Lately it feels like reality is overtaking even our most radical scenarios. Which makes us wonder if the current moment calls for more challenging future worlds. This is the first of a two-part series on the concept, value and process of creating extreme scenarios.
It seems everyone feels overwhelmed by the ferocious pace of change shaping and often disrupting our current reality. Individuals, families, communities and organizations of all shapes and sizes are experiencing not just extreme and unfamiliar change (Covid-19, unprecedented political division in peacetime, and now AI, to state the most obvious) but a more profound loss of control. Never in recent memory has the way forward seemed more cloudy, confusing and even menacing.
The understandable temptation is to “hunker down”. To postpone big decisions and commitments. Wait for the storm to pass, and for things to somehow settle down.
As scenario planners, we know things never really do “settle down.” Reflecting back over a quarter century of scenario engagements we’re reminded of the inevitability of change. It is not predictable. It is often destabilizing, and it usually originates from the most unexpected domains. In a sense the uncertainty we’re living through is a more pervasive and intense version of what forward looking strategic planners have always wrestled with.
Managing strategic surprise
Prediction is a losing endeavor when it comes to strategic planning. We’ve written about this often, most recently here. At the heart of our philosophy is the conviction that beyond the very near term the only way to plan prudently is to assume the future will be different in fundamental ways that challenge the organization’s operating model and then create detailed, convincing stories – scenarios – that describe these alternative operating environments and how they could arise. Critically, these scenarios need to be relevant and intellectually accessible to the user. But they should also be provocative, to prompt fresh thinking around nonconventional risks and unexpected opportunities.
It’s beyond the scope of this essay to describe the steps involved in going from scenarios to strategies and plans. What’s essential, though, is the effect – the shift in perspectives and mental models that takes place when decision makers collectively explore fundamentally different operating environments. There’s no promise of perfect prescience. But what does emerge is an enhanced ability to deal with disruption and “strategic surprise.” The very practice of rehearsing multiple scenario futures makes scenario planners mentally prepared for any number of disruptive events or conditions, including those not even considered in the scenario exercise.
This perspective shift for executives participating in scenario planning is critical. Many say they never view the news the same way again. Collectively this shift can instill a needed culture change in an organization.
What is an extreme scenario?
FSG’s approach to scenario planning has always favored the use of “extreme” scenarios when building strategies. We call this an “alternative futures” approach to scenario planning, in contrast to, say, single event-based scenarios or probabilistic scenarios. (See a previous blog describing the different types of scenarios.) The imperative in alternative futures scenario planning is to push beyond “known unknowns” and engage the largest practicable set of scenario variables (drivers) that can define or affect future operating conditions. In collaboration with our clients, we build scenarios that intentionally challenge existing assumptions not only about what the future holds, but also about the viability of the organization’s operating model.
In scenario planning practice, we prompt this forward perspective by encouraging our clients to create scenarios that extend significantly further out in time than their normal planning cycle. If the planning horizon is zero-to-five years out, for example, the applicable scenarios will be set ten years out or even longer. This engenders fresh thinking and intellectual liberation from the “tyranny of the present.” Intuitively planners are more accepting of substantially different future worlds if they’re not restricted to planning horizons associated with current organizational plans and activities.
While our goal is never single-point prediction, sometimes the alternative futures approach has proved amazingly prescient, and has generated valuable foresight. In a 2003 scenario for the US Coast Guard we crafted a scenario (“Code Quebec”) in which 10 million people were killed worldwide by a corona virus originating in China. Covid-19 was still 16 years away. For a pet food company more than a decade ago we explored drought, flooding and other extreme climate change impacts on product ingredient availability and costs. More recently we’ve built US health care scenarios for 2040 that consider delivery systems ranging from fully privatized and minimally regulated to wholly government owned and run.
Pushing the envelope on scenario plausibility
One of the enduring requirements for FSG scenarios is that they are plausible – that you can imagine the present somehow evolving to those scenario end-states. As a check on ourselves when writing scenarios, we sketch chronologies with invented political, economic, regulatory, technological and other events to test our own scenario logic. The scenarios also need to be internally coherent. These rules have served our clients well and enhanced the rigor and quality of our craft.
But it’s worth wondering today if alternative futures scenarios need to be more extreme – and whether we need to deliberately push out the boundary lines of plausibility to get out ahead of the furious pace of change. This is always an important negotiation between FSG scenario consultants and our clients who increasingly feel immobilized by relentless disruption and thus reluctant to take on even more challenging scenario planning environments.
And yet the payoff for aggressively confronting extreme futures is potentially great: more expansive and resilient strategies, greater organizational agility and a workforce that is leaned into the future.
Preparedness for the future and all it holds is never guaranteed. Inevitably there will be disruption and shocks that even the most disciplined and prescient planners will fail to anticipate. But the commitment to alternative future scenarios is the best defense against being upended by strategic surprise.
To paraphrase Louis Pasteur’s insightful words: Chance favors the prepared mind.