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Summary The Art of the Long View

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Some Impressionistic takes from the book of
Peter Schwartz
“The Art of the Long View“
Planning for the Future in an Uncert...

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Peter Schwartz (born 1946) is an American futurist, innovator, author, and co-founder
of the Global Business Network (GBN)...

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 Peter Schwartz evidences charming honesty & humility about his
experiences building scenarios. He learned from his failu...

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Summary The Art of the Long View

The motivation to write this book for Mr.Peter Schwartz came from Royal Dutch/Shell group success in using scenarios to anticipate the oil crisis in the 1980’s . Shell was one of the few companies that managed this crisis. The following are the key points that may be of interest and assist the professionals in making better decisions in planning events in your life or the organization you work with:

• Too many people react to uncertainty with denial. They create blind spot for themselves.
• Scenarios are a tool for helping us to take a long view in a world of VUCA. Once you get used to the idea of scenarios, using them comes more easily.
• Scenario planning is about making choices today with an understanding of how they might turn out. This type of planning comes easy to some people. For others, it takes practice. Be patient, the end result of proper planning is worth the effort. Remember the 6 P’s of planning – Proper Planning Prevents Piddley Poor Performance.
• Scenarios can be used
To plan a business
To Judge an investment
To choose an education
To look for a job.
• Scenarios are not predictions. Rather , it is vehicles for helping the people learn & help the people to perceive futures in present.
• Scenarios deal with two worlds
The world of facts. Gather and transform information of strategic significance into fresh perspectives.
The world of perceptions. You are looking for the “aha” feeling.

The motivation to write this book for Mr.Peter Schwartz came from Royal Dutch/Shell group success in using scenarios to anticipate the oil crisis in the 1980’s . Shell was one of the few companies that managed this crisis. The following are the key points that may be of interest and assist the professionals in making better decisions in planning events in your life or the organization you work with:

• Too many people react to uncertainty with denial. They create blind spot for themselves.
• Scenarios are a tool for helping us to take a long view in a world of VUCA. Once you get used to the idea of scenarios, using them comes more easily.
• Scenario planning is about making choices today with an understanding of how they might turn out. This type of planning comes easy to some people. For others, it takes practice. Be patient, the end result of proper planning is worth the effort. Remember the 6 P’s of planning – Proper Planning Prevents Piddley Poor Performance.
• Scenarios can be used
To plan a business
To Judge an investment
To choose an education
To look for a job.
• Scenarios are not predictions. Rather , it is vehicles for helping the people learn & help the people to perceive futures in present.
• Scenarios deal with two worlds
The world of facts. Gather and transform information of strategic significance into fresh perspectives.
The world of perceptions. You are looking for the “aha” feeling.

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Summary The Art of the Long View

  1. 1. Some Impressionistic takes from the book of Peter Schwartz “The Art of the Long View“ Planning for the Future in an Uncertain World by Ramki ramaddster@gmail.com
  2. 2. Peter Schwartz (born 1946) is an American futurist, innovator, author, and co-founder of the Global Business Network (GBN), a corporate strategy firm, specializing in future-think and Scenario Planning Schwartz has written several books, on a variety of future-oriented topics. His first book, The Art of the Long View (Doubleday, 1991) is considered by many to be the seminal publication on scenario planning, was voted the best all time book on the future by the Association of Professional Futurists and is used as a textbook by many business schools. Inevitable Surprises (Gotham, 2003) is a look at the forces at play in today's world, and how they will continue to affect the world. About the Author
  3. 3.  Peter Schwartz evidences charming honesty & humility about his experiences building scenarios. He learned from his failures, so he includes them, as well as his rather impressive successes.  Schwartz emphasizes that scenario planning is not the same thing as predicting the future and that complete accuracy is not the goal. Yet, it is still striking how accurately his 1991 scenarios played out. He may have missed a few specific events and trends but, if you’d based your actions on his scenarios, you would have been well equipped for the last two decades.  His very useful principles of scenario planning and multisource information gathering have not changed since he delineated them.  The result is a classic. I recommend this book to entrepreneurs, organizational decision makers and anyone interested in strategic planning, futurism or change. Prelude In this Summary the take away are 1. What scenario planning is; 2. What principles and steps scenario planning involves; and 3. How to use scenarios to make better decisions
  4. 4.  Scenario thinking is a powerful method for clarifying perceptions, communicating, integrating quantitative and intuitive planning, forcing people to think, working through complexity and influencing an organization without micro-managing.  Simply put, scenarios are alternative futures. People often spin future scenarios unconsciously.  Many companies have encountered severe problems because management “locked in” to certain scenario and failed to consider other potential outcomes.  Conscious scenario planning forces managers to confront their unspoken assumptions and test them in the glare of a possibly adverse future.  Leaders/Managers need to recognize that the way they think affects what they see.  What they assume to be true can often blind them to what is, in fact, happening. What are Scenarios ?
