John Holmberg, Chalmers University of Technology Backcasting and scenario analysis John Holmberg, Chalmers University of Technology at the STD seminar organized by UPC, June in Barcelona

John Holmberg, Chalmers University of Technology Backcasting [Holmberg, 1998]

John Holmberg, Chalmers University of Technology The future situation, step 3, and the strategies, step 4, in the backcasting method can be tested regarding their robustness through scenario analysis, see the steps below.

John Holmberg, Chalmers University of Technology Different types of uncertainty 1.Risk – there is historic data available which makes it possible to estimate probabilities for different possible outcomes 2.Structural uncertainty – we can predict that something could happen on the basis of cause-effect reasoning, but it is not possible to estimate the probability 3.Unknown – such things that are impossible to think about in advance, but we know that they have always occured if we look back at history. But we have no clue what these events could be

John Holmberg, Chalmers University of Technology Identify factors in the environment which already are, or may become, of major importance for the focal question Describe each factor as a change or that something happened, e.g. : ”Average life is increasing” ”The worlds oil reserves will be 0” ”Use of paper will be illegal” Influencing Factors

John Holmberg, Chalmers University of Technology Put the factors in a diagram which shows how important and how uncertain each factor is: Effects and Uncertainties Impact Predictability Low High High Low

John Holmberg, Chalmers University of Technology Identify critical uncertainties and trends : Trends and critical uncertainties Impact Predictability Low High High Low

John Holmberg, Chalmers University of Technology Trends and critical uncertainties Trends –Clear development –Direction is possible to identify –Are part of all scenarios Critical uncertainties –Big influcence on focal question –Very uncertain –Several outcomes are possible –Create the major differences between the scenarios

John Holmberg, Chalmers University of Technology Critical uncertainties ”Flip-flop events” Every flip-flop can lead to two different futures –a trend may at a certain occasion flip over –typical flip-flop: Chernobyl, the fall of the Berlin wall Different expert views: either two experts who are of a different opinion or one expert who cannot provide a definite answer Political change and decisions –Will there be a new law? Will it be a new technology, and when? We can often be sure that something will take place but we are uncertain when How will different stakeholders react and act?

John Holmberg, Chalmers University of Technology Chose two unrelated critical uncertainties and describe their extreme values: Critical factor 1: Critical factor 2: Critical uncertainties

John Holmberg, Chalmers University of Technology Describe and name scenarios for the identified outcomes: A B C D Scenarios Scenario A: …

John Holmberg, Chalmers University of Technology Test your business idea (B.I.) in relation to the focal question and evaluate how robust it is: Modify your business idea in relation to its robustness A B C D B. I. ++ +/ Modif. 1 2 Robust Business idea?

John Holmberg, Chalmers University of Technology Identify different strategic alternatives and evaluate their robustness: A B C D B.I. ++ +/ Strategy X /- Strategy Y+++ +/ Strategy Z +/ Robust strategy?