Scenario planning success requires disciplined, deliberate efforts to imagine the widest range of plausible future operating environments – even those we don’t like or that make us uncomfortable.
There is a reflex in all of us to roll up what we think we know about the past, mix it with our hopes and fears, and use it all to project some vision of the future. It is an illusory pursuit of certainty.
That does not mean we can’t think about the future with rigor. It does mean that too often even the smartest among us don’t know how to it.
Nick Foster, author of the new book Could Should Might Don’t, remarked recently that, for almost every senior leadership team he ever worked with, the capacity to imagine the future in a way that is not merely a projection of the present was an underdeveloped skill.
“You can be sitting in a meeting with people with Ph.D.s or people who have led billion-dollar companies,” said Foster, the former head of “futures design” for companies including Google X, Apple, Sony and Dyson. “When they’re talking about the here and now, it’s very empirical and detail oriented. There needs to be a well-reasoned answer for every question or opinion. When you start to talk about the future,” he added, “people just grab The Matrix or The Jetsons or flying cars, which to me points at a lack of learning and rigor and ability in that domain.”
Scenario planning, at least as it is practiced at FSG, calls upon clients to use “rigorous imagination.” For FSG scenario planning consultants this is not just a turn of phrase. It is hard work thinking in a disciplined way about an operating context for which there is not yet any data but for which we can prepare all the same.
What is rigorous imagination in scenario planning?
Think of industries that have undergone transformational changes in the last twenty years. How many were upended by forces that no one in that business imagined had anything to do with them? And we don’t mean catastrophic “Black Swan” events. Ordinary volatility, compounded over a decade or two, can be more than enough to change everything.
Installing rigor in our strategic imaginations is not about settling on a “most likely future” and then working to prepare for it. This is the conventional way of doing long-term strategy, and it is too full of surprises.
The reason for the surprises is that the further out in time we go with our projections the more likely we are to miss big things whose relevance is not obvious today – geopolitical shifts, climate change impacts, supply chain disruptions, novel forms of competition and so on. Instead, planners focus on what they know and are accustomed to thinking about. In the face of phenomena that actually do rock their worlds this myopia can catch them flat-footed.
This is the value in testing an organization against multiple versions of the future—all of them plausible, none of them “correct.” Working in these alternative futures often stimulates cultural change inside an organization. When that change takes root, as it has at so many of FSG’s clients, it changes the reflexes of an organization.
This new reflex is alert to forces familiar and forces never considered before. It inspires an expansive conception of opportunity and risk. Against those possibilities the new reflex tests an organization’s current capabilities and ambitions.
From rigorous imagination to committed action
Making the case for this approach to thinking about the future is easy. Getting a senior team to fully commit, as Nick Foster has discovered, is another matter.
We’ve written often, including here, about resistance to making the foresight leap. Often there is a perception that senior leadership lacks the time to contribute meaningfully. This is a legitimate reason during crisis periods. At other times it reflects internal fear of challenge to a firm’s existing business model. This is something scenario planning invariably does in a thoughtful, non-threatening way.
Success in scenario planning hinges on the expectation that leadership will act on the insights that emerge from the process. It is at that point when brain utilization shifts from right to left, when rigorous imagination shifts to rigorous planning and detailed implementation. As one of our colleagues describes it, the pointy heads give way to the pointy pencils.
Scenario planning is not a trivial investment of leadership time and attention. We counsel firms to postpone scenario efforts if leadership cannot invest skin in the game. But when the commitment is real it invariably pays off.
As Nick Foster put it, “companies that invest and spend time thinking at longer time frames tend to have fewer failings than companies that are just racing to keep up and get ahead.”
Well said – I couldn’t agree more. The imagination is a muscle which for most of is underused and therefore sclerotic.
Yes. The perverse thing is that a genuinely expansive imagination is often subtly discouraged for coloring outside the lines.
Too many organizations become attached to the familiar—even when the familiar has stopped working.
This is a thought-provoking essay. We seem to be living in a time when leaders of organizations have either given up on the foresight imperative (preferring to muddle through or “stay agile” amidst the current uncertainty) – or because of that very uncertainty feel now more than ever it’s critical to invest in the long view.
The idea of being “agile” seemed to take root right after the 2008 financial crisis. It seemed to me then, and seems to me now, to be a reactive concept. At heart it shows a lack of confidence in a leadership’s ability to chart a path to the realization of their big ideas.
Future events may be in tension with a big tension, of course. A culture built for anticipating change can assert itself even amid volatility, and in that way capitalize on change.
Part of the reason the imagination muscle is not developed and used may be that few organizations and certainly analysts don’t reward it.
This is an excellent point. Few leaders get acknowledged for preceving the crisis that didn’t happen. Or for their foresight in seizing an opportunity that, by the time it arrives, feels like it was obvious all along.
Great piece. My favorite bits:
– multiple versions of the future—all of them plausible, none of them “correct.”
– the pointy heads give way to the pointy pencils.
When we describe to clients the power of living in multiple alternative futures they are sometimes skeptical about how such an approach can yield insights for their near-term strategic plans. Very quickly they perceive two things.
The first is how present-minded most of us are in making our plans about anything beyond the near term.
The second is that multiple versions of the future can, considered together, engage the full constellation of change agents—many of them well outside the established operating environment but hugely consequential for the business just the same.
Very nicely presented, Kevin. I would add emphasis to one point you make mid-way through. One reason that leadership groups fail to think imaginatively, is not a failure of their imagination. It is that they focus too narrowly on imagining threats or opportunities within their own industry segment. But, as you note, transformative surprises typically come from outside of the industry – suddenly imposing new rules, new constraints, new players, and new opportunities. The strategic thinking must begin by imagining the broad social context within which their industry must perform successfully. Then ask, in such a societal future (set of futures) what must we do to survive and prosper?
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Agreed, Tom.
My favorite examples of this is the initial response of Hollywood studios to television in the 1940s, which perceived TV as interesting, sure, but nothing to do with them. They fumbled their response well into the 1950s.
There are lots of others once you start thinking about them. Think of a taxi driver fifteen years ago, who probably gave little though to how a mobile phone app would crater their business. Or all the well-established entertainment businesses—radio, music, TV, Hollywood again—that abruptly had to reimagine themselves once streaming technology became commonplace on all sorts of platforms.
“What’s a platform?” they might have asked.