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Scenario planning

This brief is intended to guide readers through the practical issues raised by scenario planning. We begin by placing this tool into its proper place in the broader framework of oversight, planning and operations.
Once the goals of scenario planning are understood, we move on to the mechanisms by which scenarios are to be generated. Quality control is fundamental to scenario generation, and we link the necessary processes, timeframe, resources and deliverables back to the issue of integration with the broader decision-taking processes.
Scenarios can be finely constructed and excellent in every way, but completely useless if their potential role is not understood in the organisation at large. Scenarios are designed to address important and sensitive variables. Those who develop scenarios are, therefore, posing challenges which may well be resented if they are not properly framed, and the whole exercise may be dismissed as illegitimate presumption.
These three fundamental issues - of goals, process and legitimacy - are addressed in three chapter headings which follow. We hope that you will find them helpful in solving your practical problems.

What scenarios are for.

What scenarios are for.

We are accustomed to divide our world up into self-contained operational and conceptual boxes. This greatly simplifies our tasks, and allows us to concentrate on the variables which time has proven to be locally key. We have our budgets and our goals, and we strive to meet these on time and to quality.

The world is not, however, permanently divided up into such neat boxes. Competition and innovation, economic tides and social forces, policy shifts and political change all alter the framework within which we work. If we lose sight of this context, then we may find ourselves surprised by events. Our 'local' model will no longer work, and our fine targets will be dust on the floor.

It is unnecessary to rehearse the pace at which events now force change upon us. If we understand the nature of these events, and if we are able to anticipate how they will interact with our local concerns, then we can respond to them in a more fluid manner than if we are bewildered, taken by surprise or simply wrong in our interpretation. At issue are two rather separate concerns:
  • First, how are we to arrive at an understanding of our operating environment? What would such an understanding look like? How are we to ensure that our view and that of our colleagues and partners are broadly aligned? Their reflexes under stress are at least as important to the overall outcome as our own, after all!
  • Second, how are we to build such understanding into our operations: into strategy and policy, to be sure, but also into resource disposition and portfolio management. Even more poignantly, it is often the sum of the myriad of small choices that are made in the day-to-day running of the organisation that ultimately shape the direction that the organisation will take. The trade-offs that are made, the options which are surfaced and taken forward, or which are repressed and forgotten which together create consistency or diffusion, vibrancy or an absorptive numbness in which all initiatives are shelved and the organisation proceeds through inertia.
The answers to these questions are, of course, extremely complex. Scenario planning is a tool that helps with both of these, but it cannot operate in isolation from all of the other processes that occur when organisations make choices. The two chapters which follow discuss the actual creation of scenarios, and the social context within which all of this has to happen.
Here, however, we need to focus our attention on the interaction between scenarios and the organisation as a whole. There are, as we have already hinted, two fundamental and different interactions. The first of these links with formal processes: that is, with resource budgeting, numerical planning and explicit strategic thinking. The second, by contrast, if focused on the informal, the tacit and often-unconsidered aspects of daily life in the organisation.
Formal subjects are the easiest to talk about, because they offer us a defined template against which to work. For example, most organisations worry about resource flows: will there be enough income to fulfil all the intentions of the organisation? Will there be enough skilled people to carry these plans through? Scenarios should offer such thoughts a framework within which to operate.

Equally, most organisations are concerned to manage their portfolio of activities: are cash and human resource being directed to growing, useful areas or are they being sucked up by activities which should be reduced in scale or closed? Is enough being done about innovative things - research, technology partnerships, human resource diversification - or is the focus to be placed on consolidation and getting the current activities 'right'? If the organisation is a commercial one, is the balance between payout and re-investment correct? If the organisation is a public sector one, then are the public goods that are being created of equivalent value to those which have to be foregone through resource scarcity? Are customers and stakeholders happy, or do they see the organisation as unresponsive and a poor source of value?
One can think about planning processes of this sort as consisting of three concentric cycles. They are cycles because they are usually repeated in a regular and predictable way. They are best visualised as being concentric because the product of one cycle should feed into its conceptually-nearest neighbour, and the planning system should be organised so that it in fact does so.
The outer loop consists of the big, general context-setting ideas that should inform the rest of the organisation. How are we to think about our operating environment? How does it "work", and who and what are the most important agents that can change the current situation? What are the balances that need to be struck between the many and often competing things that have to be got right: between safety and cost management, for example.
The inner loop consists of the processes which manage operational routine: the criteria set for individual staff and for units, the guidelines on practices where trade-offs are necessary, financial tracking and other kinds of performance monitoring. For these to be adaptive to circumstances, a great deal of thought needs to go into their formulation. The general concepts are established in the outer loop and made concrete and practical in the middle processes.

