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Looking forward - Scenario development
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in practice
Scenarios are used to identify a number of possible
alternative futures and, optionally, how we might get there.
Scenarios are not predictions of the future. They show
how different interpretations of the driving forces of change can lead to
different possible futures. By setting up several scenarios a possibility
space is created and it is within this space that the future is likely to
unfold.
Scenarios are an important and useful tool in providing
a neutral space (the future) for discussion, helping to build consensus on
the key issues facing all stakeholders. They:
- Offer an inclusive and consultative process
- Can reflect the views and challenges facing all stakeholders
- Are a useful tool for organisational learning
- Use stories to describe strategic issues
- Allow detailed analysis to be woven in.
As well as being useful in strategy formulation, they
can be used in policy development, conflict resolution, group learning and
to aid rehearsal of management decisions. They can be used at many levels:
- Nations
- Government
- Regions
- Sectors
- Multi-national companies
- Small / Medium enterprises
- Single institutions
- Multi-organisation partnerships.
Scenarios can be used over any time scale, dependent on
the primary objective for using them. Scenarios developed in order to aid
team development, for example, are likely to be developed more quickly and
have a shorter shelf life than those used for policy development.
Scenario Development - background
Societal, technological, economical, environmental and
political drivers (as well as organisational and transactional
environments) should be identified and used in constructing scenarios.
Good scenarios:
- Are based on analysis of change drivers
- Allow critical uncertainties and predetermined elements to be
distinguished
- Are compelling and credible
- Are internally logic and consistent
Scenarios will not:
- Make the decisions
- Begin an unstoppable course of action
- Ever be entirely right (although elements of each scenario could be)
- Persuade everybody.
When building scenarios, the focus of interest needs to
be agreed, the change drivers identified and the key uncertainties mapped
to determine the critical planning area for scenario development - the
area of uncertain, important change drivers. The dynamics between these
change drivers and how they play off each other are the starting point for
developing different possible futures. For scenarios to be effective they
need to plausible and compelling (as opposed to being implausible or
obvious), as well as being stretching - taking their intended audience
into what can be 'uncomfortable' territory. There is a risk or even
likelihood that audiences may 'pull back' from such scenarios, for a
number of reasons:
- People are not skilled at thinking about the future and therefore
may find it difficult to understand where the scenarios have come from
- Scenarios invite people to lay bare their assumptions
- Scenario thinking removes the rules and structures of today, which
makes some people defensive.
- Scenarios invite people to explore what might happen, and
people want to control what will happen
- Understanding scenarios (the output) relies on understanding drivers
and uncertainties (the input) and many people do not have a detailed
understanding of the current situation.
For effective scenario generation therefore it is
important to know well the intended use and audience for the scenarios. As
far as possible, the audience should be used for developing the scenarios
and testing and verifying the plausibility and areas of comfort or
discomfort in each scenario.
Scenario Development - process
There are a number of factors which will affect the
design of the scenario process. For example: is there one preferred or
multiple explorative futures?
- The Normative method involves defining a preferred vision of the
future and outlining different pathways from the goal to the present
- The Explorative method meanwhile involves defining drivers,
assessing their importance and outlining the scenarios.
Another important factor in the design process is
whether new or contextualised scenarios are the goal. It is time consuming
to generate scenarios from scratch. It can be more effective therefore to
make use of existing generic scenarios, already developed and tested.
Examples include the DTI scenarios produced for their 'futures lab' (futurefocus@dti)
and the scenarios developed by Shell (see references). There are
also many other 'off-the-shelf' scenarios.
A further factor for consideration is the extent of
consultation that is desired and indeed possible. It may be decided to
present stakeholders with the finished scenario. This is swift but it can
be hard for stakeholders to engage with scenarios if they were not
involved in their development. It is better if stakeholders can
participate in building the scenarios. This can be time-consuming but if
well managed it is possible to move from the first stage identification of
raw drivers to final scenario generation within a couple of weeks (one of
the hardest tasks being identification of key individuals for the
process).
Typical steps in scenario generation
1. Assemble the scenario team
- The core team will be responsible for project and workshop
management, providing sponsoring departments' points of view and
internal communications.
- Experienced scenario-planners should also form part of the team - to
lead the process and ensure clarity about the focus of interest.
2. Identify drivers of change
- It is often best to use workshops to do this. You should determine
the 'mix' of stakeholder groups and size and number of workshops
required (suggested bare minimum: 10 people, one half day workshop).
- Ensure participants understand purpose, format and outputs from the
workshop (and have good pre-briefing materials).
- Brainstorm on drivers of change: compiling an unfiltered list;
disposing of obviously invalid drivers and sorting and categorising
the list.
3. Bring drivers together into a viable framework
- The next step is to link these drivers together to provide a
meaningful framework. This should involve grouping the drivers into
combinations that are meaningful.
- This is probably the most difficult conceptual step and intuition
will be important.
4. Produce initial mini-scenarios
- The outcome of the previous step is usually between seven and nine
logical groupings of drivers.
