1. Scenario Planning Process
By T Garrett

2. Scenarios are possible views of the world, described in narrative form (stories) that provide a context in which managers can make decisions.
By seeing a range of possible worlds, decisions will be better informed, and a strategy based on this knowledge and insight will be more likely to succeed.
Scenarios do not predict the future, but they do illuminate the drivers of change: understanding them can only help managers to take greater control of their situation.
Gill Ringland
Scenarios in Business, 2002
What are Scenarios

3. Scenarios strengthen a manager’s strategic management tool box:
traditional methods focus on the past
scenario planning focuses on the future
Combining both the past and the future makes thinking about strategy stronger and promotes:
responsiveness
flexibility
competitive advantage
Why Scenarios?

4. Scenarios allow a shared view of the future to be developed, and then
Provide the opportunity for an organisation to consider how it wants to position itself in that future.
Why Scenarios?

5. Why Scenarios? (Range of usefulness)
Distance into “the future”
Uncertainty
Predictability F S H
Forecasting
Scenario Planning
“Hoping” t U
Adapted from K. van der Heijden
Why Scenarios? (Range of usefulness)

6. Imagine you are back in your senior executive group meeting
Imagine you are back in your senior executive group meeting. Fortunas, the clairvoyant, has left, promising to return soon with a detailed report on her findings.
As a group, you are now considering what you think will be the most important, but uncertain, external forces (drivers of change) that will affect your institution over the next 10 years.
What are the top 3 drivers of external change on your list?
Your Turn!

7. The Scenario Planning Process
Identify the focal question
Environmental scanning – internal and external
Selecting drivers of change and ranking
Building the scenario matrix
Developing the scenarios
Presenting the scenarios
Considering the strategic implications
The Scenario Planning Process

8. The Scenario Planning Process
Identify the focal question
Environmental scanning – internal and external
Selecting drivers of change and ranking
Building the scenario matrix
Developing the scenarios
Presenting the scenarios
Considering the strategic implications
The Scenario Planning Process

9. Identify a focal area or issue – such as a decision or question that is critical to the future of your unit now.
Useful foci often emerge from major challenges of today, or from questions such as “what one question would you ask a real psychic?”
Choose a “horizon year” as the distance into the future that the scenarios will extend (at least 10 years):
allows suspension of disbelief (the “that won’t happen” reaction);
will you be in the same job you are in today in 10 years?
The Focal Question

10. The Scenarion Planning Process
Identify the focal question
Environmental scanning – internal and external
Selecting drivers of change and ranking
Building the scenario matrix
Developing the scenarios
Presenting the scenarios
Considering the strategic implications
The Scenarion Planning Process

11. “Inventions have long since reached their limit, and I see no hope for future development”: Roman engineer Sextus Julius Frontinus, 1st Century AD
“Heavier than air flying machines are not possible”: Lord Kelvin, President of the Royal Society, 1895
“I think there is a world market for maybe 5 computers”: Thomas Watson, Chairman of IBM, 1943
“Space flight is hokum”: Astronomer Royal, 1956
“Stocks have reached what looks like a permanently high plateau”: Irving Fisher, Professor of Economics, Yale University, 1929
Things Change!

12. “We don’t like their sound, and guitar music is on the way out”: Decca Recording Co. rejecting The Beatles, 1962.
“640K [of RAM] ought to be enough for anybody”: Bill Gates, 1981
“The fact that conflicts with other countries [producing civilian casualties] have been conducted away from the U.S. homeland can be considered one of the more fortunate aspects of the American experience”: Quadrennial Defense Review (QDR) for the US Dept of Defence, 2001
Things Change!

13. What seems to be happening?
Inputs
Strategy
Outputs
Analysis
Interpretation
“what might we need to do?”
“what will we do?”
“how will we do it?”
“what’s really happening?”
“what seems to be happening?”
things happening
Foresight
What seems to be happening?

14. What is Really happening?
Interpretation
Foresight
“Deep” Drivers of Change
(System Dynamics/Structure)
What’s Really Happening?
What is Really happening?