The middle loop is, in general, the home for the set of "strategic" processes which lead to decisions over resource allocation and portfolio management. It attempts to make explicit the sense that has been gained about the appropriate medium-term direction for the organisation to follow.
The outer loop is, in many ways, the most difficult and the most complex to install. It does not, for the most part, follow rigorous or numerical procedures, and it is seldom clear what an answer will look like: indeed, the nature of the questions to ask is often obscure. It feeds on what has gone before, and it is common experience that an organisation has to go around the loop several times before it sees the full benefits of the investment of effort. People need to learn to use the tools that are available, but also need to learn to interpret what they produce. They need to learn to trust the outcome, and to trust what their colleagues will do with it. Policy is potent medicine, and most organisations feel themselves starved for direction. Small signals from the top can be vastly over-amplified as they flow down the hierarchy. Managing these processes so that premature closure, run-away systems or a gathering mist of ambiguity does not cause damaging consequences is a part of the art.

Scenarios are an important tool for this outside loop. They are also a potent means by which general context-setting ideas can be transmitted between the various cycles. As the figure suggests, the inputs to a scenario process will organisational preoccupations from all levels and time scales, new ideas and new relationships, new trends and the like. They will be focused to address current concerns, often as articulated by senior staff.
Scenarios are not, of course, the only tool that works in the outer loop. Benchmarking of the firm against its peers, the pursuit of insight from dissimilar organisations, from partners and from foreign circumstances all have a role to play. The tools of business economics - experience curves, assessments of defensible competences and structural features of the industry play a role. No industry can be understood without an agency or stakeholder analysis. Technology foresight has a role to play.
Fundamentally, however, what scenarios try to do is to capture a model of what makes for excellence (often accepting that there are several distinct kinds of excellence at play.) This model is used in a number of ways.
  • First, its existence gives people something against which to react, both when addressing their daily challenges and we seeking to improve the model.
  • Second, the model challenges the organisation to be explicit about where it wants to be in the universe of potential which it identifies. It requires the organisation to be relatively explicit about where such rivals as it has may be located, or may be headed.
  • Third - and this is where most people put the emphasis in scenario thinking - the model is open to challenge both from forces which are both innate to it and located in the outside world. The changes which these forces will impose are far from certain, however, and so multiple outcomes are possible, just as multiple options can be advanced as to what the organisation should do with itself.
The strength of the scenario process is that it generates a unified view with is, nonetheless, non-prescriptive. Not only does it create multiple futures, it offers multiple ways in which to react to them. This affords a disciplined framework in which the organisation can make its choices; and, if the scenario process has been properly conducted, the relevance of the issues and the options will reflect and extend or challenge recognisable realities.
A focus on the future tends to lessen tensions in debate. People who will fight for the last scrap of resource when asked about options in the present will take a more balanced position when asked to think about the longer term. Further, once an agreed position has been developed and run through the organisation several times (in several turns of the concentric wheels) the need to think systematically and so outside of the convenient little operational box becomes widespread. Its presence - called, perhaps, "overview" - can even be set as one of a number of selection criterion for staff development.
Scenarios are usually given memorable - or anyway, catchy - names. This is not just whimsy, but an important part of the process of communication.
It is a general principle of negotiation under adversarial conditions that the facilitators should try to lead the parties to ground where they fundamentally agree - that we all wish well for our children, for example - and then explore the implications of this position on the areas of disagreement. It is common experience that the parties learn a new jargon ("child-focused futures") which then acts as a mental short-hand, and which greatly eases debate. Scenarios have been used in just this way in easing a number of literal conflicts. However, in less tense situations, the potency of still having a metaphor for the complexity of life, and of having a set of names which cover the options and risks which its development seems to entail, cannot be over-stated. In exactly the same way that the negotiating parties can stop each other as they become extreme, and ask - for example - how this contributes to the child-focused future, so managers can ask themselves and each other how this or that proposal would fare under Hard Labour, or whether it exploits the full potential of Biological Boom-boom.
Extremely complex concepts, tailored to meet the needs of the organisation, have been installed in managerial heads. Not only this, however, but in parallel processes, the uncertainty and risk of the environment has been spelled out, and the options of the organisation have been codified in ways which seem intuitive to the managers who then use this information. The criteria and targets, policy and trade-offs which rule their day-to-day lives have also been brought into alignment with these ideas. None of this is set in rigid terms, however, but all of it together offers an enabling framework in which people can sense what will work and what will not, what is robust and what may prove an embarrassment, what will be seen as a waste of senior management time and what will come as a welcome revelation. They are empowered to act independently, given that they now have the map by which to navigate and the rules of engagement spelled out for them.
Readers will realise that there is a marked difference between low quality scenarios and the true thing. This is not measured in terms which reflect creativity or inspiration, although both of thee are useful ingredients. Rather, the key quality parameters are, first, the relevance and integration of the work with an organisation's processes, preoccupations and needs; and second, the robust, complete and coherent nature of the communication tool which the scenario team bring forward. It is worth learning from the famous apology: "I am sorry to send you an eighty page note. I did not have time to write one shorter." In brevity we find insight distilled and useful; whilst in complex and length documents we often find that all of the economists in the world have been laid end to end, and still have failed to reach a conclusion.

How to make scenarios.

How to make scenarios.

