One way of approaching the issue of uncertainty is to use scenarios to envisage a variety of different, challenging futures. This activity alone allows stakeholders to individually and collectively generate, communicate and test ideas about important external events that could impact them – giving an insight into their “mental maps” and exposing some of the assumptions behind how they approach their market and make decisions. This is a valuable exercise in its own right, and, in addition to improving communication, often gives a crisper sense of the collective uncertainty being faced by a team, business or strategic unit.
Some scenario exercises stop here – after the intense and often time-consuming process of generating and persuasively explaining a variety of futures that challenge or inspire participants. However there are a variety of additional steps integral to scenario thinking that move the issue of uncertainty at hand from “I see it more clearly now from a variety of perspectives” to “I’m starting to get an inkling of how we can strategically respond to this uncertainty”.
At the Forum, we call this next set of activities generating “implications” and “strategic options“, and they have become an increasingly important part of the projects we do with our partners. Like building scenarios, the process of getting to useful strategic options can take a number of different forms (depending on the resources, time and stakeholders available), but in the end it comes down to answering the questions: “so what does this mean?” and “now what should we do?”.
The “so what” question involves thinking deeply about how the various scenarios will affect relevant stakeholders if nothing is done to respond. What will happen to regulation and government intervention? Will there be new entrants, shifting consumer demand or other radical change in the competitive environment? Will we be able to find the required talent, donor funding, market access or partners? Will our current advantages remain or will new ones emerge? The answer to these questions – and all others are key to the success of stakeholders – comprises the implications for each scenario.
The “now-what” is where reflection links to action, as implications at a scenario-level inform strategic options that a stakeholder can employ in attempt to manage the uncertainty presented by the scenarios. At the more passive end of the spectrum, this might consist only of a variety of contingent strategies that prepare stakeholders to act rapidly when more information is available – if this happens, then we will respond like that. Sometimes, there will emerge what seems to be a dominant strategy that can be employed across a number of scenarios, often with a hedge or two in case the unexpected occurs and a wayward scenario (or driver) starts to exert its influence. And other sets of uncertainties may require a number of small, active experiments in the market to tease out optimum strategies, with built-in exit strategies to reduce costly lock-in.
In a world where most people what to try and harness uncertainty rather than simply wait and see, it seems natural that all scenario projects should address the “so what” and “now what”, but there are a number of challenges. First, just getting to the end of the scenario building process is often exhausting, and renewed energy and participation is sometimes required to push through to the next phases, all the while keeping the set of scenarios fresh and relevant in everyone’s consciousness. Second, since implications and strategic options are specific to the needs, capabilities and resources of particular stakeholders, when there are a wide variety of stakeholders involved in the project it can be hard to get consensus on “common” strategies, requiring careful facilitation at this stage of a project. Third, even once the implications have been discussed and agreed, and the strategic options have been generated and refined, there remains the need to see how the resulting insights can practically fit into existing strategy; at this stage, you might find that internal strategy-making processes may not be aligned with this type of input and additional champions are required to create change in the direction desired.
But despite these challenges, from my perspective it seems to me that the reality of the scenario process is starting to catch up with the intention of many scenario practitioners for many years – to spend only 30% of effort and time generating the scenarios themselves, and 70% of resource ensuring that stakeholders think hard and well about the “so what” and “now what” in addressing future uncertainties.
So what does xkcd have to say about options?