  5. 5.  To prepare your organization to use scenario planning, it is necessary to:  Understand that people always spin scenarios — Allow alternative scenarios to come forth for open discussion and debate.  Examine your assumptions — Determine how habitual behavior & thought patterns constrain your individual and organizational thinking.  Plan strategically — Make a conscious, deliberate effort to balance quantitative planning with intuitive, “gut” planning.  Test readiness for change — Challenge “business as usual” ideas.  Do a creativity check — Honestly examine how often your organization develops really innovative plans and concepts.  Make decisions — Explore alternatives before reaching a consensus.  Recognize uncertainty — In fact, admit and embrace uncertainty.  Clarify all communications — Eliminate jargon, confusing language and doubletalk What are Scenarios ?
  6. 6. Scenarios are stories Scenarios are maps of the future Scenarios are mental maps Scenarios are mental models Scenarios are narratives Scenarios are pictures Scenarios are models Scenarios are sets of indicators Scenarios are tools Scenarios are art What are Scenarios ?
  7. 7.  Case study which helps us understand how the scenario-building process can help to make decisions.  One business that has had success using it is Smith& Hawken, a mail-order marketer of top quality garden implements made by Bull-dog tools of U.K.  This case shows the end results of a lot of trench work that we will learn to do.  3 Possible scenarios  First one- Envisioned a world of high economic growth fueled by consumption & materialism. Further it presumed that government and business would find the right solutions for major social problems. In other words, the world would continue along its present track and things would get better and better  Second one- Scenario envisioned economic depression. Third world famine, environmental crisis, and vanishing natural resources, Thinking of the worst helped S & H determine if it could weather hard times  Third one- Imagined fundamental shift in western cultural mores that would lead people to live in harmony with the environment. Natural foods would become more popular, and values would switch from materialism to inner growth. Quality of life would dominate the social agenda. Scenarios
  8. 8. Scenarios & Impact
  9. 9.  Each scenario showed a strong market for garden tools, even after factoring in other concerns, such as the strength of the dollar ( which would affect profit margins on imported tools).  Moreover, the futurists figured selling by mail instead of through retail stores made more sense because  Consumers in the more-of-the same-but- better scenario would be too busy to shop in person  Capital & inventory- intensive retail stores would have trouble surviving in depression scenario  Mail order sales made good sense for Whole Earth Catalogue oriented consumers in the socio- transformation scenario.  So what really happened ?  All 3 versions of USA emerged in the 1980s.  Yuppies lived side-by-side with the working poor & new ages- so all 3 scenarios were somewhat correct.  S & H sold $ 200,000 worth of tools the first year & $ 1 million a year within 3 years.  Today the company does $ 50 million annually Outcome
  10. 10.  They gathered information from many sources.  Discover – A Popular science magazine that is sometimes first to report a significant development or event  The Economist- One of the best sources of information about what is happening globally. A mainstream publication that covers speculative & imaginative issues especially well.  Foreign Affairs- The mainstream journal of international relations.  Future survey- A newsletter with interesting abstracts of books summaries & comments on magazine articles.  Granta- Contains unusually perceptive high-quality writing & thinking.  Harper’s- Good surveying the fringes because it culls materials from unusual sources.  New options- Reports on the pulse of future American politics.  New Scientist- A British publication that often reports the first news of important scientific discoveries. Has a good grasp of the policy implications of new technologies.  Omni- A mainstream bonding of science & science fiction.  Scientific American- New ideas that are moving into mainstream  Technology review- Insightful views on the social consequences of new technology A Scenario Builder’s Reading List
  11. 11.  This Case study which helps us understand how the scenario- building process can help to make decisions.  One business that has had success using it is Smith& Hawken, a mail-order marketer of top quality garden implements made by Bull-dog tools of U.K.  Peter Schwartz & his team futurists first isolated the all important decisions to be made:  What would lead to a successful garden-tool business , especially since others had failed ?  As they researched the question, other concerns- upon which their success hinged- emerged ;  What might happen to future customers & suppliers?  How much could they afford?  What should tools cost ? Scenarios Building Blocks