The actual process of making scenarios has to be set in the context of the chapters which both precede and follow this one. You need to know what they are for. That is, you need to have at least generic insight into the practical roles that they will play - the processes with which they will engage, the timing and needs of these - and you also need a good sense of what will connect with the concerns of the individual people whom they are intended to influence. In addition, the issues of the final chapter need also to be brought into play. In what way are you legitimised in taking this initiative? How is your role to be presented to the organisation or target audience? The answers to these questions will be instrumental in delivering the relevant two page letter that we have just discussed.
Given your legitimacy, and given a working planning architecture, then there are three broad steps which are involved in making scenarios.
  • First, you need to find out what matters to the target audience, and to those who grant legitimacy. It is often the form of words ("globalisation") that is as important as the actual concern, insofar as the people who are worried are often referring to white spaces on their mental maps, rather than objective phenomena. If 'globalisation' evaporates from your analysis, and is replaced by something close to 'enhanced competition and outsourcing' you should nevertheless be careful to link these back to the original concerns.
  • Second, once you have a sense of the canvas on which it would be useful to paint, you need to engage in analysis. The bulk of this chapter is given over to the methods by which to do this, so suffice it to say that you should generate draft scenarios, test these on senior stakeholders and then move to a refined conceptual product.
  • Third, you need to generate the deliverables of the project, which in turn encapsulate the scenarios, the analysis behind them and the concerns of the stakeholders in the process. It is a mistake to believe that one deliverable is enough, at least in all but the most simple project. A useful output will typically consist of a physical object (a book, for example) and also a set of presentations. These are typically aimed at different audiences: at senior management and at 'cascade' audiences, for example, or at those engaged in innovation and research as well as line managers more concerned with resilience and continuous improvement.

There will be an acute need for a series of workshops, to be undertaken with different interests and in different ways: from line managers on how practically to respond, from HR people in respect of improved selection criteria, from external relations staff who want to explain the new thinking to the outside world. It is also necessary to engage in protracted interaction with the people who manage the planning and resource allocation process. It is often appropriate to have an intranet site, with a 'debating chamber' and to offer something externally, for a general audience that wishes to talk constructively with the organisation.

The figure suggests an appropriate allocation of the time budget. The three phases - consultation, analysis and promulgation - are shown in green, yellow and blue. Analysis runs in parallel with most of the early process, and in fact precedes the consultation, so as to give something from which to begin debate. The switch for analysis to synthesis, the crucial boiling down of the issues to a tractable form - occurs roughly half of the way through the analytical phase, and before consultation is complete. The ideas have to be tried out on informed minds if they are not to be insular or academic. A crucial, formal but short consultation takes the analytically-complete product to senior staff for endorsement.
Staffing for scenario generation is extremely difficult. One needs people who combine social intelligence, credibility within the organisation with formal skills that are relevant - for example, with economics or a background in technology or markets. On top of this, the team need to be open minded, eager and possessed of the peculiar mindset that likes big pictures, systems and structures. This is a combination which is generally rare and extremely uncommon within large organisations. The answer, of course, is the team.
The scenario team should be picked with these characteristics in mind, but also with an eye to the currently-crucial issues. If technology is a dominant factor, for example, then it is important that such knowledge is reflected within the team. The importance has two facets: the team needs the knowledge, but the organisation's technologists need to feel represented by someone that they respect. However, one also has to make sure that each specialist has the capacity to articulate their knowledge, and that they will be useful in subsequent facets of the work, such as promulgation. People of too high a level of seniority often cannot give the time when it is needed, or may be better used elsewhere.
The solution to this is, frequently, to make the consultation period a time of rapid self-education for someone with an appropriate background but with an all-round ability that goes beyond their area of specialisation. Such people run workshops with their specialist peers during the consultation, so as to be seen to engage and so as to earn ownership. This is also a way of rapidly developing people of high potential.
The scenario team leader has a particularly onerous task. He or she knows in broad terms what is needed, and when it has to be delivered. However, both the nature of the deliverable and its content has to be teased out of the process as it goes forward. Creative staff are not always the most tractable team members. It is, therefore, doubly important to make roles and boundaries concrete, to install proper project planning tools and to make the process of generating the deliverable the job of people who are technically good at the task. The content of books, in particular, need to be negotiated like international treaties; and whoever fulfils the editorial role usually wields a bloody scalpel if the output of an entire enthusiastic team is to be made accessible. The team leader must apply stern judgement and soothing oils to this turmoil.
There is a stylistic issue that is of great importance. This is the choice of time frame. An ideal framework should step forward about one-and-a-half project lifetimes. That is, if your industry works to a five year cycle, then you should look seven years or so ahead. However, in areas such as defence, where people and equipment are set on something of a fixed course for decades, analysis of the forces that are likely to be at work over the next 30-50 years is something to approach with great caution. Time frame needs to compromise with the length of time that it will take key trends to eventuate and the meaningful choices which can be taken about these today. Equally, the patience of the line managers may be strained by very long term perspectives. (This said, regulatory bodies often force perspectives on industries which are not prepared to take them on their own, and pressure groups often have much the effect upon the agencies of state. Indeed, it has been the interaction of NGOs and civil servants within the EU, rather than through political initiatives that were conducted by means of the European parliament, which has put much policy into play.)
This section is, however, concerned with the second of the three stages: with the actual generation of scenarios. How is this done? There are five main steps, although life is seldom so simple as to deliver this in a recognisable form. These will be expanded in the sections below.

