Learning Log: Facing uncertainty in scenario thinking

Scenario thinking has proven its value in the past. Multinationals such as Shell have successfully created different scenario’s that could impact their future decision making. This is in line what scenario thinking is about; examine possible future developments that could have an impact on individuals, organizations or societies, in order to find directions for decisions that would be most beneficial no matter how the future unfolds [1].

More companies have scheduled seminars to come together with their staff and discuss and document developments that could change the way they do business now. Especially in a technological driven society [2] where we find us in now, we keep track of technology that could change this. Most people do not want too much change in their lives or business and we want to be prepared for what might come. Right? Scenario thinking can contribute to this by providing some sort of a backup plan for a worst case scenario and how to deal with them.

Besides all the benefits scenario thinking can have for companies and individuals, all scenarios face one difficulty which is uncertainty. A good example would be when we were at primary school and the teacher asked us that one questions regarding our future job: “What do you want to become?” “A pilot, sir!” was my reaction. But things most of the time do not fit what we expected it to be, different driving forces have steered us towards the personality we have become. The way we think now, can be very different in ten years.

I assume, this will be the same as with scenario thinking. When we create a scenario we decide which driving forces are contributing to the scenario. We read articles, watch the news, browse the web or debate during seminars to come to a consensus for our scenario. Most of the time, these scenarios come close to reality but they always face uncertainty of forces beyond our control. The terrorist’s attacks on the World Trade towers in the fall of 2001 had a big impact on the employment rate in the United States but how can someone predict that this would happen and that the employment figures would drop in New York [3].

According to a study on the advantages and disadvantages of scenario planning [4], there are three methodological approaches based on Martelli’s (2001) study on scenario building and planning [5]:

• Intuitive Logics
• Trend Impact Analysis
• Cross Impact Analysis

By using an intuitive approach, analysts use every available piece of information about the future. Because most information is so specific and tailored to a particular business environment, it is very hard to validate the scenario and reinforce it from a scientific point of view. The trend impact analysis can be used very well when a set of data is available and is based on data from the past to predict future trends and its impact. Marketing research companies tend to follow such an approach by predicting on prior data what the next trend can be. Since most data is very static, specialized tools and methods are being created to interpret it. Researchers with experience are the ones that can analyze this and therefore this method is not recommendable when not having a background in this field. A cross impact analysis will be the most common way to write a scenario because we take into account future developments and stimulate us to be creative in describing scenarios or ideas.

The above methodologies all cover a particular area in which they can be used. The trend impact uses static information while the intuitive approach uses every piece of information that can be obtained.

But in general, they all face one thing, which is uncertainty. This is a factor that will play a very important role in scenario thinking & planning. A scenario planner can take into account every factor he or she thinks can shift the scenario towards a certain direction but it is impossible to look in the future unless a glass bowl is to their disposal. Even one small change in the environment can have a big impact on the scenario.

References

[1] What is Scenario Thinking?
[2] The technology driven world order
[3] Advantages and disadvantages of scenario approaches for strategic foresight
[4] Martelli, A. (2001) ‘Scenario building and scenario planning: state of the art and prospects of evolution’, Future Research Quarterly, published on the summer 2001