  12. 12.  They simultaneously examined the key factors that would affect their decisions.  For instance, they realized that the size of the target market- the baby boom generation- was certain ( a pre-determined element).  But critical uncertainties included the range of the boomers economic opportunity.  How many could afford to buy houses?  What kind would they buy?  Was quality important ?  Would they pay for it ?  Would many garden or not?  The most significant uncertainty, they concluded, was the future of the economy, so they built their scenarios around 3 plots  3 Plots- Fast growing national wealth, Depression and a prosperous though culturally different landscape Scenarios Building Blocks
  13. 13.  Scenario building is an art, nor a science, and it is not possible to create scenarios with recipe.  It is important to move through a process several times refining our decisions, doing more research, digging for more key elements, and rehearsing the implications of events again.  The start will be with the plot line ( If I want this to happen, what decisions will I probably have to make ?).  Some case start with some new or impending discovery and try to project its effects (“ If this really happens, what scenarios could it set in motion?”)  No matter the method, scenario building is the best way to make sense out of ambiguity & disorder. Scenarios Building Blocks
  14. 14. Uncovering the Decision  Pay attention to those situations that make you uncomfortable or that you do not understand  Articulate the decisions you need to make; make the process of decision making conscious  Examine your "mind-set" (your attitudes, outlook, etc.) and deliberately examine the possibilities (pitfalls and opportunities) of other outlooks  Refine the focus by considering (and moving back and forth between) narrow questions related to a specific situation and broad ones related to the world at large (otherwise you might develop a scenario for a focused situation and discover it is affected by much larger issues)
  15. 15.  The future is so uncertain that it makes people anxious. They don’t know what decisions to make now. To equip yourself to make informed choices in this continually shifting world, use scenarios.  A scenario isn’t a prediction. No one can know the future with certainty, and if you think you do, you’re sure to be wrong.  That is why the process of “scenario planning” calls for developing challenging stories about a number of possible futures.  First, gather the best data available from a broad range of sources. Include information and perspectives that are just appearing on the horizon and on the fringes of society.  Use the data to generate several divergent yet plausible scenarios, each incorporating different assumptions about the nature of the changes your organization will face.  This lets you examine which futures might unfold and anticipate and rehearse possible responses. A Tool for all futures-Scenarios- (1/3)
  16. 16.  Whether you’re starting a small business or running a multinational company, you need to ask the same kinds of questions about possible futures that may affect you.  Some people will be better at building scenarios than others, at least at the start, but everyone can do it, and can build more skill with training and practice.  It’s an innate human ability.  Some neuroscientists argue that projecting action into the future is built into humans on the evolutionary level.  Primitive hunters had to anticipate how prey would move so they could throw weapons accurately.  If you’re trained in a “deterministic” discipline, such as accounting, you’ll find scenario building harder at first than someone like an anthropologist who’s trained to shift cultural frames. You’ll get better at generating scenarios if you encourage your imagination (and then temper it with realism). A Tool for all futures-Scenarios-( 2/3 )
  17. 17.  Scenarios are presented as stories, not as expositions or lists of facts, because stories play a special part in the human psyche.  This “old way of organizing knowledge” has been downplayed in the last few hundred years, but it’s especially apt for scenario construction.  Stories assemble information into an order that has meaning. Stories can have multiple plot lines, and involve more than one character and point of view, enabling the scenario planner to imagine numerous possible futures. Scenarios can function as “myths of the future.  Just as myths of the past told people where they came from and contemporary myths communicate a community’s shared identity, so scenarios offer emotionally resonant visions of what could be. Stories add substance to information, beyond recitations of facts.  These verbal simulations engage the heart as well as the mind A Tool for all futures-Scenarios-( 3/3 )
