible future of the Internet in order to try to anticipate the effects of Internet technology on our future lives.

Essentially, a story expresses how and why life changes. It begins with a situation in which life is relatively in balance. We expect this balance will go on that way. But then there's a sudden – relevant, plausible, consistent or surprising - event that alters this balance. The story goes on to describe how that change will occur, in an effort to restore balance with subjective expectations. Successful storytelling describes what it is like to deal with the opposing forces, work with scarce resources, make difficult decisions, take action despite risks, and ultimately discover the truth. Like all great storytellers throughout time - from Shakespeare to Bill Clinton – we have dealt with this fundamental conflict between subjective expectation and cruel reality, during our efforts to anticipate the future of the Internet.

One of the biggest advantages of storytelling as a part of scenario thinking, is to understand that we all live in dread. Fear is when you do not know what is going to happen. Dread is when you know what is going to happen and there is nothing you can do to stop it. Ever since human beings sat around the fire in caves, we have told stories to help us deal with the dread of life and the struggle to survive. Scenario thinking is the most modern way of doing that. In the process of building the four scenarios for this project, the group used storytelling extensively to understand and facilitate the process of scenario building. Our efforts resulted in scenario snapshots. System thinking was also heavily employed.

System Thinking: Peter Senge, in his famous work “The Fifth Discipline”, emphasized that “At the heart of system thinking is a shift of mind –from seeing ourselves as separate from the world to connected to the world, from seeing problems as caused by someone or something ‘out there’ to seeing how our own actions create the problem we experience.” The theory of being part of the whole can be fruitfully applied to the future of the Internet, in order to understand related system dynamics. The underlying message is that systems determine behavior, and people can learn to identify what has to be done to deal with the problematic behavior by engaging the system and understanding how it behaves.

At the foundation of systems thinking is the identification of circles of causality and feedback loops. These can be reinforcing or balancing, and they may contain delays. A number of system structures or patterns of relationships can be commonly found in a variety of settings. Some of these are ‘Balancing Process with Delay’, ‘Limits to Growth’, ‘Eroding Goals’ and ‘Growth and Under-Investment’. A practical example for the future of the Internet would be a combination of all these patterns. Think of a situation where Internet service providers suggest that the only way to respond effectively to the increased demand for Internet services would be by increasing technological capacity, i.e.- bandwidth. Although this insight is not particularly dazzling itself, when coupled with an evaluation that in the absence of resources to increase capacity, there would be an erosion of the quality of services.

Regarding our project, we constructed systems diagrams both for the scenario snapshots scenario snapshots and for the Scenario for the Internet in 2005. The diagrams were one of the most helpful instruments that allowed us to see inter-relationships, causalities and conflicts among the driving forces that are shaping the future of the Internet.

Research: Much of what we understand today about new technology and media shapes our society builds on the prescient insights of communications theorist Marshall McLuhan. This is why our scenario thinking for the future of the Internet has been highly benefited by McLuhan's pioneering concepts, such as the “medium is the message" and "the global village” (see our class' McLuhan critical view). McLuhan saw the new direction in which civilization was suddenly headed: electronic technology shapes us, and the type of technology we use has more impact on our thinking than does the information it carries.

Driving Forces: The Internet revolution, still in its nascence, is already exerting an enormous impact on culture and the way we live, just as the telegraph -- and later the telephone —impacted society in previous communications revolutions. The phase of growth in the Internet is currently evolving significantly by the ongoing development of information technologies into a coherent whole. Unlike the previous linear and sector-differentiating progression of structural upgrading in which a new independent industry (for example, automobiles) becomes dominant as a leading sector without much affecting and being affected by yesteryear's leading sectors (say, textiles), the Internet industry impacts and is being impacted by all the areas of social, political, technological and economic environment. These are the driving forces that were identified and used to create snapshots by the scenario building teams.

Snapshots: In 1966, McLuhan told an interviewer: "I'm resolutely opposed to all innovation, all change. But I'm determined to understand what's happening because I don't choose just to sit and let the juggernaut roll over me. Many people seem to think that because you talk about something recent you're in favor of it. The exact opposite is true in my case." The intent of McLuhan, as well as of scenario thinking, has been to shake us out of passivity. It is believed that by knowing how technology shapes our environment we can transcend its absolute determining power. McLuhan wanted us to tune in and take charge, and through building snapshots we were just doing just that. Our scenario thinking efforts on the future of the Internet should be credited with teaching us to deconstruct the current communications phenomena and their social, political, economical and technological aspects.

If we had the chance to ask McLuhan react to the sudden onslaught of the newest electronic media, he would probably urge us to pay attention and start developing our scenarios right now because the situation is becoming urgent.Take a look at our scenario snapshots.