First, seek breadth, and then focus.
Second, identify the systems boxes.
Third, calibrate the key variables.
Fourth, identify the key dimensions and populate the space.
Fifth, create a narrative thread.

I Seek breadth, and then focus.

Interviews, past experience with scenarios and strategy, analysis and intuition will identify potential key issues. Each of these can be 'decomposed' into its composite parts. If the concern is, let us say, the stability of the teaching establishment, then the factors which contribute to the outcome can be shown as an influence diagram.

The aim is to understand how the system as a whole operates. Some teams are happy to hold virtual influence diagrams in their heads, whilst others like to cover walls. The point is, however, to look for missing variables, factors which turn up repeatedly, possible policy 'levers' that could be manipulated, balances which may soon be upset. It is also important to look for obvious discrepancies between this analysis and the concerns of the stakeholders.
Portmanteaus words always reward attention. These are 'buzz words' or phrases which are used generically, and often loosely or carelessly, in order to bundle together all sorts of concepts, such as 'globalisation', 'environment', 'shareholder value' or 'human rights'. This is not to devalue these concepts, but it is usually the case that analysis and deconstruction allows the debate to be refined to point where practical solutions become evident. If the interviewees express concern about 'environmental issues', for example, then deconstruction and sharpening can show that what they are in fact concerned specifically with, let us say, how the industry is to debate with the regulator about the progressive management of a specific category of effluent.
The outcome of the broadening process is twofold. First, the team are much better educated about the connections between the issues than they were before they started. Second, it is possible to review what has been achieved and to compare this with the stakeholder views. Areas of white paper on the map - and areas of conventional wisdom and over-concentration - may become apparent.

II Identify the systems boxes.

The network of influence that has been identified can be clumped together in various ways. Plainly, however, some of the variables are "internal" to the concerns of the organisation and some are not. These can be clumped together.

The figure suggests that an analysis of educational futures is driven by technological, social and economic variables, each of which also impinge on the others.
It becomes a matter of judgement as to how these boxes are to be handled. However, the assignment of variable to these has greatly reduced the complexity of the problem. It is much easier to describe what is going on in the central "education" box now that these variables have been taken out of it.

III Calibrate the systems boxes.

It is now helpful to make use of evidence and data to estimate the impact of various parts of the system on each other. How much would it cost to replace some aspects of what teachers do with IT equipment? How far would IT prices have to fall if this were to be feasible? How would changing IT prices impact on social variables, and would these perhaps change our appetites so that we actually want more human contact for our children, and not less?
Consider an example of this. A nation with a fast-growing school population is worried that it will not be able to train enough teachers. The following figure re-enforces this doubt:

Anticipated population, and school-aged population is shown in the figure below. The pupil-teacher ratio will fall, and there will be more pupils. Catastrophe! Note, however, the introduction of compulsory schooling in 1988.

A further graph shows the outcome of calculations made on the basis of these figures. The growth in teacher the demand for teachers is, at first sight, impressive: from 45,000 in 2000 to a median forecast of 94,000 in 2020. However, the recent past saw a growth from 17,500 in 1980 to th ecurrent figure, driven by the extended minimum school leaving age. This is 12% annual growth, rather than the 2.8% foreseen to 2020. Impressive numbers and general alarm can be shown to be tractable. This is not, therefore, an issue on which to build scenarios.

Data should be used sparingly, and only when the assumptions can be made clear. Extremely complex 'black box' models are actively unhelpful, as few people believe them and as the underlying model is obscured. As a general rule, one should have a data series that goes back at least twice as far in time as one is looking forward.
One use for simple models is to show the range of outcome that is implicit in external uncertainty. In Step II, we identified the systems boxes. We may feel that it is best to leave world economics as an external variable, but we have to accept that it will have an affect on our chosen scenario topics. We may, therefore, choose to deem a range of economic growth, and try to estimate the impact of this on things that are directly germane. Acquiring these ranges is not very difficult: history, experts and common sense offer us goof guides. What is less easy is to factor in the parallel effects of many such variables acting in concert. This is what simple spread sheets let us do, and the resulting spread in the variable on which we have decided that we want to concentrate show us something of the range that we need to encompass. Simple X-Y scatterplots also show us which variables matter most to our chosen outcomes. These are the ones which we emphasise in our scenarios.
One must not let quantification take over the process. Equally, if there are factors which are intractable - social attitudes and their impact, perhaps - then we should not feel thwarted. This said, completely unconstrained scenarios, in which not recourse whatever is made to evidence, leads us to unwarranted assertions and plain science fiction. If one believes that there will be a huge shortage of teachers, then one will generate messages which are actively unhelpful when a review of the facts shows that there will not.

