Dr Trudi Lang is Senior Fellow in Management Practice at the Saïd Business School, University of Oxford and a core faculty member of the Oxford Scenarios Programme and co-director of the Oxford Collaborative Strategy Lab.
She visited the UNSW Centre for Social Impact (CSI) to talk about scenarios and why they are the approach of choice when strategising amid times of unpredictable uncertainty.
Scenarios have a long tradition of use for military purposes including helping think through the potential impacts of nuclear war. Scenarios made the consequences of nuclear war vivid helping policy makers to engage and identify ways to avoid such an outcome.
What started to happen for organisations at a similar time, in the 1960s, was an increased sense of turbulence. Not only from the risk of nuclear war, but there was the Cold War, the awakening of the environmental movement - Rachel Carson’s groundbreaking book, Silent Spring, was published in 1962 - technological advancements as seen in the human exploration of space, and geopolitical tensions, particularly between capitalist and communist regimes.
This turbulence had two key consequences for organisations and the way they approached strategy. First, it drew attention to the consequential importance of their wider operating context, triggering a broader socio-ecological or systems view of strategy. Second, the turbulence started to present challenges for long range planning models, as past or known data could not be used to forecast the future with a degree of accuracy that was helpful.
It was in this context that scenarios started to emerge. Scenarios are memorable, coherent narratives describing a small set of plausible and relevant future contexts developed for someone for a specific purpose. They are equally plausible because with unpredictable uncertainty, judgements can’t be made about what is probable. Scenarios reframe ways the future might unfold helping stress test plans, but most importantly creating new insights, options and identity possibilities to inform innovation and action in the present.
In the Oxford Scenarios Programme (OSP), we had the opportunity to work with the insurance firm AXA who wisely wanted to explore the future of ESG (Environment, Social, Governance). The firm was very aware that their ESG strategies would be operational in a future that could be very different to today. The ESG space has evolved a lot over the past, at times being known by related concepts such as corporate social responsibility, triple bottom line, sustainable development, etc. There was no reason to believe it wouldn’t evolve further in the future.
But how? Participants in the OSP developed different scenarios such as climate change accelerating leading businesses to prioritise the reduction of CO2 emissions, abandoning social innovation and governance strategies. Another scenario explored a future in which governments took a more stringent approach to regulations leading to compliance implications for firms’ strategic choices. A further scenario imagined stand-alone insurance companies being taken over by technology platforms whose own priorities supplanted those of the insurers.
What these scenarios helped AXA do was to start to think about how the nature of social impact and ESG may evolve, and how to prepare for those futures rather than as ESG is currently understood.
AXA’s experience with the OSP is outlined in the MIT Sloan Management Review article titled How ghost scenarios haunt strategy execution. I mention this article because it also discusses how scenarios are frames of the future and how people and organisations are always framing the future in a certain way, but that in doing so they are often using just one frame. The consequence is that the future might not play out as expected coming back to haunt the best laid plans.
By using a few different, equally plausible scenarios, people can reframe the future and in doing so start to see new opportunities and identify emerging challenges. Each scenario is based on a set of assumptions - change the assumptions and you can see how scenarios are very helpful for innovation.
So, what would a team gathered to develop scenarios look like? Well, first anchoring the scenarios is important: Who are they for? What is the reason for developing them? How will the outcomes be used? Based on that you can understand who would be helpful to involve. Diversity is key because there are no facts about the future. Rather by talking with many different people we are tapping into what they are seeing emerging from where they sit in the systems we are embedded in. Or alternatively, as William Gibson, the science fiction writer said, “The future is already here – it’s just not evenly distributed”. That is, the future we are exploring might already exist in places such as Rio de Janeiro, Mumbai or London for example and we can tap into that. Whatever the approach, the intent is to address our blind spots and challenge our assumptions about the future.
First, recognise that you are already doing a form of scenario planning. That is, to innovate or to design strategies, organisations have to make an assessment about the future context because that is where the innovations and strategies will live – not today. But often this assessment is implicit or largely assumed (thus the idea of the ghost scenario). Second then is to make the assessment of the future context explicit, to surface the assumptions being made, and see which ones you are uncomfortable with. It might be for example that a trend you were sure was going to continue is starting to bend as Joe Martino would have expressed it or very plausibly could bend. Third, develop another scenario or two where these core assumptions plausibly play out in different ways, and explore what new options they suggest for the organisation.
At the end of the day scenarios are like conceptual models allowing you to experiment without immediate real-world consequences. This is invaluable for reframing and innovating.