  18. 18.  Every choice is shaped by “mental maps,” people’s assumptions about the nature of the world, what could happen & what is likely to happen.  Most people aren’t aware of the content of their mental maps or how deeply these maps shape how they collect & interpret information.  Start by making your maps visible.  Consider what you think – or hope – the future will be like.  Practice seeing the world systemically & from different perspectives.  Imagine an optimistic future:  What is the best thing that could happen?  What events or trends would logically take you there?  In a pessimistic future, what could go wrong?  How might that unfold? Imagine a “status quo” future, essentially a continuation of present trends. Which future is closest to how you habitually view the world? Principals of Scenario Construction- ( 1/4 )
  19. 19.  Now play with your futures. Take an element of your pessimistic future, like overpopulation; ask if there is any way it could become positive.  How would that change the future?  Compare your current assumptions and future images to those you had last year or last week.  How have your mental models changed?  Carry the practice of consciously viewing the world through a specific perspective from the personal realm to the organizational.  Once you identify your mind-set, expand it by channeling “a constant stream of rich, diverse and thought-provoking” data into your life. Principals of Scenario Construction- ( 2/4)
  20. 20. Habitually research these general categories  “Science and technology”  These, more than any factors, shape the future. Politics & world power may change, but a scientific innovation that’s unleashed on the world cannot be taken back.  Its impact is permanent & absolute. Pay special attention to new developments that could change lives & spur businesses.  You may find them coming from such fields as Physics, Bio- Technology, Computer science, Ecology, Microbiology & Engineering  Perception-shaping events  Carbon dioxide levels have been increasing in the atmosphere since early 1970s.  They were ignored, however, until one hot summer day in 1988 when NASA meteorologist James Hanson testified before congress on how pollution would cause long-term climate changes.  This event made global warming a major issue, because now it was perceived to be a problem. Information-Hunting & Gathering
  21. 21.  Perception-shaping events -continued  How can you recognize a perception-shaping event?  By watching how society reacts to it.  Does it touch a responsive chord?  If the response is especially deep & wide, the event may change the public’s basic belief & priorities.  Music  Music reveals what people are thinking & feeling.  In 1964, for example, Bod Dylan’s music was a harbinger of political events that occurred in 1968. Elvis Presley’s 1956 debut foretold the emergence of an international community of your.  While you may think popular music affects only kids, those kids are scattered all over the world, and the music they embrace will affect them for the rest of their lives. Information-Hunting & Gathering
  22. 22.  Fringes  Scenario builders, like horses, have superior peripheral vision.  They train themselves to look at the world as horses do because new knowledge develops at the fringes where thinkers have more freedom to let their imaginations roam  Great innovators often come from the fringes.  Albert Einstein was a paten clerk in Geneva who couldn’t get a teaching job. Steve Jobs and Steve Wozniak, co-founders of Apple computer, had their respective roots in Eastern Mysticism and the hacker subculture of the computer world.  Take time to explore fringe areas. Attend off-beat lectures, read unconventional magazines , go to a rap concert; keep your radar out for attitudes & ideas that are likely to blend into the mainstream as time goes by.  For E.g., conservationist & solar power disciple Amory Lovins argued in the mid 1970s that improved technology would reduce energy consumption despite an expanding economy. Most of the energy industry wrote him off as an extremist, but Royal Dutch/Shell encouraged him to push ideas further.  The result? Shell was one of few energy companies that foresaw a collapse in the price of oil. Information-Hunting & Gathering
  23. 23.  Although everyone has an idea about where to gather information, you might consider looking to some of the following sources  Remarkable people  Unconventional thinkers like Amory Lovins can be an excellent source of scenario- building information  You usually won’t find such people mentioned in the New York times, however , and they are often found in strange places or roles.  They are not necessarily wild-eyed zealots, either.  Some lead very conventional lives. It is their thinking that makes them unorthodox.  How can you contact remarkable people with unusual insights ?  Read their articles & books and try to meet them and interview .  Take inter-disciplinary courses and attend meetings and conferences that will bring you into the orbit of unusual thinkers.  As you do so, remember to evaluate such people by how often they nudge you to look at something in a fresh light. Information-Hunting & Gathering- Where to look for ?