IV Identify the key dimension

The concept of key dimensionality is one which many find difficult, but it is central to arriving at a useful set of scenarios. If we look at a group of people, we could line them up in the order of their height or age, or we could cluster them by hair colour, gender or educational attainment. Each time we do this, we create a 'map', with a particular kind of order built into it. Very useful maps are those which combine two kinds of order: that is, people go from rich to poor in the North-South axis, and from short to tall in the East-West direction. This trivial example 'dissects' the population into short, rich people; and so forth.

If one chooses appropriate dimensions - ways of sorting things - then the dissection creates a powerful narrative. Most systems seem to vary chiefly in response to two, or at most three dimensions. Ruthless pruning forces one to pick the two most useful or influential of these. If the dimensions which have been chosen are those which underpin the scenarios, then the space on the resulting matrix can be seen as a map. What it maps is relationship of the scenarios with each other, with the current situation and with the trends that shape the future. As we shall see in a moment, it is possible to show movements into the future on this map.

One can also indicate combinations of circumstances which are impossible. The figure shows two areas as shaded out - as being impossible. The entire lower left is omitted: low growth is unlikely to be associated with positive views of the state. The upper part of the growth axis is also shaded out: the economy has never grown that fast and would over-heat if policy was chosen to try to make it do so.
A version of this matrix can also be used in the strategy process. Here, the key dimensions are those of choice: for example, should the firm borrow to grow or aim to stay the same size? Should the state department take a lead in formulating policy and therefore outsource the operational aspects of work, or should it take a hand-on approach to its current duties and let others set its direction? Linking these choice matrixes with the scenario dimensionality is a straightforward business. One can locate the organisation and its peers on this matrix, and show the limit to their range of options.

V Create a narrative thread

The final step in making the scenarios (but not, of course, in validating and publishing them) is to create a narrative thread that takes us from the present situation to the situation which the scenarios describe.
The scenario matrix is reproduced, now showing the current situation as a red dot. Three pathways radiate out to the scenarios. The path that leads to All's Well, for example, dips into the area of low growth. The state is reforming itself, and is seen to be taking a painful medicine. Popular confidence is restored. A flaccid state, however, causes opinions to drift in the negative direction. External economic conditions restore growth, but not confidence (Me! Me!) and society is driven rapidly towards individualism and cynicism about the collective good. The path to Hard Times is similar, except that the external economic impetus does not arrive.

Plainly, this is a trivial matrix, with none of the richness associated with a real case. The paths are trite, and reflect nothing about a real society. Nevertheless, the point has to be made that future states do not "just happen", and a good scenario needs a credible evolutionary path that gets it to its end point.
Much of this assessment will never get beyond the scenario team. Pathways, for example, are often too complex to present to the stakeholders. This said, credible scenarios are robust and internally consistent. One does not want to have one's balloon punctured by a sharp question months into the promulgation process; and the key to achieving this is solid, cross-referenced analysis. Critique, obtained from specialist voices and from 'users' of the scenarios, will hep greatly in avoiding these issues.
We have already discussed the many options which are open in respect of presenting the material. The time (and cash) budget should be heavily weighted to take account of the effort which is involved in getting the product ready. User panels are very helpful in warning where the material becomes inaccessible, or where jargon has taken over from plain language. The scenario team usually begins to talk in shorthand, and most people who do this forget that not everyone can understand the result.
The scenario team will end the production process as a major asset. They, alone in the world, are completely at home in the concepts that have been brought together. They can, therefore, steer workshops and presentations with confidence. The habit of taking the "strategic" aspects of the scenario process away from the team after they have published is a very wasteful one.

Gaining legitimacy and the right to ask questions.

Gaining legitimacy and the right to ask questions.

We have seen something of the role which scenarios are to play in an organisation. W have also seen how to make them, and get them into a state where they can be used. We now need, briefly, to consider the issues of legitimacy.
Organisations which have been doing scenario planning - or anyway using scenarios as an aide to strategic thought - will usually already have attributed some legitimacy to the practitioners. Those who are making a fresh start will, however, find that they need to work for this.
The single worst position for a scenario team to start is on wide-reaching issues, generally deemed to be none of their business, from a position where they have to convince senior management of their worth. This is an impossible remit, and it is far better to conquer a small hillock before braving the Himalayas. That is, use the technique in an area where it is both useful and of relatively small impact elsewhere: in a small, self-contained service function, for example. The aim is to take intractable and complex issues and make them plain, offering management options for the future that they can address with confidence.
Where organisations wish to install elements of scenario planning in an existing structure, then chief executive imprimatur is essential. The messages from scenario planning are sweeping, and barely a department will be untouched by what is said. Challenge can therefore be expected. Once again, it is best to build up momentum with at least one scenario round that is intended for external consumption rather than for internal direction-setting.
Where there is no effective planning structure - where, for example, only strict accounting is practiced and there is no portfolio overview, then it may be best to get these in place before embarking on scenarios. Excellent views forward, coupled to a lack of machinery by which to do anything about this, is not a recipe by which to be taken seriously in the medium term.
Scenario planning is extremely helpful in isolated domains, such as research management and where units are asked to undertake step-out innovation. Here, it is possible to assemble enough practical machinery - essentially, the enthusiasm of relevant managers - for the operational thrust to be in place. This, too, is a fine place to start.



