Scenario Analysis

I came across this article about preparing for the future and think it provides a good basic framework for performing scenario analysis. This is a tool that is often underutilized as it pertains to strategy and innovation efforts.

http://www.shambhalainstitute.org/resources.html#

Step 1. Refining our sense of purpose

Scenarios provoke genuine learning when they answer genuine concerns; otherwise, they are merely an academic exercise. The concerns should be compelling, shared by the entire group and beset with uncertainty.Articulating our focus is not a trivial task, especially because the participants are, ideally, diverse people with a common interest. As with a vision exercise, it requires moving past the concerns that people think they have to the concerns that truly motivate them.

Step 2. Understanding Driving Forces

Scenarios are built upon the distinction between two types of driving forces. Predetermined forces are reasonably predictable. We all know, barring unforeseen calamity, how many 20-year-olds will exist in any country nineteen years from now. We can assume that the pace of technological growth will continue, with costs of new devices falling at a fairly predetermined rate.

But the vast majority of forces at play are uncertain. We can't know the answer, but we can become far more aware of the reasons that events might move in one direction or another, and the implications of their movement.


Step 3. Scenario Plots

Developing scenarios involves considering "classic stories" in terms of the current situation. (Indeed, a few researchers are discovering that system archetypes and this stage of scenario planning are devilishly complementary.)

As participants, you create several stories of your own, trying to make each evoke a future that pulls you past your own blinders. As you talk, you enrich the plots, developing sketches of what might plausibly happen.

You don't care how likely or unlikely each story may be. You care about whether it illuminates your understanding. In fact, if a substantial drop in the demand for your product or service is undeniably plausible - even though the chances against it are 100 to one - you owe it to yourself to create a story around that event, to spark the necessary creativity and preparation that you might or might not need, but which is worth developing in any case.


Step 4: Strategy, rehearsal, and conversation

This may be the most important step, and, regrettably, the most often ignored. Having developed two, three or four scenario plots, you now consider each of them. What strategies would be effective no matter which of those futures came to pass? What would it feel like to live in those worlds? Some groups go so far as to rehearse the scenarios, as though they were pieces of improvisational theatre, with each participant taking the part of a different key actor. It's also important to describe the scenarios to others-to get insights from the rest of the organization that may make your pictures of the world richer.

You may find that your scenarios themselves go through several iterations. That's all for the better. When you are done, you will have a language you have created, in which collective assumptions can be voiced. "How will we know this particular world is coming?"

Most importantly, you will ask: "What decisions can we make now that are robust- so that no matter how the future unfolds, we will be glad we made that decision?" Because you have anticipated several possible futures, you can ask that question of your imagination.