  24. 24.  Sources of Surprise  Take time to read outside your usual areas of interests  Stick bookmarks in promising place, then graze the marked passages later.  Read across as many disciplines, subjects and social strata as possible.  Seek & embrace perceptions that are at odds with your won.  Filters  Every busy executive must have a set of filters to separate irrelevant from useful information.  Filtering is an important skill, because without it you will drown in a sea of data. Be Selective.  Identify sources- like magazines editors ( See slide no.13) that can feed you valuable material clearly & concisely.  For e.g. , the US congress office of technology assessments monitors and interprets information & produces inexpensive reports from the Government printing office.  It is like having a cut-rate think tank at your disposal. University symposia, National Radio & CNN are additional filters that capture the texture of our times.  Watch too, the filter in yourself. If any idea or perception makes you uncomfortable, identify what troubles you.  Such reactions can throw light on otherwise invisible biases. Information-Hunting & Gathering- Where to look for ?
  25. 25.  Expose yourself to Challenging Environments  Travel is good way to experience unfamiliarity, because you are force to adapt an alien point of view.  You have to ask questions about why people live the way they do and what forces created their relationships, goals and values.  It is especially beneficial to visit countries that shock western sensibilities & challenge your opinion of what is ordinary.  Network Sensibilities  Computer networking is an excellent high-tech way to share knowledge, the only kind of wealth that multiplies when you give it away.  Joining a computer network enables you to reach people efficiently, question dozen of them simultaneously and locate experts in any field.  You won’t see them personally, but you will see their ideas & words.  Computer networkers now number in millions worldwide. Information-Hunting & Gathering- Where to look for ?
  26. 26.  The process of building scenarios starts with looking for driving forces, the forces that influence the outcome of the events.  Take another look at the decision you have to make & look for the driving forces that are critical to that decision.  Trust your instincts.  Compose scenarios in teams since driving forces may be obvious to one person but hidden to another (i.e., brainstorm together).  Run through familiar categories of driving forces: society, technology, economics, politics, environment.  Next sort through the driving forces to decide which are significant and which are irrelevant.  Then uncover the "predetermined elements" (which are almost certain no matter what scenario) and the "critical uncertainties" (which scenario planners seek out in order to prepare for).  “Critical uncertainties are intimately related to predetermined elements.” You find them by questioning your assumptions about predetermined elements: what might cause...? Creating Scenario Building Blocks
  27. 27. When you build a set of scenarios, incorporate three essential interacting components:  “Driving forces” T  These dominant factors in the external environment are often beyond your control but they shape the broader business environment within which you operate.  Identify the core question you want to answer, for example, whether you should start a business or drill for oil.  Review all the major forces that will shape your actions. You’ll see some of them immediately, almost instinctively, but – since people have blind spots – you could miss others, so build your scenarios with a team.  Work systematically through social influences, technological factors, economic and political influences, and environmental trends.  These categories manifest differently in every business, even in every decision, but always take them into account. Interacting Components
  28. 28.  “Predetermined elements”  These scenario factors will remain the same, no matter which future unfolds.  To find them, look at “Slow-changing phenomena,” such as the rate of population change. Note constraining factors, for example, the fact that Japan has a large population but limited land, or that China’s continued growth will be affected by water availability. Look at factors “in the pipeline,” such as demographic bulges, like people who are retiring.  Be aware of “inevitable collisions,” like the clash between the public’s opposition to taxes and its demand for services. “Critical uncertainties”  These are factors whose outcomes are unpredictable, but that are most likely to shape your scenarios by changing their nature or direction.  For example, demographers basically know how many young people will enter the U.S. workforce in the next ten years (a predetermined element), but companies don’t really know the impact of their attitudes toward work, benefits and careers, and how those attitudes might intersect with new technologies or economic conditions. Interacting Components