15. Mindsets, Worldviews, Metaphors, Myths
Events
System Structure
News Items
Recurring Themes
Underlying “Drivers”
“Core” Human Intelligences
Mindsets, Worldviews, Metaphors, Myths
Copyright © 2001 Joseph Voros
Patterns, Trends
Mental Models
Thinking Systems
Levels of Structure

16. Mindsets, Worldviews, Metaphors, Myths
Events
News Items
Recurring Themes
Underlying “Drivers”
“Core” Human Intelligences
Mindsets, Worldviews, Metaphors, Myths
Copyright © 2001 Joseph Voros
Levels of Structure

17. What is REALLY happening?
The Interpretation step means the Prospection step is better informed (in this case, the scenarios you will develop).
So, look beneath the events, news items, themes and trends for the deep drivers of change.
What is REALLY happening?

18. Major Drivers of Change
Political
Economic
Environmental
Social
Technological
Major Drivers of Change

19. Major Drivers of Change
Globalisation
Cheap travel & instant transfer of information/communications, trans-national commerce, student diversity
Economics
Massification of education
Percentage of population in post-compulsory education rising
Rising funding costs to government
Technology
Internet, online instruction, e-commerce, cost and complexity of science
The ‘knowledge project’ itself is changing
From dualist objectivism to participatory worldviews
Major Drivers of Change

20. The Scenario Planning process
Identify the focal question
Environmental scanning – internal and external
Selecting drivers of change and ranking
Building the scenario matrix
Developing the scenarios
Presenting the scenarios
Considering the strategic implications
The Scenario Planning process

21. The Impact / Uncertainty Classification
Low
Moderate
High
Mod
The Impact / Uncertainty Classification

22. “Low” means we are reasonably certain that it will play out or continue in ways that are fairly well understood
eg. population
“High” means that we have no clear idea which of a number of plausible ways it might go
eg. government legislation and policy
“Mod” means “somewhere in between” 
What is Uncertainty?

23. The Scenario Planning Process
Identify the focal question
Environmental scanning – internal and external
Selecting drivers of change and ranking
Building the scenario matrix
Developing the scenarios
Presenting the scenarios
Considering the strategic implications
The Scenario Planning Process

24. The Impact / Uncertainty Classification
Low
Moderate
High
Mod
Critical Scenario Drivers
Important Scenario Drivers
Critical Planning Issues
Important Planning Issues
Monitor & re-assess
Monitor
The Impact / Uncertainty Classification

25. Building the Scenario Matrix
High Impact, Low Uncertainty = “predetermined elements (or trends)”
should be present in every scenario
High Impact, High Uncertainty = “critical uncertainty”
choose the two most uncertain of these to create the scenario matrix
And the “blue drivers”?
include in your scenarios if you like, & if it makes sense to, particularly if you think that they will be significant in the future.
Building the Scenario Matrix

26. Take your 3 key internal issues (the clairvoyant questions) and your 3 most important but uncertain drivers of external change.
Plot them on your impact-uncertainty matrix.
Pick two from the upper right hand corner.
Your Turn!

27. Building the Scenario Matrix
Choose two drivers that are most uncertain and most critical in terms of impact on your organisation.
Critical Uncertainty 1
Critical Uncertainty 2
Building the Scenario Matrix

28. Builsing the Scenario Matrix
World 2
World 1
World 3
World 4
Critical Uncertainty 1
Critical Uncertainty 2
Builsing the Scenario Matrix

29. The Scenario Planning Process
Identify the focal question
Environmental scanning – internal and external
Selecting drivers of change and ranking
Building the scenario matrix
Developing the scenarios
Presenting the scenarios
Considering the strategic implications
The Scenario Planning Process

30. Developing the Scenarios
In a scenario workshop, small groups would ‘flesh out’ each world. The requirements for this step are to suspend disbelief, trust your intuition, look for plausibility, surprises and novel elements.
Scenarios must be internally consistent and plausible – they have to make sense to the people creating them, and to the people in the organisation who will read them.
Developing the Scenarios

31. Your Turn! Build your scenario matrix…. and
Consider what your worlds might look like….
Your Turn!

32. Developing the Scenarios
What is the world like in your scenario in 2026?
How did your world develop? Stand in 2013 and look back over the major events that have occurred; list the events. Developing the timeline in 5 year intervals saves time, but you can also simply prepare a list of the events you think created your world.
 Would your organisation exist in 2026?
What do you look like? Are you physical or virtual? Global? Specialist? Major characteristics of your customers? What do staff do?
Title of Scenario
Be creative! Imagine a title that describes the essence of your world, and that is memorable.
Narrative – the scenario story
Write up a paragraph or two to describe your world (skip this if you are running out of time).
Presentation
Decide how you will present your scenario to the rest of the group. You’ll have about five minutes, so focus on the key elements of your world as they relate to tertiary institutions.
Developing the Scenarios

