A famous scene in the film Lawrence of Arabia illustrates a typical response, often observed when organizations or people face an unknown or changing situation. While Lawrence and a fellow traveler rest in the desert, a tiny dot becomes visible on the horizon, growing larger as it approaches. At this stage, the horizon seems far away but they do not know what the image is and their curiosity holds them. They watch and wait puzzled and just stand there without moving. Eventually when the unknown object is recognized, it is too late. Before the fellow traveler can hit him with his revolver, the unknown man shots him dead. This is exactly what happens in normal life. If we are not prepared to read the dots on the horizon, we are killed before we can kill the dot (or the danger)
Scenario Planning was recognized as reliable form of predicting distant future and a source of strategizing after World War II and was given a formal stature by Herman Kahn of RAND Corporation, later adopted by different organizations of the world. However, it most famous results were seen in Oil Crises and Arab Israel War (Youm Kippur War) in 1973.
Scenarios are a description of a plausible future(s) and a set of future events or circumstances that would affect an organization’s performance. Scenarios are based on perceptions about alternate future environments and essentially take a longer view in a world of great uncertainty. They are mental models that allow decision makers to anticipate the future and solve problems from different perspectives. Based on ‘divergent’ thinking and exploring discontinuity, Scenarios are hypothesis and narratives. Their essential focus is on Uncertainties and not on certainties. They require a lot of futuristic and creative thinking.
The process of Scenario Building is simple. There are generally two approaches: one is non – structured and purely uses mental models to write divergent stories about future. The second approach is a simple process, which, if followed and practiced, can automatically generate divergent scenarios and eventually strategic options. The process is as follows:
1. Select the Organization (Country/Military/Company/Corps/Unit)
2. Select a Horizon Year
3. Do a SWOT Analysis
4. Do a PESTEL (Political, Economic, Social, Technological, Ecological and Legal Analysis)
5. Identify Trends, Drivers, Certainties and Uncertainties from the analysis
6. Make intelligent assumptions about future
7. Select the two most Critical Drivers on the basis of Impact and Uncertainty
8. Plot them on an X/Y Axis
9. Fill in the four quadrants and develop story lines
10. On the basis of four scenarios, develop four strategic options
11. Strategize for most plausible Scenario and prepare for the Worst impact of other Scenarios
Consider Pakistan as a test case and look at its scenarios for the year 2040. We recognize that “Geostrategic Location” and “Demographic Transition” are two key drivers that will have a sustained and considerable impact on the environment in future. Plotting them on an X and Y axis, we came up four scenarios and four strategic choices, details of which are available on slideshare or directly from the author.