The text has not followed MBA practice, peppering the narrative with war stories. Nevertheless, scenario planning is an excellent way to handle the complex, ill-structured issues with which complex organisations have to grapple, and it has scored many successes.
If is, however, all too easy to generate 'meringue' scenarios, which are all sweetness and fluff, but brittle and with no real substance. There is danger in producing elaborate scenarios that nobody is inclined or set up to use, and it is easy to lose legitimacy and be rejected by the organisation that you are trying to help. As with any tool for complex organisations, there are quite a number of factors to be 'got right' before scenarios can be used with confidence.

The many kinds of scenario process

It is unhelpful to talk about something as though it were a unity when, in fact, it contains multitudes. Issues around scenarios are fraught with such over-simplification. They are used according to differing standards of discourse and debate, for disparate audiences, using heterogeneous participants to multiple ends. We cannot say anything useful about how scenarios can create "new realities" until we have some sense of the situations which this evokes, the styles which might be used and the criteria which may be used to judge progress.

Deconstructing scenarios

Deconstructing scenarios

It is a good analytical test to see which component parts one cannot remove from a concept without destroying its fundamental nature. The concept of 'scenarios' seems to contain three such elements.

1. Scenarios are used in the communication of ideas about complex systems and in clarifying relationships which are made complex by differing or limited insight. Scenarios are of limited use in simple systems, where issues of risk and uncertainty are easily quantified and handled accordingly.

2. Scenarios describe the alternative outcomes of such a system. Scenarios are internally coherent patterns of belief about this system, perhaps formally supported by evidence. What constitutes "evidence" may, however, be values-determined.

This structure is useful to the degree to which the stakeholders have some interest in and perhaps some influence on this system. Scenarios actively set out to describe aspects of the chosen system which are germane to the project stakeholders, and so are not value-free. However, they also set out to span the useful range of the selected system and, as a result, they present challenge as well as comfort.

3. Scenarios are a tool used at a particular stage in a process of engagement. This stage may be temporary - as in a one-off project - or it may exist as a 'conversation' which develops and spawns projects and activities.

Scenarios of themselves change nothing. If they are to bring about change, then those managing events must deploy this tool kit as fits their needs. Scenarios are a very flexible tool, and so can be deployed in many ways, to many ends. There is no one way to make change with scenarios.

These three elements - the deliverable, the target system and the implementation - vary enormously with stakeholder interest, sophistication and cohesion. One way of simplifying this is to consider two areas in which clarity may or may not exist.
  • Are the stakeholders clear about the nature of the system that they are discussing? One recalls political debate in the UK as to whether social conditions were or were not relevant to the debate about policy aimed at containing crime.
  • Do the stakeholders agree on values - on "what matters" - in respect of the outcomes of the working of this system? To continue with the example used above, should analysis focus on formal crime and its reduction, or on the abatement of the environment which supposedly gives rise to crime?
One can argue that a "good" scenario process would force its way to synthesis amidst these ideas. However, this is simply not possible with some stakeholder groups.

The figure contrasts this issue of mixed values and limited insight. There is a social consensus as to what is right, but no understanding of why this should be so in the quadrant labelled 0. The consensus breaks down in 1. There is a strong sense of what is going on in quadrant 2, but no agreement as to what would constitute a sensible response. In quadrant 3, however, social processes have run such that both the analysis of the problem and the nature of a sensible solution are agreed.

Scenarios for creating change

Scenarios for creating change

The upshot of this analysis is that scenarios can be designed to create change, but that the change which occurs will be to both insight and to values. Which of these preponderate will depend on where the exercise is located on the matrix which we have just explored.

"Shake-up" scenarios can be helpful in challenging systems which have got stuck, but they can also look like agitprop. If a company has become smug about how it believes the world to run - and if its values have quietly fragmented without anyone noticing - then it has a major journey ahead of it to get all of this in hand. The state of the USSR in 1980 needed its Perestroika for this journey to start. Societies which are in the same state are often propelled by events in which the authorities fail, or where a story is told that breaks the current consensus. This, as with Shake-up scenarios, propels the situation from quadrant 0 to quadrant 1. It is an uncomfortable business, and not something to be undertaken lightly.

"Reconciliation" scenarios - getting Tamils and Sinhala to talk together, or Serbs and Kosovars - lie in quadrant 1, where both values and analysis are fragmented. The aim is to move to quadrant 2, where the values are still mixed, but there is an understanding that actions have consequences, and that whatever it is that you may want as a group, you still have to play in the same world as the other people.