- Having placed factors in these groups work out, very approximately
at this stage, what is the connection between them. What does each
group of drivers represent?
5. Reduce scenarios
- The main action at this stage is to reduce the seven to nine
mini-scenarios into two or three larger scenarios. The challenge is to
come down to finding just 2 or 3 "containers" into which all
the topics can sensibly be fitted. This usually requires considerable
amount of debate but usually producers fundamental insights into what
are the really important issues.
- The main reason for reducing to 2, 3 or 4 scenarios is a practical
one. Managers who will be asked to use the final scenarios can only
cope effectively with a small number of versions.
6. Testing the scenarios
- Having grouped the drivers into scenarios, the next step is to test
them for viability. Do they make sense? If they don't intuitively
"hang together" then why not?
- The usual problem is that one of more of the assumptions turns out
to be unrealistic. If so, then you need to return to the second step.
- The key point to remember is that developing scenarios is likely to
be an iterative process.
7. Write the scenarios
- Once tested for viability, the scenarios should be written up in the
format most useful for the client.
- Most scenarios will be in written form, especially where they will
almost inevitably be qualitative. Other formats include adding
"fictional" characters to the material, using numeric data
or diagrams, or using more detailed fictional forms. An extreme
example of the latter could be assuming the character of a leader
writer in the Financial Times in the year 2010, for instance.
8. Validation of Scenarios
- Once written up, the scenarios should go through a consultation
phrase to allow them to be approved and revised. Original workshop
delegates should always be consulted but the audience for scenario
testing may be much wider - putting up on an electronic forum can be
useful (but the scenarios should have a caveat stressing they are in
development). The key message here is to cast your net wide.
- Built into the whole scenario process must be the capacity to revise
scenarios when there is some fundamental change to underpinning
drivers. Thus a team member should be assigned to continually review
the validity of scenarios - this is an iterative process not a
'one-off'.
Incorporation of scenarios into project, policy or
organisational culture
Scenarios must be completely embedded in the project or
policy of which they form a part. If they are to become part of the
organisational mindset then they will need careful dissemination to get
good engagement. It is also important that they form part of the
underpinning assumptions of future work not just the work they were
originally commissioned for.
For good engagement with scenarios, they must be widely
circulated. When distributing the scenarios, however, you should make
clear whether they are being distributed for comment or for information.
The report - A Futurist
toolbox outlines an explorative scenario process.
Strengths
- Can help to identify opportunities.
- Can act as a checklist during planning to ensure that nothing has
been forgotten.
- Can be used to give early warning to possible changes.
- Can be used to envisage preferred futures.
- Remove some of today's constraints.
- Allow strategists to say "what if…?" "I like that…"
"That would be a good outcome".
- Assist in separating tangled issues.
- Help to break 'group think' and conventional wisdom.
- Allow 'undiscussables' to be aired.
- Create a rich and shared picture of outcomes.
Weaknesses
- Can be difficult to translate the outcomes into concrete decisions.
- The method is partly based on qualitative information that is
imprecise.
- Beware of focussing too much on the scenarios at the expense of the
actual objective for using them.
References
The Generic
Scenarios paper by the Strategy Unit Strategic Futures team
(December 2002) presents summaries and provides links to generic scenario
sets, in order to provide background materials to help those interested in
using scenarios for their own projects.
Exploring Corporate Strategy, Johnson, G., and
Scholes, K.
S.P Schnaars 'How to develop and use scenarios'
in R.G. Dyson Strategic Planning: Models and analytical techniques, Wiley
1990
Scenarios shooting the rapids, Wack, P. Havard
Business Review Vol. 63 no 6
Scenario Planning: Managing for the Future,
Ringland, G. 1998
The Sixth Sense: Accelerating Organisational Learning
with Scenarios, Kees van der Heijden et al 2002
Scenario development
In Practice 1: SU Energy Review
The DTI Foresight scenarios describe four futures based
on two extremes of governance (global or local) and two extremes of social
values (individual or communal). The scenarios are realistic in the sense
that they represent value systems held by minority groups, but appear
extreme when compared to the current culture.
Foresight Environmental Futures and Conventional
Development
The Foresight scenarios were used in the Energy review
on two time scales. The first was to 2050 with a view to seeing the degree
to which the scenarios were consistent with a low-carbon future. The
second use was to 2020 where the main use was to explore the ways in which
the electricity generating stations being decommissioned could be
replaced. In both cases the scenarios were developed quantitatively with
detailed projections of energy demands (by sector and type of demand;
heat, power or transport). Each demand was forecast using a driver (such
as number of households), level of energy services required (driven by GDP
growth and curtailed by saturation effects) and improvements in energy
efficiency (by both deliberate policy and technical progress).
The choice of supply options was harder to quantify in
detail, but the different drivers in each scenario could be interpreted in
terms of preferences. For example in both the "global" scenarios
(World Markets and Global Sustainability) energy supply companies were
assumed to be operating in a liberalised commercial market. This precludes
the use of nuclear energy since the financial risks associated with
investment in nuclear stations is regarded as too high for commercial
companies. In the "regional" scenarios (Provincial Enterprise
and Local Stewardship) the operating values encouraged national
self-sufficiency which encouraged the use of local resources.