DEVELOPING THE SCENARIO STRUCTURE: Choosing the four scenarios. Key Uncertainties

Choosing (voting) the four scenarios

As seen in Figure 1, a consequence tree represents a coherent system of driving forces, clusters of trends and consequences. To discuss this matter further, the driving forces are the root system which assist by showing why a trend may develop in a specific way. In Figure 1, trend-cluster constitutes the trunk of the tree. The height and number of branches (consequences) provide a glimpse of the development of the trend at a certain point. The first, second, and third-level consequences can be thought of as the branches of the tree. The perimeter of the branches of the tree shows the complexity of the development and its connections.

The Scenarios group members compiled the "tree" by generating stories on what the Internet would be like in 2015. The stories of each group member were read out to the class and at the end of the story, the classmembers voted by showing how much the story moved them. This "movement" was accomplished by students getting up out of their seats and swapping to another open seat. The number of members who were "moved" by the story were then counted and a tally was recorded. The result of the entire story-telling process was that serveral possibilites of what could happen on the Internet in 2015 originated from the trends (the trunk). These ideas were very useful for setting out upon unknown paths.

Consequence Tree

Key Uncertainties

Pierre Wack wrote in 1985 that we could forecast the future only when its elements are predetermined that is, based on events that have already occurred, but whose consequences are yet to be unveiled to us. Other experts have reached the conclusion that forecasting is different from scenario building. While a group needs consensus to forecast future trends by making use of predetermined factors, the same group would need to explore the richness of uncertain elements to construct different scenarios about the future. The method is however not easy to employ given that people are, by nature, less tolerant to uncertainty.

Some techniques of scenario building start with selecting predetermined elements and uncertainties, analyzing each category and element, grouping them, and then constructing matrices and/or systems of variables (deductive approach). Our class turned out to have used a different approach of identifying uncertainties, called the inductive method. Since the project’s sponsor encouraged us to try storytelling and conversations, the deductive method was not appropriate.

After the scenario voting process ended, our team (“the project office”, as we called it) went back to researching: we analyzed again the driving forces, the scenario snapshots (“the stories”) of the class, and the voting process. We had to discover the patterns, the embedded key uncertainties that made our colleagues voting as they did. Finally, we identified two major variables: 1) the evolution of technologies for the chosen time span; and 2) the reaction of society (individuals and groups) to this evolution. Each of the final four scenarios is a story built around these two variables.

The scenario logic diagram below shows the key uncertainties as three nodes, each of them being a result of intertwining the two variables, each having both a social element and a technological one.

The first key uncertainty is called Does the Internet continue to transform society? Looking back at the Internet’s evolutionary path for the past ten years we could say that extraordinary things have happened and at a quite fast pace. If we go further with our analysis, we could reach two conclusions, based on McLuhan's theory (the maelstrom) and, to some extent, on the fractals theory. On the one hand, we might be right now on the edge of the maelstrom and the society might have come to the point when it’s time to rest aside and take time to adapt to the changes that have already occurred in technology. If this is the case, More of the Same is the scenario that might come to be true for the next ten years. Are people tired of so many divergent technologies and their continuous evolution? Is the huge technology access gap between North and South a major stumble block towards worldwide Internet adoption?

On the other hand, if society has still room to take more of the changes in technology, we go further and try to answer our second key uncertainty, Is this transformation integrated into the physical space? Individuals and groups (communities, business entities, governments, etc) might be now at the point where they value the convenience of using the Internet, wait for more technologies to be discovered, while incorporating those that have already occurred in the day-to-day life. In this case, Virtual Society is a possible outcome for our time span. Are there many causality relationships between numerous driving forces to predict this scenario? Is the implication of governments and NGOs a sign that we will favor a virtual society? Is the driver of the business world – cost reduction and efficiency – a crucial determinant of such society?

Going further with our third key uncertainty: Does the Internet remain as a unified standard? there are two possible answers. If Yes, the outcome would be our Real Net scenario, where real becomes more like the net. But what if the answer is No? Presently, the Internet community tries to work towards standardization of protocols and procedures. It also addresses the intellectual property rights and copyright issues associated with the standards process. Some internationally recognized organizations in the field are IANA , ISOC , IAB , IETF. But what happens if the Internet community suddenly stops sharing the same protocols and standards? What if nations, such as the US, become more restrictive about the Internet access, identity checking prior to access, in other words what if the Internet access (virtual access) becomes as restricted as the physical access from country to country? Then maybe our fourth scenario, Separate Directions, is going to be closer to the reality of the next ten-year period.