"Cohesion" scenarios are aimed at finding common ground amongst people who broadly agree that the world is round and the sky is blue, but who do not agree at all about the action which this implies. The vast body of political discourse operates in this quadrant. In an applied situation, however, industry and regulatory bodies can use scenarios to find new ways of thinking about goals and debate. The upshot of such a process is something like a balanced score card - an understanding that to operate in a complex multi-stakeholder world, you do not have just one criterion (profit, zero accidents) but a mass of desirable trade-offs which have to be balanced. This takes people into quadrant 1, where the machinery is clear and the goals are also clear.

Plainly, it is not a goal of policy to go from quadrant 3 to 0, or indeed anywhere else on the matrix. Mature organisations which have used scenarios for some time will, for the most part, practice 'cohesion' scenarios, perhaps supplementing with focused local work that operates on other parts of the matrix.
The oil company Shell has worked with scenarios for decades. Shell's published scenarios have migrated almost completely around the matrix. The early work was a call to action. The oil industry had changed, former truths were no longer so, and previous norms and values no longer worked. The subsequent scenario rounds began to stress the need for complex, coherent values: was Shell to be thought of as existing "for" the shareholders, or was it to be aimed to satisfy a broader group, not least of them national governments? Latterly, the stress seems to have moved more to consider how Shell fits into the developing trans-national culture or cultures, and how to interpret its capabilities to that culture.

Making change occur.

Making change occur.

Readers will recall three irreducible components to scenarios - that they communicate, that they express possibilities or options, that they are a part of a tool kit and that they effective or not to the degree to which they are used in an appropriate manner. We have since seen that the internal state of the stakeholders defines the meaning of the term "appropriate".

The table cross-references the key components of any scenario process (columns, as discussed in the first section) with the stakeholder-defined feasible types of scenario (rows, as discussed in the previous section.) Flag symbols reflect the relative importance of each intersection. Thus "Shake-up" scenarios are all about communicating ideas, whilst "Cohesion" scenarios are action-focused insofar as they deal with people who have relatively common ideas and values.
Please note that "Action" here does not equate to change induction per se, but rather to the conscious choice of the action to be undertaken. If one drops a new capability into a society - mechanised transport, refrigeration - it will induce change, but one will not be in charge of it. The result will emerge through social churning, but be a very major shift. By contrast, introducing performance related pay into a manufacturing line is a conscious process aimed at getting a defined result, albeit a rather small one in the grand sweep of history.



So we find that we are dealing with at least nine things, comprising the cells in the table which we have just examined. If we want to simplify this, we are nevertheless still dealing with three elements, the types of scenario which we discovered by exploring the matrix. Each has three (different) steps with extremely different processes and quality parameters. If we want to talk about how to induce change, then we have three "spaces" in which to do this, and they are not at all like each other. That is, in all likelihood, why people seem have difficulty with the implementation of scenarios - because they are dealing with many things, and not with only one.

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The Challenge! Forum

The Challenge! Forum is a loose international partnership of expert individuals, most of whom have occupied senior planning or management roles in commerce and the public sector. We take on projects that organisations or interests find it hard to structure for themselves.
We are currently looking for affiliates and for people who are interested in marketing our services, either as a free-standing activity or as a facility within whatever it is that your organisations does. For example, we are often used by training organisations to set the tone of an event and to widen the debate. Please make contact with us if this is something which you would wish to develop.
Organisations face two kinds of problem. There are issues such as cost management, where the problem is plain and the solutions straightforward, if hard work. Equally, there are intractable and painful issues where the problem is largely undefined, and in which finding the nature of the question is often as important as seeking its answer. The Challenge! Forum deals chiefly with the second set of issues. We help organisations to articulate issues with which they have yet to come to grips. We give insight into the forces that are generating change, and we help to adapt and innovate in response to these.
Much of the information that is published on this site is somewhat generic, applying to all nations, organisations or firms. Real value comes when expert insight in these areas is turned onto the specific: on the business idea, on local conditions, onto genuine policy handles. The lesson of the dot.coms (and previous investment bubbles) is that one has to see how the clockwork actually turns so as to deliver sustainable value to the investor. The lesson of policy fads - such as marketisation or deregulation - is that one has to know where they work and why they work, and what is needed to keep the real machinery in play. Grand-sounding buzzwords - sustainability, governance - need to be assessed for what they truly mean to a given issue or circumstance, and trimmed down until the become useful tools.
The Challenge! Forum brings decades of insight to these issues. Clients know their own area of activity well, but they have often found it hard to synthesize their insight into something which generates action, or harder still to link this insight with the changing world in which they operate. The Challenge! Forum specialises in delivering such focused interventions.
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Oliver Sparrow
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What our clients say about us, unedited:

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"I could have happily listened to your presentation all day. But you made us work, and my goodness it really hits me how our ideas had changed in half a day!

"That was completely stellar. You just stunned them, and made the whole conference into a success. The speaker who said 'Follow that...' was doing no more than acknowledge the rest of us thought - that anything more was going to sound lacklustre.

