Copyright © 2007 CIL Ltd. All Rights Reserved. Used under licence by Centre for Innovative Leadership (Pty) Ltd P O Box 50405, Randjesfontein 1683, Midrand,

Copyright © 2007 CIL Ltd. All Rights Reserved. Used under licence by Centre for Innovative Leadership (Pty) Ltd

P O Box 50405, Randjesfontein 1683, Midrand, Gauteng Tel: +27 (011) 3141143, Mobile +27824161322, Int. Tel: +441414160660, Email: [email protected] Website: www.cil.net

BUILDING STRATEGIC SCENARIOS TO GUIDE THE EVOLUTION OF THE ENERGY INDUSTRY IN SOUTH AFRICA

The 2012 ICUE Conference – Stellenbosch – South Africa14 – 16 August 2012

Overview



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1. Introduction to Scenarios2. Difference between scenarios and predictions/forecasts3. Example of divergence between predictions and what

actually happened - hindsight4. Types of scenarios5. The process of building a scenario6. Global examples of where scenarios have made a

contribution7. The need for South African Energy Scenarios8. About CIL9. About the Presenter

Introduction

• Many large organisations are developing sets of scenarios to test their strategies and decisions, so they can recognise signs of change early and adjust to different business conditions

• The future is fundamentally unpredictable and unknowable • Consider the computer power going into weather

forecasting• Having a great deal of data is not useful• The future is not an extrapolation of the past



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Scenario Thinking v Traditional ThinkingSource: Louis van der Merwe Ref. 1

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[email protected] Website: www.cil.net

Traditional thinking – characterised by:

Scenario thinking – characterised by:

Reductionist Thinking, Linear Causality – The Future is Singular

Systems Thinking, Multiple Causality – The Future is Plural

Prediction, Probability Plausibility, Robustness

Getting the Future Right Doing the Right Things before Competitors

“Good” Strategy is Intelligence Dependent

“Good” Strategy is process and engagement based

Strong Action along a single path into the future

Building the capacity for Early Sensing, Acting, Learning and Self-Correcting

Command & Control – the Central thinks and the local acts

Resilient organisation–wide thinking, learning and acting in alignment

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The difference between Predictions and Scenarios

Source: Louis van der Merwe Ref. 2



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PREDICTIONS AND SCENARIOS

PAST FUTURE

PRESENT

“THE

OFFICIAL

FUTURE”

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Source: v d Heijden, Scenarios the Art of Strategic Conversation, Wiley

Source: v d Heijden, Scenarios the Art of Strategic Conversation, Wiley

Thinking about the future



Forecasts Scenarios

• Single line projections • Multiple stories

• Impoverished summaries • Rich summaries

• Assume predictability • Assume unpredictability

• Focus on certainties • Focus on uncertainties

• Conceal risks • Clarify risks

• Enable responsiveness

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Uncovering Deep Patterns & Structures

Copyright © 2007 CIL Ltd. All Rights Reserved. Used under licence by Centre for Innovative Leadership (Pty) LtdP O Box 50405, Randjesfontein 1683, Midrand, Gauteng Tel: +27 (011) 3141143, Mobile +27824161322,

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Increased ability tolead, influence & learn

Events

Patterns ofBehaviour

Structure of the System

mailto:[email protected]

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Types of Scenarios Source: Louis van der Merwe Ref. 2



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Building a Scenario



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Source: Louis van Sourcederurce: Louis van der Merwe Ref. 2



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Testing for Robustness Source: Louis van der Merwe Ref. 2



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PREDICTIONS AND SCENARIOS

PAST FUTURE

PRESENT

TESTING FOR

ROBUSTNESS

ACROSS ALL THE

SCENARIOS •OPPORTUNITIES

•RISKS

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LEVELS OF CONTROL: ACTORS (OPTIONS) ,

FACTORS (APPRECIATION ONLY)



Source: After K. v d Heijden


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Scenario - Based Strategy Source: Louis van der Merwe Ref. 2




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Quality Of Thinking = Quality Of Decisions



Purpose of Scenario Thinking

Purpose of Systems Thinking

To influence the assumptions we make about how the world we may live, could plausibly unfold (Microcosm/Macrocosm)

To look below the surface at patterns of behaviour and causal relationships, between key variables which are often hidden from view

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Common Mistakes

• Put all the good news in one scenario, and all the bad news in another

• Best case, worst case and status quo scenarios• Developing implausible unrealistic scenarios• Falling into the probability trap• Stopping when the scenarios are completed