  29. 29. “Critical uncertainties”- Cont. ..  Uncertainties are part of every scenario.  They are intimately related to predetermined elements, & you will find them by questioning your assumptions about those elements.  For instance  Traffic gridlock is a real problem in some cities- say New York,  If the grid lock becomes more widespread, could a mass change of habits occur?  Would business collectively move to flex time to relieve the burden on the public transportation?  Would they allow telecommuting ?  Would real estate price drop low enough so that people could move closer to work or might car phones and fax machines turn gridlocked cars into portable offices?  Two gridlock scenarios are possible  Cities become paralyzed  Commuting undergo a transformation Interacting Components
  30. 30.  Scenarios describe how driving forces might behave in the future based on how they behaved in the past.  These forces may act differently in the future, however, scenarios explore two or three alternatives based on plots that are most worth considering  3 main plots appear often in today’s world, and you should consider them in every set of scenarios.  Winners & Losers  Common plot  Only one winning candidate  Winners-& -Losers plots lead to covert but practical alliances  Challenge & Response  Name comes from Script writing  Adventure stories in which a hero faces one unexpected test after another  Each time the tested person emerges different from the way he or she was before.  In a business context, you might draw scenarios that include environmental, financial or social challenges Building a Plot
  31. 31.  Evolution  Evolutionary plots always involve changes in one direction – usually either growth or decline  These changes tend to be biological  They sprout slowly, ripen and then burst upon the world.  They are hard to spot unless you are attuned to them because they happen so slowly.  Common evolutionary plot in today’s world involves technology & its myriad effects.  Revolution though rare and hard to predict, is also a valuable plot of envision.  It characterizes a sudden change that, like an earthquake, change the landscape.  The emergence of OPEC as a political force was a revolution, as was the fall of the Berlin wall. Building a Plot
  32. 32.  Using Scenarios is rehearsing the future.  You don’t know ahead of time which scenario will take place, so you prepare for all scenarios & train yourself to look for one or two small details that allow you to recognize which is taking place.  Even the most unlikely events should be prepared for if the consequences are great enough.  You must start by questioning your belief in the inevitability of more of the same  The point of scenario-planning is to help suspend disbelief in all the futures, to allow us to think that any one of them might take place  Then you can prepare for what you don't think is going to happen  You need multiple scenarios, so by the end you understand the implications of each possible future (and have literally rehearsed them)  Work out warning signals in advance (less open to interpretation that way) – they help you decide which scenario is coming to pass and can also be used as warning signs to learn sensitivity to change Rehearsing the Future
  33. 33.  Names of scenarios carry "a lot of freight" - try to choose the name so that it condenses the story's essence into a few words (e.g. “Humpty Dumpty", "the Official Future", "My Worst Nightmare", "Johnny Appleseed")  Go back to old scenarios a year later – it takes years of practice to do scenario planning, so it's helpful to go back to see if it was effective  Did it change behavior?  Did you do the right thing?  Scenarios create a shared and powerful language Rehearsing the Future
  34. 34.  Create a Hospitable Climate - do what you can to make the organizational culture welcome diverse points of view and lively discussion  Establish an Initial Group Including Key Decision Makers and Outsiders – include most of the key decision makers, selected "experts", and other who have valuable perspectives; in large companies, there may be several sets of strategic conversations going on at once  Include Outside Information and Outside People - bring in people from the outside; a purely internal conversation will rarely be able to achieve break-through thinking  Look Ahead Far in Advance of Decisions - strategic conversations should occur long before the moment of decision (when the appearance of short-term factors make reflection more difficult) How to hold a Strategic Conversation
  35. 35.  Begin by Looking at the Present and Past - look at what has happened in the past, talk about ways you have traditionally dealt with change, look at trends going on around you, ask questions, elicit opinions, and determine what you ought to know more about.  Conduct Preliminary Scenario Work in Smaller Groups - start and continue strategic conversations in large meetings with key players but also have subgroups that study individual issues in depth and report back, followed by vital and often heated discussions with the large group.  Playing Out the Conversation - structure a few workshops in different areas to spread the messages, raise some questions, raise hypotheses, form questions, set up new working groups.  Living in a Permanent Strategic Conversation - strategic conversations never end; they must move into different venues and become the model for discourse. How to hold a Strategic Conversation
