by Joe Flower

International Copyright 1997 Joe Flower All Rights Reserved
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But what about thinking about the future itself? Is there a better way?

At the moment, I am writing a book on the future of China with Peter Schwartz and Jay Ogilvy of the Global Business Network, a think tank with international reach. Ogilvy and Schwartz were formerly researchers at SRI, and Schwartz was later head of global planning for Royal Dutch Shell. In the early 1980s it was Schwartz and two colleagues who caused Shell's top management to ask themselves, "What if oil prices fell drastically?" When oil prices did fall by more than half in 1986, Shell was prepared, and fared far better than the other large oil companies.

Ogilvy and Schwartz do not attempt to tell the future. Instead, they tell stories about it. They spin scenarios.

One of the most singular successes of the scenarios process was the part it played in helping to dismantle apartheid. Pierre Wack, the man who brought Schwartz to Shell, retired in the early 1980s. In retirement, he joined a team helping AngloAmerican, South Africa's largest company, think about the future -- of South Africa and apartheid. It turned out that one future that few white South Africans had even considered was one in which black South Africans came to dominate the government -- but did not exile the white people, kill them, or confiscate their property. And it turned out that the various black South African cultures showed certain elements, especially a deep appreciation of the value of forgiveness, that made such a scenario plausible.

An AngloAmerican executive, Clem Sunter, gave a series of speeches around South Africa highlighting the study group's scenarios. The speeches became a book, which became a bestseller -- which ultimately helped pursuade President DeKlerk to release Nelson Mandela from prison and begin the process that would dismantle apartheid.

Spinning scenarios is a highly sophisticated, singularly useful, and imminently practical way to think about the future. Yet it is simple enough that you can do it yourself. In fact, Schwartz tells how to do it in a book that you should read: The Art of the Long View (Currency Doubleday 1996).

When you spin scenarios, you end up with an array of plausible futures -- usually three to five possible stories of how the future will unfold for you, your organization, your community, or whatever you are focusing on. The idea is not to decide which of these tales is right. Rather, the idea is to create an array of plausible futures, and then 1) examine how prepared you are (and how prepared you could be) for each of them, and 2) look for markers that will tell you which of them -- or some other future you had not imagined -- is unfolding. The point of scenario-spinning is to help us "suspend our disbelief" in all possible futures, so that we can see the possibilities with clear eyes.

It's a process that works best with other people, especially with other people who don't share your assumptions.

Schwartz identifies eight steps in the process.

1) Isolate the decision. Rather than trying to explore the entire future, ask yourself, "What am I trying to decide?" The decision in question might be: "Should we merge with the other guy?" Don't worry too much about whether this is exactly the right question. In the process of exploring whether you should merge with MegaComm, Inc., you might discover that you really should be asking whether to merge with AstraMeta, Inc., or TechnoBaffle, Inc. But narrowing the original decision question gives you much sharper insights.

2) Identify the key forces in the local environment. Forces within your organization and your environment might include such things as the size of the market, and whether it is expanding; your level of debt, and that of your potential partner; your and your partners' reputations; the existence of unfilled niches, and what the market really wants.

3) Isolate the driving forces. Having researched a number of forces that could affect your decision, ask yourself and your team: Which are the driving forces that are critical to this decision? Some driving forces effect everyone the same. Everyone, for instance, is driven by the need to cut costs, and the need to incorporate new technologies. But unless one of your potential partners is markedly better or worse than other people at doing these things, they are not differences that make a difference.

4) Rank the driving forces by importance and uncertainty. Some forces are more important than others. Whether the market will grow may not be as important as whether new players enter the market. And some forces are far more certain than others. Local housing and population patterns usually change fairly slowly. The aging of the U.S. population is fairly predictable over the coming decades -- and will have a similar effect in any scenario. On the other hand, other questions are highly uncertain. The most critical driving forces will be those that are both very important and highly uncertain.

5) Select the scenario logics. This is probably the most important step. The feeling is one of playing with the issues, re-shaping and re-framing them, drawing out their hidden factors, until you begin to come to a consensus about which are the two or three most important underlying questions that will make a difference in your decision. One way to generate scenarios from such questions is to cross them, in a two-axis matrix, or a three-axis volume.

Crossing two major questions in a matrix gives four possible scenarios.

6) Flesh out the scenarios. Now go back to all the driving forces and trends that you considered in steps two and three, and see how they affect your scenarios. For instance, degree of risk, access to capital, ability to control costs, raise quality, or extend funtionality, all might be critical in some scenarios, and not so important in others. Weave all the trends and driving forces into the basic logics that you have built, and see how they affect the story.

7) Play out the implications. Return to your original question and examine it in the light of the scenarios that you have built. Does the idea of merging with MegaComm, Inc., seem strong in all the scenarios? Suppose MC is a high-quality company that has not yet shown a great ability to cut costs -- the decision looks pretty dicey under the some scenarios. You would be betting the farm on the hope that people will pay a bit more for quality. If it only looks good in some scenarios, and in others it seems to lead to crash-and-burn, classify the decision as a gamble. Remember, you built the scenarios out of factors that were highly important, highly uncertain, and beyond your control.

8) Search for markers. Finally, look for the leading indicators that would tell you which of the scenarios -- or which combination of scenarios -- is actually taking place. How would you know? The questions buyers ask in contract negotiations? Customer response in questionnaires and focus groups?

Having the right questions in hand and having given thought to how you will know the answers when they show up will put you a step ahead of the next guy.

According to Schwartz, "You can tell that you have good scenarios when they are both plausible and surprising; when they have the power to break old stereotypes; and when the makers assume ownership of them and put them to work. Scenario-making is intensely participatory, or it fails."

If you can't find The Art of the Long View by Peter Schwartz in the bookstore, you can order it from the Global Business Network: Box 8395, Emeryville CA 94662 USA, phone 1 510 547 6822, fax 1 510 547 8510