We conclude that the future of the Internet depends on both how the technology will change, and how the process of change and evolution itself will be managed and accepted by society. With the success of the Internet has come a proliferation of stakeholders with an economic as well as an intellectual investment in the network. Who will control the domain name space and the form of the next generation IP addresses? What will be the next social structure that will guide the Internet in the future? What is the role of policy makers and of national interests (security purposes) in setting standards? These are all uncertainties about the future of the Internet, and the answer not always lies in the technology domain. As the one of the Internet Society, ISOC, paper mentions, “If the Internet stumbles, it will not be because we lack for technology, vision, or motivation. It will be because we cannot set a direction and march collectively into the future.” Furthermore, let's keep in mind the laws of economics and the business models which are still going to be in place for the future were are talking about. The evolution of technology will still be driven by corporations' struggle to meet and stimulate market's demand and win in a highly competitive environment. If this would not be true, then how can we explain the millions and millions of dollars companies such as IBM and Microsoft invest in their R&D activities?

FOLLOWUP: UNDERSTANDING THE SIGNS

A critical question to be answered by the scenarios created in our project is whether we will know when they have been realized. In other words, what signs will tip us off to their actualization. Answering these questions must be framed in the logic of the systems diagram, and we will present several examples that would indicate whether the Internet is in fact evolving in the future in the ways we predict they might in our scenarios.

First, we must ask the question of whether the Internet will continue to transform society. If nothing radical changes in the next ten years – which is the timeframe chosen for all of our scenarios – then we will assume the “More of the Same” scenario has in fact been realized. However, what if nothing changes in seven years? Will that also be a strong indicator that the “More of the Same” scenario is in fact being realized? We argue that looking for indicators at seven years and then again at ten years are the right timeframes for measuring signs. In other words, if nothing changes in seven years then we will be satisfied that nothing radical will change in ten years either.

A sign indicating that the Internet is continuing to transform society is if it continues to evolve at a radical pace. Moore’s Law, which states that the computing power of a chip doubles every 18 months while its size halves, has proven true for decades. Metcalfe's Law which states that the value of a network increases by its square with every node added, is a bit more difficult to measure and observe than Moore’s Law. However, as the Internet continues to gain momentum from both social and technological aspects, we can assume that Metcalfe’s Law continues to be valid. For example, the rapid adoption of 3G mobile telephony in the coming few years and the subsequent take-up of 4G thereafter would indicate that Metcalfe’s Law is valid. If both Moore’s Law and Metcalfe’s Law sustain for the next ten years, then we can assume that the transformation powers of the Internet will be sustained as well.

The next question begs whether the changes in society brought forth by the Internet will be paid much attention, or if the Internet will simply fade into the background similar to how television became a standard within a decade after its invention. In other words, the changes will be integrated into the physical space and the world will evolve toward a “Virtual Society”. A sign that may indicate if the Internet is fading into the physical space is if it is mentioned far less in popular media, and if fewer books, lectures and courses focus on its powers.

Likewise, if the Internet continues to gain increasing media attention (or the same amount as now) then the next question to ask is whether the Internet will remain as a unifying standard. One of the Internet’s powers has been its ability to democratize society, such as giving a voice to minority political interests and enabling what globalization expert Thomas Friedman calls “super-empowered individuals”. So far, the Internet has brought people closer together because of its ability to flatten the conventional hierarchy of societies.

If the government of China, for example, de-regulates its oversight over Internet content, this would be a sign that the ‘flattening’ trend is continuing. Other signs that we are moving toward a more “Real Net” would be if the Linux operating system gains more market share than Microsoft Windows. Finally, if web services – or pre-packaged plug and play software applications that can be downloaded and upgraded from the Internet rather than purchased physically – becomes the norm, then this will be another sign that the Real Net has become realized.

The ‘flattening’ trend may not continue, however, as we might reach a tipping point where the democratizing effects of the Internet may reverse. For example, if terrorists continue to use the Internet for plotting attacks then government censorship of content may become necessary in the future – which would limit access and expression. Also, if poorer nations, such as in Latin America, cannot afford new technologies then they may fall behind the rest of the world. In this scenario, the Internet becomes a divider rather than a unifier and sends societies in “Separate Directions”.

In summary, it will be important to track certain critical signs for understanding which scenario will be the most relevant in the next ten years. Some examples provided here include the continuation of Moore’s Law and Metcalfe’s Law, the Chinese government’s policy on Internet content, the adoption rate of Linux and web services, and the access of poorer nations such as in Latin America. Of course, it is possible that elements of all four scenarios we have outlined – More of the Same, Virtual Society, Real Net, and Separate Directions -- will become actualized in the next ten years.

Acknowledgment

In constructing this page, we used as guide one of the publications of Royal Dutch/Shell Corporation, “Exploring the Future. Scenarios: An Explorer’s Guide”, Global Business Environment, Shell International 2003:

Exploring the Future