Posted by: Nicholas Davis | February 26, 2009

Possible units for scenario-planning value

Following my uber-long post below about constructing a theory of scenarios, I’ve now decided that I’ll do a search for possible “theory units” as Dubin proposes (see Chermack’s paper here proposing one model). Since Chermack was pretty broad about choosing units, I figure I can start by listing all the outcomes, potential processes and enabling aspects of the “scenario value chain” and then filter from there.

Let’s start with Chermack’s suggestions:

  • Scenario stories
    • Learning
      • Mental models
        • Decisions
          • Performance

Trudi Lang is cleverly looking at social capital as an output of scenario exercises, which I have to say resonates very well with the work we do here at the Forum.  She writes, “Social capital is said to be an important aspect of enabling information exchange and opening up collaborative possibilities for action.” [1] So let’s add as potential theory units:

  • Social capital
    • Information exchange
      • Collaborative action

To that, why don’t we also put in the Forum’s standard propositions for how scenarios add value. Building on a preface by Ged Davis, our introduction to The Kingdom of Saudi Arabia and the World: Scenarios to 2025 argues that scenarios:

Enhance the robustness of strategies by identifying and challenging underlying assumptions and ‘business as usual thinking’ and, hence, contributing to robust and pre-emptive positioning of corporations.
Allow better strategic decisions by discovering and framing uncertainties and better understanding of risks prior to making substantial, irreversible commitments.
Raise awareness of the external environment by helping business communities understand the complex interplay of underlying drivers and critical uncertainties while increasing sensitivity to weak signals that precede a significant change in direction, but often go unnoticed.
Provide impetus for current action by providing users with common languages and concepts for discussing current strategies across various businesses, in a non-threatiening context of possible futures.
Increase response speed to unexpected events by visualizing possible futures and mentally rehearsing futures, thereby raising the degree of prearedness and agility.

Some of these seem to fit with Chermack’s units, but let’s see what to add:

  • More robust strategies, better competitive positioning (driven by…)
    • Heightened awareness of underlying assumptions
    • Heightened receptivity to contrarian opinions
    • Use of scenarios to test strategies (the ‘wind-tunnel’ effect)
  • More successful strategies (driven by…)
    • Better appreciation of risks
  • Heightened awareness of external environment (driven by…)
    • Increased sensitivity to “weak signals”
  • Greater consensus around action (driven by…)
    • Shared language/concepts for discussing strategic options in a non-threatening manner
  • Increased response speed to unexpected events and greater preparedness (driven by)
    • Ability to visualize multiple possible futures and rehearse responses

My 2006 thesis on perceptions of value in scenario planning adds the following (additional) possible units from interviews with directors of various scenario projects and a review of scenario literature:

  • Widening of perspective
  • Acceptance of uncertainty
  • Enhanced communication between stakeholders
  • Enhanced knowledge transfer

Finally, what research would be even partly correct without a solid google search? Martin Borjesson adds:

  • Understanding the long-term impact of current decisions
  • Avoiding unconscious biases in decision-making

That’s 26 elements so far, and I’m sure we can find hundreds more as well as disaggregations of most of the above. If you have any suggestions, let me know. I’ll coalesce the list in a later post, and we can try and see what a model for multi-stakeholder scenarios might look like.

[1] Trudi Lang, (2009) Personal communication

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