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Scenario Thinking v Traditional Thinking in Energy. Source: Louis van der Merwe Ref. 1

18Copyright ©2006 CIL Ltd. All Rights Reserved. Used under licence to CIL BV. P O Box 14836, 1001 LH, Amsterdam, The Netherlands Int’l. Tel: +44 1414 160660 Email: [email protected] Website: www.cil.net

Traditional thinking –characterised by:

Scenario thinking – characterised by:

Reductionist Thinking, Linear Causality – The Future is Singular

Systems Thinking, Multiple Causality – The Future is Plural

Prediction, Probability Plausibility, Robustness

Getting the Future Right Doing the Right Things before Competitors

“Good” Strategy is Intelligence Dependent

“Good” Strategy is process and engagement based

Strong Action along a single path into the future

Building the capacity for Early Sensing, Acting, Learning and Self-Correcting

Command & Control – the Centre thinks and the Periphery acts

Resilient organisation–wide thinking, learning and acting in alignment

http://www.cil.net/

SA Energy Scenarios

• A highly volatile future• Little agreement amongst the generators, users

and regulators• A reactionary tit-for-tat response• Dissipation of energy

Now is the time for a set of plausible SA Energy Scenarios



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P O Box 50405, Randjesfontein 1683, Midrand, Gauteng Tel: +27 (011) 3141143, Mobile +27824161322, Int. Tel: +441414160660, Email: [email protected] Website: www.cil.net 20

A SAN VILLAGE COUNCIL

References

• Reference 1: Louis van der Merwe, L. (2005) Planning for Certainty in Uncertain Times. World Print Conference CT-Keynote

• Reference 2: Louis van der Merwe, L. (2008) in ed. Chermack, T. et al (2008) Advances in Developing Human Resources Vol 10 No.2 April 2008 216-239 SAGE Publications



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Centre for Innovative Leadership (CIL) est.1989(Ireland and South Africa)

Consulting support and executive development themes:• Scenario-based Strategy CIL Products: Scenario development, BSA,

Executive Briefing• Leadership development, executive development CIL Products:

Leadership for Results (LFR), TAS, STLT, BMD, MAP• Change Management CIL Products: SLC, CIL Coaching Capacity building-training and licensing internal people Experience base: City Gov./Large Corporations/Universities-Teaching at

various Bus. Schools including; Neijenrode-NL, Trinity-Ireland, WBS-SA, UKZN-SA, Research Ass. MIT. International consultant: USA, NL, Ireland, UK, Taiwan, PRC, SoA, West Africa

Partial client list: Nokia, Old Mutual, Mobile Telephone Networks (MTN), Amnesty International, ETHZ-Zurich, SASOL, SA Presidency, Telkom-SA, MIT-Boston-OLC, Shell Oil (USA), Royal/Dutch Shell, New York City Gov., Debswana, Taiwan Cellular Corp., The Open University, United Nations (HIV/AIDS scenarios in Africa), UNDP-Lesotho/Botswana, Irish Life and Permanent, SA Gov.-NPA, RandGold Resources; Mali, Cote D’Ivoire, Senegal, Eskom-scenarios-next 50 years. CoMSA Mining industry scenarios

Patterns: Telco’s, Financial Services, Energy, Governments; city and national, UN agencies, Universities, Resources companies in Africa, NGO’s

Common themes amongst these organisations: Knowledge intensive, volatile external environments, leadership. “Interesting work with people and organisations we care about”

CIL Coordinates: Web: www.cil.net , Email: [email protected] Tel No: +44141460660

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About the Presenter

• James is an Associate of CIL with a special interest in corporate governance and stakeholder engagement. His experience in the soft areas of human resources, and in the hard areas of feasibilities and due diligences, gives him a unique view of how people, organisations and strategies fit together. He has extensive experience in building lasting relationships with clients, listening to their needs and responding proactively to helping them manage the way forward. In the last year James has been developing strong experience in the area of Stakeholder Engagement, and has worked closely with AccountAbility, the organisation sponsoring the AA1000 suite of International Standards. He is also pioneering approaches to regulatory impact assessment. He is part of the delivery team building the scenarios for the Mining Industry arising from the recent Mining Lekgotla.

James [email protected]: + 27 [0] 83 625 3 862Tel: +27 [0] 11 314 11 43



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Copyright © 2007 CIL Ltd. All Rights Reserved. Used under licence by Centre for Innovative Leadership (Pty) Ltd P O Box 50405, Randjesfontein 1683, Midrand,