Modern Management Challenges


The Power of Scenario Thinking

Having won the 2016 election with a clear majority, President Donald Trump proceeded to fulfil his promise to the American people – to put American interests first. He also lived by his belief that climate change was a ‘big hoax’, enabling the US oil and gas lobby to dominate policy.

As Trump established ‘Fortress America’ and shut its borders to ‘undesirable’ migrants, President Vladimir Putin exerted muscle in Eastern Europe, to apply economic power and gain political control over former Soviet satellites. Europe, a continent in social, economic and political disarray after the UK’s withdrawal from the EU, was unable to resist Russian advances.

This may not seem such a strange narrative when read now. However, when we presented this scenario to an audience of about 300 senior decision makers in February 2016 – months before the US Presidential election and the UK referendum – it was greeted with a wave of laughter. When we asked the audience if anything in this story was implausible or impossible, we were met with shaking heads.

Of course, we were not predicting the future – we presented a second scenario with President Hillary Clinton and the UK voting to remain within the European Union. This example illustrates the power of scenario analysis to present potential futures that are entirely possible yet remain largely unconsidered by decision makers. Why is this the case?

In our experience with business, we have met with leading-edge technology firms, with managers who are confident of success. However, challenging scenarios have uncovered potential problematic issues that had not been considered. These include issues of consumer resistance or lack of buying power, regulatory controls, or lack of support infrastructure. We have also encountered firms who have previously brought technological disruption to an existing market and built success, but then sat back and failed to consider that others now seek to do the same to them.

In Scenario Thinking, we provide an explanation of the ‘cognitive biases’ that tend to constrain individuals’ thinking, often leading them along paths that they have followed previously and know well. Thinking is set within a ‘frame’ – boundaries of what we think might happen based on experience and limited inquiry. We provide simple illustrative examples of how such biases influence our thinking and, hence, our decision making.

Scenario methods offer a set of tools for breaking out of our frames to explore the full range of possibilities for what could happen. Scenarios enable us to ‘prototype the future’, to consider how our current strategies and plans hold up under a broad range of future conditions. If they are robust under all potential futures, we have done well. If, however, there are one or more scenarios where they do not perform, we can seek alternative ways to succeed under these conditions. Or, if we cannot see a strong option for success, we can design for resilience and survival should the worst happen.

We have worked with scenario methods with all kinds of organizations, from multinational companies through government agencies to not-for-profit groups and multi-organizational collaborations. We have helped these different bodies to address a wide range of problems, from complex and ambiguous, ‘wicked’ problems, like responses to climate change, to operational problems of how best to meet a particular market demand in future.

This book is designed to enable the reader to plan and undertake scenario analysis for their own organization, using the most appropriate method for the problem at hand and the resources available. The scenario exercise may run for one day, or over many months, depending on these factors. However, the key message we seek to offer as a take-away is that you should adopt scenario thinking as a ‘way of being’. Unless there is one, and only one correct answer to your problem, you should look for options and possibilities to find the best outcome, not jump to looking immediately for the ‘right’ answer.

George Cairns is an Adjunct Professor at QUT Business School, Brisbane, and the author of Scenario Thinking. He has taught scenario methods in the UK, Europe, Singapore, Hong Kong and Shanghai and led scenario research on post-carbon futures, farm futures and regional regeneration in Australia. George has co-authored two books and numerous journal articles on scenario methods.

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