Striking conclusions from the scenarios included
identifying the significance of old solid wall housing (although only 20%
of the projected housing stock they accounted for 50% of domestic space
heating demand) and the significance of air transport (the fastest growing
sector with no sign of saturation). The scenarios also demonstrated the
potential for improved energy efficiency in all cases.
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Scenario development
In Practice 2: SU GM Crops Project
Why we used scenarios in our analysis
The GM Crops team used a scenario-based approach to
consider the range of costs and benefits that could be associated with the
growing, or not growing, of GM crops in the UK. The central purpose was to
consider the relative costs and benefits of alternative futures for the UK
(over a 10-15 year time scale), both with and without the
commercialisation of GM crops on UK farms. The scenarios did not predict
the future, nor did they have probabilities attached to them. However, all
of the scenarios were scrutinised to ensure that they were plausible and
internally consistent.
There were a number of reasons why a scenario approach
was deemed appropriate for this study:
- The use of scenarios meant that a range of possible future outcomes
could be considered, without having to pre-judge the most likely
outcome for what was a controversial subject area.
- Many different factors needed to be taken into account in this
study. Assessing each of these in the abstract could have presented a
confusing and misleading picture. Tying the assessment to specific
scenarios helped to avoid this.
- A scenario-based approach was helpful in capturing the dynamics of
the costs and benefits associated with GM crops. There is a dynamic to
each of the individual scenarios (see below), but in addition, it is
possible to envisage that over time, the UK situation could evolve
from one scenario into another.
- The scenario-based approach helped to inform the policy-making
process, without having to make judgements about the "best"
policy approach - which was outside the scope of the study.
How we developed our scenarios
The GM Crops team ran a one-day "scenario
workshop" involving about 25 stakeholders and experts. The workshop
was facilitated by independent scenario experts. Its purpose was to
identify the key issues that would need to be taken into account in
scenario definition and, in particular, to identify the two axes that
would be used to define our scenarios. The scenarios were subsequently
developed by the GM Crops team, in the light of discussions with Expert
Advisory Groups and other stakeholders. Draft outputs - and a note of
the scenario workshop - were published for comment by the wider public.
Description of the scenarios
The scenarios represent possible future outcomes that
could occur in about 10-15 years time. Four of the five scenarios were
based around two axes:
- The vertical axis on regulations represents a range of
possible regulatory regimes. At one extreme are "Non-GM-specific
regulations", under which GM crops and foods are treated much
like any other novel crop or food. At the other extreme are
"GM-specific regulations", under which GM crops are subject
to a comprehensive approvals process, conditions of use and monitoring
requirements.
- The horizontal axis represents a range of public attitudes.
Public attitudes are complex and heterogeneous. The axis covers a
range from public attitudes which are broadly positive to GM, through
to public attitudes which are broadly negative. A distinct fifth
scenario looked at the possibility that the UK may reject GM crops
outright. The scenarios are illustrated below.
Scenarios used in the Strategy Unit study
The role played by the scenarios in the final report
The five different scenarios played a crucial role in
the final report. After we had defined the characteristics and conditions
of each scenario, we considered the costs and benefits that would arise in
each case. This enabled the study to highlight the importance of
trade-offs and weighting of different costs and benefits. An example is
attached at Annex A, for just one of the scenarios. As a final step, we
also considered possible disrupters in each of the scenarios - how these
might arise, how they would be dealt with and what the implications might
be.
Lessons learned
Developing new scenarios is time-consuming - but
definitely achievable. In some cases it will be possible to use "off
the shelf" scenarios developed by other people. But in other cases,
no existing scenarios will fit the bill. If so, it may well be worthwhile
developing new scenarios, providing that sufficient time and resources are
devoted to this exercise.
Scenarios are a tool, not an end in themselves.
Scenarios should be defined and used in the way that is most helpful to
the study - there are no right or wrong answers.
The importance of involving stakeholders and experts in
scenario development. If scenarios are to be used, it is essential that
they have widespread buy-in. The best way to achieve this is by giving the
relevant people a "sense of ownership" of the scenarios.
This scenarios were crucially important in the GM
study, where opinion was so polarised and we faced criticism that it was
there to provide evidence for a predetermined Government decision to allow
the commercialisation of GM. The scenarios illustrated that we were
studying all possibilities, including a "no-GM" future.
The scenarios analysis enabled the SU to investigate
whether government policy objectives could be supported across a range of
possible outcomes.
Scenarios can be powerful tools - but they cannot do
everything! Scenarios should be seen as a complement to other techniques,
such as risk assessment or cost-benefit analysis - not as a substitute.
Scenarios need to have names! This may be one of the
most difficult tasks in scenario development - but well-chosen scenario
names are much more informative than 1, 2, 3 ... or A, B, C etc.
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