33. Further Development In a real-life project:
The first set of scenarios usually needs further development and refinement.
Occurs over time, and is designed to make the scenarios understandable to the organisation (to deal with the fact that most staff won’t be directly involved in their development).
Further Development

34. The Scenario Planning Process
Identify the focal question
Environmental scanning – internal and external
Selecting drivers of change and ranking
Building the scenario matrix
Developing the scenarios
Considering the strategic implications
The Scenario Planning Process

35. From Scenarios to Strategy
The Scenarios are not the only purpose of the exercise!
the resulting “freeing up” of thinking while creating them is!
Expanding understanding of what options might be available in the long term:
shifts frame of reference years out.
examining implications for the services provided by your unit in each of the scenario worlds
looking to see what your unit would need to do to stay viable
From Scenarios to Strategy

36. From Scenarios to Strategy
Main Uses for Scenarios
A common language for “strategic conversations” - ongoing future-oriented discussions
Risk Assessment - specific decision
Strategy Evaluation - existing strategy
Strategy Development - new strategy
From Scenarios to Strategy

37. From Scenarios to Strategy
Scenarios provide ‘clues’ about what might be important drivers of change in the future, and how those drivers might interact and affect the organisation.
Aim is to identify strategies that are robust across all scenarios, given what we know about how the future might develop.
Also, to identify ‘early warning indicators’ that events in the scenarios are happening – how will we respond?
Within the context of the focal question….
From Scenarios to Strategy

38. Approaches to Strategy
Robust - Perform well over the full range of scenarios considered - “Blue Chip”
Flexible - Keep options open and / or wait for as long as possible before committing - “Hedging”
Multiple Coverage - Pursue multiple strategies simultaneously until future becomes clear - “Scattergun”
Gambling - Select one strategy which works very well, but in only one or two scenarios - “Bet the Farm”
Approaches to Strategy

39. ‘Bet the farm’ is the Common Default
In the absence of well-developed set of scenarios, single-point forecasting and / or a reluctance to allow uncertainty (ie. the “predict and control” mentality) leads to a (usually unconscious) projection of an “official” future, which is the one assumed to be coming ...
This approach is functionally equivalent to (and an unconscious form of) the Gambling / “Bet the Farm” approach
‘Bet the farm’ is the Common Default

40. From Scenarios to Decision / Strategy
The scenarios can help you to imagine the consequences of different choices of decision / strategy in each of the different scenario “worlds” …
… without having to live with the consequences of a wrong decision or strategy for the rest of your life!
Which of the types of decision / strategy do you want to develop in the real world?
From Scenarios to Decision / Strategy

41. The Scenario Planning Process
Identify the focal question
Environmental scanning – internal and external
Selecting drivers of change and ranking
Building the scenario matrix
Developing the scenarios
Considering the strategic implications
AND, ONE MORE!!
The Scenario Planning Process

42. Suddenly the World Changes!
“Wild Cards” are low-probability, very-high-impact events that are
wide in scope and directly affect the human condition
potentially disruptive (negatively and/or positively)
intrinsically beyond the control of any single institution, group or individual
rapidly moving
eg: asteroid impact; stock market collapse; terrorist attack; disrupted water, gas or electricity supply; etc
Suddenly the World Changes!

43. Types of Futures Possible Plausible Probable Preferable Time
Scenario
“Wildcard”
Today
Time
Types of Futures

44. Suddenly the World Changes!
If you don’t think about Wild Cards before they happen, then all of the value in thinking about them is lost (“horse has bolted / stable door”).
If we accept that there will be Wild Cards in the near future, then the only effective defence is to begin to systematically think about them now, and examine their implications.
Suddenly the World Changes!

45. Using Scenario Outputs
Does your organisation’s existing strategy stand up to all of the future worlds presented in these scenarios?
What rationale would you have for pursuing various strategic options in each scenario? What can you influence?
What early indicators will we monitor?
After considering the strategic implications of the scenarios, what actions might we recommend?
Deciding on an implementation plan.
Using Scenario Outputs

46. Given your scenario worlds, and your brief exploration about how those worlds might have developed over time,
And, remembering your focal question,
What are the implications of your scenarios for your institution today?
Would you still be in business? In what business?
Who are your customers and what do they want?
Where are the gaps in your knowledge? What do you need to know more about?
Your Turn!