"When I told my colleagues that you were coming to India they just thought that I was wasting money. But now they are all onside and we are all very, very happy with what you did for us in a week.

"Many thanks indeed for contributing to [...] Our participants were, as ever, overwhelmed by the breadth and depth of your scenarios. The presentation was both very stimulating and thought provoking in relation to the challenges facing higher education."

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"The Forum has helped us to discount the flashy headline distractions. It focuses us on the big structures. We get to sense the Next Big Thing, but we can also cut today's 'Big Thing' down to size."

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"We extend our greatest thanks to our Challenge! Forum friends. Before we could not speak with our new partner and now we are biggest friends. You are like wedding makers."

"The scenarios provide a very useful prompt for thinking about the future. We have gained insights that have contributed to our strategies."

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Participant organisations:

Participant organisations:

Organisations which have called in the services of the Challenge! Forum usually seek confidentiality, which we honour. Members of the former Chatham House Forum, with which the Challenge! Forum ran in parallel, have been:
  • Abbey National plc
  • Avdel plc
  • BBC World Service
  • BG plc
  • Boots plc
  • British Aerospace Systems plc
  • British Nuclear Fuels plc
  • BT plc
  • Bull Information Systems
  • Cabinet Office, The
  • Corpra
  • Defence Evaluation and Research Agency, The
  • Department for Education and Employment, The
  • Department of the Environment, Transport and the Regions, The
  • Department of Trade and Industry, The
  • Foreign and Commonwealth Office, The
  • Gardiner & Theobald
  • Halifax plc
  • Hargreaves Risk Management
  • HM Customs and Excise
  • ICL plc
  • Ministry of Defence, The
  • National Grid, The
  • Park Nelson
  • Shell International Limited
  • Strategos Europe
  • The Industrial Society
  • The Post Office
  • Unilever plc
  • x-bbe plc
Many private and public sector organisations - for example, British Airways, the Environment Agency, as well as many academic institutions - have participated in various discrete activities. We have interacted with the strategic processes of over thirty other organisations and national governments.



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Oliver Sparrow

...is the Director of the Challenge! Network. He is the author of many publications, including five books. He has written or edited much of this Forum. He is known for his groundbreaking presentations, which are given to audiences totaling well over ten thousand people in the course of a year. He has substantial broadcast experience.
Oliver is a director, board advisor or non-executive director of a number of companies. He is also director of a charity called the Leadership Capacity Trust. He serves as a member of number of UK government projects. He was a commissioner on the World Commission on Globalization. He is senior fellow at the St Andrews Management Institute.
Oliver spent the bulk of his career in Shell, chiefly in strategic planning, corporate renewal and venture capital. Country assessments - their stability, their weaknesses and potential - were and remain a central aspect of this activity.
Oliver Sparrow
Many of these projects have had a technical focus, and have usually been ahead of the field: for example, exploring electronic home shopping in 1983 (which involved the team inventing something close to today's Internet), nation-scale energy management, power generation based on novel technologies, such as biomass energy, ocean thermal power, 'hot wet rock' geothermal and the like.
Current assignments increasingly involve service to organisations which became overly-streamlined during the downsizing wave. Many now find that they have lost the capacity to deliver oversight and innovation. Their focus narrows to endless and often negligible improvements in current activities, losing sight of how their operating environment is changing and, most of all, how it may change discontinuously as a result of technical, regulatory or organisational innovation. Resources are directed almost entirely towards established activities, and returns to these reflect the commoditisation of these.
Others try to buy their new ideas from third parties or by acquisition. This is, however, the one true core activity which it is not possible to buy in the marketplace. If the firm's management is astonished by the outcome of a short campaign by consultants, then this is a reflection upon them and not the consultancy. Equally, large companies have often tried to create the equivalent capability by 'filter feeding' on small. innovative companies; but these have often proved indigestible and, where digested, of limited nutritive value. Renewal is, however, hard work and a central activity on which management attention should be focused. Outsiders can help managers learn how to do this, but they cannot think on their behalf.
One unexpected application of the skills which are needed to re-install these capabilities has been conflict resolution, notably where the parties have lost sight of what they are fighting to achieve. A number of projects have, therefore, focused on finding a common set of values and aspirations around which negotiations can proceed.
Oliver has lived and worked in a considerable number of countries, predominantly in the Pacific, Asia and Latin America. He was born in the Bahamas and brought up in Africa. He was educated at Oxford, with a science and economics background which has since expanded into many fields. He enjoys exploring wild parts of the world for orchids, particularly the Himalayas.
Oliver owns and chairs Interactive Trek!Guides Limited,a company which makes computer-based travel guides. That is, we take a country such as Nepal or Perú and construct an intricate description of it. Customers buy a disk, and then roam the country at will. Joint ventures with local organisations take the many queries that this generates and offer them specialist travel services.

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[이 게시물은 ADMIN님에 의해 2007-05-12 13:35:39 OECD Future Forum | 오이시디 미래포럼(으)로 부터 복사됨]

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