Future scenarios

Amid growing concern from business leaders about international security risks, the World Economic Forum's Global Risks Report 2016, developed in collaboration with Zurich Insurance Group and other leading institutions, features scenarios to help companies and organizations examine the trends and driving forces behind future global developments.

The scenarios are based on three possible dystopian futures called: Walled Cities, Strong Regions, and War and Peace. You can read about them in more detail in the Global Risks Report 2016.

This method of using a combination of storytelling and simulation about how the future might unfold is used by many organizations to make flexible long-term plans. Emerging in the 1960s, it was a move away from forecast-based planning and predictions.

Zurich advocates a holistic risk management view and approach, along with other tools such as Total Risk Profiling and Hazard Analysis, to help companies and organizations find their way in a world of increasingly interconnected risks.

Scenario planning is an approach familiar to Angela Wilkinson, who is Counselor for Strategic Foresight at the Organization for Economic Co-operation and Development. She was previously Director of Futures Programs at Oxford University’s Smith School of Enterprise and Environment, and also spent a decade at Shell, one of the pioneers of scenario planning. Co-author of “Strategic Reframing: The Oxford Scenario Planning Approach”, she tells us more about the technique:

"l've worked on scenario planning with both businesses and the public sector and, used well, it is transformative. It's a really good way of helping people develop agile, adaptive and creative responses to situations they're facing.

People are thinking a lot more in terms of global changes, not just local and national changes, and this presents new challenges of emerging risk and global uncertainty.

That's particularly important today when we face increasingly interconnected challenges with multiple drivers – whether it’s migration, climate change, resource stress, the governance of new global business models such as Uber or Airbnb, or disruptive technologies such as Bitcoin. People are thinking a lot more in terms of global changes, not just local and national changes, and this presents new challenges of emerging risk and global uncertainty. Conventional risk management approaches assume the future can be known using data from the past, so can't deal with these.

There is a tendency to see the world through the lens of quantifiable and downside risk. But the businesses that flourish from scenario planning engage with unpredictable uncertainty to create and identify new opportunities.

Space for dialogue

In scenario planning, you are redirecting attention to futures that are already emerging in the here-and-now, not embarking on wild speculation. These stories open up a safe space for dialogue, and creative thinking. They improve the quality of strategic conversation, which leads to better decision making.

By working with a set of alternative futures it is possible to reveal and test the official future – a dominant narrative that's been honed by past experiences and successes and is accepted by the status quo in power.

My job is to facilitate this structured, strategic conversation so that it includes the potential of disruptive change, good or bad – and allows new voices and different perspectives to be heard. The art is to push people to the edge of their intellectual comfort zone, whilst exciting them with new ideas, so that they are active learners and doers. It’s an immersive learning experience for those involved – people insert themselves into these different scenarios and develop their own stories of success. It’s not like reading or writing a report and more like improvisational theatre!

Emerging possibilities

Unlike conventional forecasting which works by assuming the future is somewhere in the distance and knowable given sufficient data, scenario planning recognizes the emerging, transient and multiple nature of future developments already in the here-and-now.

A scenario-based planning process should help you understand the killer assumptions you are making and why your forecast might not turn out right. People do it intuitively in their everyday lives when they say something like: ‘We are having a barbecue - what happens if it rains?’ Yet when we work in groups and organizational settings our ability to effectively anticipate can become struck in groupthink (based around one ideal scenario) or fragmentation of ideas (too many scenarios). Scenario planning works by building only as many scenarios as are needed and useful – usually two, three or four – and avoiding the traps of thinking a particular future is all good or all bad.

Everybody's got killer assumptions about the future somewhere – often buried in their strategic conversation, organizational narrative, or strategy and planning.

Using scenarios

The first thing to do is to find out how people in the organization understand their strategic challenges and how they make sense of the future. Everybody’s got killer assumptions about the future somewhere – often buried in their strategic conversation, organizational narrative, or strategy and planning. Is their vision clear, shared and translated into measurable action? Do they need to align their values and forge common ground? Do they need scenario planning because they are dealing with a turbulent or uncertain situation? Or are they trying to implement a strategic plan and need an early warning system?

I worked with a company in the biotech industry that felt it had become stuck with its strategic innovation. They found their ideas kept falling in the same opportunity space of health, the sector they’d been spun-off from. Unintentionally, they were trying to re-invent the parent company and they couldn’t break this locked in thinking. So, they used the scenario planning intervention to create new ways of thinking and to address the questions: ‘How can we grow but in a way that is different? What are the contexts we could be facing and what do they tell us about the new and different innovation domains we should be accessing?’ They identified several billion-dollar growth opportunities in other sectors.

Helping collaboration

In the process of scenario planning, people start engaging with other colleagues and new and different ideas from other businesses, sectors and professional communities. They learn what’s going on from the point of view of others, and this helps them to discover insights and create new opportunities.

This is an approach that helps collaborative strategy to create the future context and that’s a big shift in the business world.

There are a lot of tools for competitive strategy but this is an approach that helps collaborative strategy to create the future context and that’s a big shift in the business world. Today, you need a good balance between collaborative and competitive strategy. It’s no use being one step ahead of the competition, if everyone falls off the cliff together."

Disclaimer: Views expressed on this page and in the reports are not necessarily those of the Zurich Insurance Group, which accepts no responsibility for them