  36. 36. Eight Steps Scenario Building Step-1 Step-2 Step-3 Step-4 Step-5 Step-6 Step-7 Step-8
  37. 37.  Step One- Identify Focal issue or Decision  Start with a specific decision or issue, then build out toward the environment.  What will decision makers in your company be in thinking hardest about in the near future?  What decisions will have a long-term influence on your company’s fortunes?  For E.g. , an auto maker may want to see scenarios built around changes in energy prices.  A forest products company might want to look at scenarios based on different numbers of new housing starts.  Whatever your job or industry, you can usually identify the focal issue or key decision by asking yourself one simple question: What keeps me awake at night?  Step Two – List key factors in your local environment  These will affect the success or failure of your decision.  They might include, for example, facts about Customers, Suppliers or Competitors.  They are the factors that decision makers will want to know when making key choices Eight Steps Scenario Building -1/5
  38. 38.  Step three- List driving forces  These are trends in the macro-environment that affect step two’s key factors.  They are the forces behind the key factors, and they may stem from social, economic, political, environmental, or technological forces.  Some will be predetermined ( like demographics); others will be highly uncertain ( like public opinion). Some research to define these driving forces.  Where is technology leading us ?  What if the rate of inflation rises ?  Look at major trends and trends about to break .  Step four – Rank key factors & driving trends  Use two criteria here  First ask how important they are to the success of step one’s focus or decision.  Second , estimate the degree of uncertainty surrounding these factors & trends.  The point is to identify the two or three factors or trends that are most important and most uncertain.  Remember that your scenarios cannot differ over predetermined elements that will exist come hell or high water.  The inevitable aging of the baby boomers, for e.g. , is an absolute certainty in any scenario. Eight Steps Scenario Building-2/5
  39. 39.  Step Five- Select the Pertinent scenario Logics  The results of your ranking exercise becomes the axes along which you will build different scenarios.  Your goal is to end up with handful of scenario ‘drivers’ whose differences make a difference to decision-makers.  For auto makers, they may include the level of fuel prices and protectionist sentiment in Congress ( and the possible variations in each) .  Keep these fundamental differences to a minimum because too many scenarios based on too many uncertainties will confuse your audience.  The plot you control events may better define the logic of your scenario that its drivers . The challenge is to identify the plot that  Best capture the situation’s dynamics  Communicates the point effectively. Eight Steps Scenario Building-3/5
  40. 40.  Step Six- Flesh out your scenarios Return to the lists of key factors and trends you identified in steps two & three, give each one some attention in each scenario, then weave the pieces together to form a story.  How would the world get from here to there?  What events might be required to make the end point of each scenario plausible ?  Step Seven- Develop Implications  Once you have fleshed out your scenarios, return to the focal issue or decision and rehearse the future.  How does the decision look in each case ?  What vulnerabilities do your scenarios reveal?  Does your decision look strong in all of them, or only in one or two ?  A decision that looks good in only one scenario is a better- company move, especially if you cannot control the likelihood of the scenario coming to pass. Eight Steps Scenario Building-4/5
  41. 41.  Step Eight- Selecting leading indicators  It is worth investing the time to identify a few indicators to monitor as time goes by.  If you select these signposts carefully and imaginatively , your company will have a jump on your competition in knowing what the future holds and how it is likely to affect your strategies & decisions Eight Steps Scenario Building-5/5
  42. 42.  The future is uncertain, but you can use scenarios to prepare for it.  Scenarios articulate possible futures in story form to help you make better decisions today.  Scenarios are not predictions. They are stories that stretch your thinking about what could happen.  Anyone can build scenarios; everyone gets better with practice.  To build better scenarios, expand your mind-set and seek data from many sources.  In any scenario, look at the driving forces, the factors that won’t change and the key areas of uncertainty.  All good scenarios are built around an organizing logic or “plot.”  Work as a team to build a set of scenarios. Then test your decision or options within each one.  Work through the implications each scenario has for areas that concern you.  Identify and look out for events that will signal which scenario is coming true Take-Aways
  43. 43. Mail your comments to ramaddster@gmail.com

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