Managing uncertainty with scenario planning

Martin Börjessonmartin@futuramb.se

www.futuramb.se+46 704 262891

Oil price development 1970 - 1981

High

Low

Base

$10

$20

$30

$40

$50

$60

$70

$80

1970 1975 1980 1985 1990

Oil price development 1970 - 1990

High

Low

Base

$10

$20

$30

$40

$50

$60

$70

$80

1970 1975 1980 1985 1990

Actual outcome

$17

100 200 300 400 500

Feeling good

Mental maps

• We navigate by our mental maps - a mental representation of the world

• A picture/map is

• never complete

• always from a certain perspective

• dependant on the social context

• almost always centered around ourselves

• We strive to maintain our mental maps by filtering things that disturbs our current view

!“Memory of the future”

! The brain rearranges memory fragments to images of the future

! Provides a foundation for intentions and plans

! Focus perception and filter information

Autonomous

Uncertainty

in time

Un

certa

inty

in is

su

e

Today

Traditional

predictions

Driving f

Driving force

Driving force

Driving f

Scenario A

Scenario B

Scenario C

Scenario D

Scenario logic

Different approach: focus on criticaluncertainties

The future for american automotive industry

Low-price fuel

High-price fuel

Neotraditionalvalues

Inner-directed values

Engineers’ Challenge

•Efficiency

•Protectionism

GreenHighways

•Smaller cars

•Versatility

Foreign Competition•Sportier cars

•Light trucks and vans

Long LiveDetroit

•Muscle cars

•Brand loyalty

(1980:s)

Jail

The factory

bling bling

Systemsanalyst?

??

Environment

Social factors, values and

demography

Technologydevelopment and

innovation

Environment and ecology

Politics, lawsand regulations

Economy, industries and

companies

Transactionenvironment

Internalworld

Drivingforces

Visibleeffects

1. Key focual issueand time perspective

5. Scenario logic

Scenario development

2.Key factors

4. Prioritization

3. Environmentaldriving forces

Internalworld

Social factors, values and

demography

Technologydevelopment and

innovation

Environment and ecology

Politics, lawsand regulations

Economy, industries and compananies

Environment

Transactionenvironment

1. Choose key focal issue(+ time perspective)

2. Key factors

3. Environmentaldriving forces

4. Prioritization

1. Key focal issue andtime perspective

5. Scenario logic

Uncertainty

Impact offoreseeable

factors

Distance to future

F S G

Source: Kees van der HeijdenScenarios – The Art of Strategic Conversation

2. List key factors

2. Key factors

3. Environmentaldriving forces

4. Prioritization

1. Key focal issue andtime perspective

5. Scenario logic

1. Brainstorm on PostIt notes!

– List everything you know have an impact

– ”Empty the barrel of the obvious”

2. Cluster notes and identify 4-6 key areas of impact

– Avoid generic predefined areas

– ”Let the notes talk!

Brainstorm tips:

• First individual brainstorm, then group discussion

• No single word PostIts

• ”Yes, and…”

• Keept the pace and keep the time limit!

3. Identify environmentaldriving forces

2. Key factors

3. Environmentaldriving forces

4. Prioritization

1. Key focal issue andtime perspective

5. Scenario logic

• Widen the search to a higher level

• Add driving forces which

• Impacts the 4-6 key areas of impact

• Impacts the focal issue directly

• Use STEEP model

Tips:

• Ask why, why, why, why, why (5 times)

• Don’t be afraid of long shots!

• Keep yourself in the outer environment

Social factorsCultural patterns

Values and lifestyles

Demographics

Health

Crime

Education

Technological factorsDiffusion of technologies

Innovations

Scientific progressEconomical factorsIndustries and companies

Global, regional and local economy

Labour force and income

Infrastructure

Environmental factorsEcology

Climate/weather

Pollution

Recycling

Energy

Political factorsPolicys, laws and regulations

Political agendas

Court decisions

STEEP-model2. Key factors

3. Environmentaldriving forces

4. Prioritization

1. Key focal issue andtime perspective

5. Scenario logic

4. Prioritize driving forces2. Key factors

3. Environmentaldriving forces

4. Prioritization

1. Key focal issue andtime perspective

5. Scenario logic

Unimportant

Uncertainty

Predeterminedelements

Criticaluncertainties

Impact

5. Construct scenario logic2. Key factors

3. Environmentaldriving forces

4. Prioritization

1. Key focal issue andtime perspective

5. Scenario logic

ABC XYZIssue

IssueHigh Low

ABC XYZ

High

Low

ScenarioA

ScenarioB

ScenarioC

ScenarioD

1. Identify two most critical uncertainties

• From the top right corner

2. Stretch them to their extremes

• Mutually exclusiveness!

3. Construct scenario cross

4. Discuss resulting scenarios andgive them telling names

Scenario planningIs a basic individual human property

But for groups it

• helps us seeing the bigger pictureand reperceive our environment by moving our focus the

• uncertainties

• larger environment

• underlying driving forces

• challenges and redraws the mental maps, which determines the limits to our thoughts and actions

• Identifies blind spots

• Facilitates learning on a strategic level

• (both for groups and individuals)

???(wwdkwdk)

don’t knowknow

haveknowledge

don’t have knowledge

Make horseshoes

Accounting

Fire and heat

Scenario references

http://www.well.com/~mb/scenario_planning/Website with many references to articles, books and other resources

The Art of the Long ViewPeter Schwartz

Scenarios – The art of strategic conversationKees van der Heijden

Scenario planning in a design situation

Approaches

• Evaluate a design

• Over time

• Versus different future worlds

• Initially in design process

• Creating a better mental map

• Create future oriented concrete design “rooms”

Time perspective

• Good design is timeless

• What time perspective do you currently have? Do you know?

Windtunneling

Wind tunneling for adjusting design

Sketch or spec

A

B

C

A

B

C

Given factors

Secondary factors

Adopt-a-world

A

B

C

Alternativefuture worlds

A

B

C

The market in each world

A

B

C

Products andservices in each world

Possible ways of design or

package business idea

Opportunities ExpertsNeed for products and services

1 2 3 4 5

Creating design roomshttp://www.smart-its.org/

• Three restaurants

• The edgy restaurant (experiences)

• The social restaurant (social interaction)

• The PC (Politically Correct) restaurant (ecological and ethical food and process)