If there were an oracle that would give us an exact vision of how the environment in which our companies operate will change, would this perfect information facilitate better decision-making? Arie de Geus, author of "The living company" and for many years director of the Royal Dutch Shell planning group argues that the actions of isolated individuals and organizations have minimal impact on the powerful and distributed forces that drive the creation, direction and sustainability of external events. Therefore, de Geus continues, the real purpose of strategic planning is not to predict the future, the attempt to “get it right”, but to change the mental models of those who have to make important decisions, broadening their perceptions and re-framing their perspectives..To achieve this successfully, the management team must clearly understand what is flowing through their minds. Learning how this team thinks is an essential first step in identifying what needs to be changed. Team members cannot know if their mental models have changed unless they know what they had at the beginning of the process.
I believe that the work done by the group in the previous retreat has been profound enough for us all to realize our starting points, in fact, myths, fantasies, which are part of the culture and practice of the Company.
On the other hand, we are going to continue this strategic process, which surely involves a change in culture, having laid the human and relational foundations of the new one because, otherwise, we would find ourselves in a vacuum; the previous culture, despite having flaws, has allowed us to live and work together solving our relationships, stress, attending to our emotions, if you want in a very particular way. It is important that we agree that the new culture will provide and resolve the needs that we have as managers and as human beings. We cannot remain in a “culture gap” between the commitments, the promises, the psychological contract of the one we abandoned and the one we now have to adopt.
Arie de Geus says that "the only relevant questions about the future are those that make us change the question: from whether something will happen, to what we would do if it happened." The scenarios are multiple and possible futures, plausible; alternative accounts of how the general or global environment may evolve in the future. They are not predictions but credible and relevant alternative and challenging stories that allow us to explore hypotheses, using the question what if… The objective of scenario building is not to guess future events but to highlight the large-scale forces that drive the future in different directions. A set of scenarios provides a learning environment in which managers can explore those forces,improve understanding of the dynamics that shape the future and thus evaluate strategic options to prepare for decision-making. By looking at these vectors, we can look more distantly at the daily crises that often occupy our time, and examine the long-term forces that we normally leave out of the range of our worries and, consequently, surprise us without being prepared. By identifying which of these forces are both critical and highly uncertain, we can look at alternative futures that carry hidden dangers or unrealized opportunities.and to examine the long-term forces that we normally leave out of the range of our worries and, consequently, surprise us without being prepared. By identifying which of these forces are both critical and highly uncertain, we can look at alternative futures that carry hidden dangers or unrealized opportunities.and to examine the long-term forces that we normally leave out of the range of our preoccupations and that, therefore, surprise us without being prepared. By identifying which of these forces are both critical and highly uncertain, we can look at alternative futures that carry hidden dangers or unrealized opportunities.
The scenarios are adapted to the context of the challenges or decisions facing the company today. The number of stories we can make of the future is infinite; therefore we have to choose the ones that affect us, the ones that allow us to decide better.
In the same way that the work done in the previous retreat was more related to internal processes, with personal relationships, the one we propose this weekend aims to sensitize ourselves to the outside world, so that we can question our normal assumptions, change our mental models and really think "out of the box" in a cohesive way.
The process of participating in the construction of a scenario will improve our abilities to manage uncertainty and risk. It will allow us to better understand our today by imagining tomorrow, expanding the angle of our vision; It will also facilitate anticipation in identifying changes.
A scenario is not the same as a forecast. This is a useful tool as long as we are fully confident that the future will be like the past. However, discontinuities produce surprises that forecasters fail to detect. These discontinuities and surprises come from various forces and factors that accept the parameters that we want to extrapolate to the future but over which our control is small or non-existent: geopolitical, social changes, technological advances, environmental impacts and economic restructuring.
Here are some examples of wrong predictions because the discontinuities that occurred were not clear or obvious:
- “Well-informed people know that it is impossible to transmit the voice by means of waves; and that if it were possible, it would have no practical value "(Editorial," The Boston Post, 1865) "The phonograph has no commercial value" (Thomas Edison, 1880) "I think there is a market for about five computers" (Thomas J Watson. IBM President, 1943) "There is no reason for individuals to have a computer at home" (Ken Olsen. DEC President, 1977) "64 k. they should be enough for everyone "(Bill Gates, 1981)
Scenarios are a way of thinking about the future, from my approach to decide what needs to be done in the present.
It was the business world that created them in response to the weaknesses of the different approaches used for strategic planning. One of the dangers of the latter is that it is based on a forecast of the future situation based partially on the past and the expected changes.
The problem is that most of the forecasts are incorrect and therefore the strategies based on those will be wrong. Scenario planning starts from an alternative approach. Instead of determining the most probable future (forecasts), consider a range of diverse plausible futures (generally three or four for practical reasons because conceptually the number of possible futures is unlimited).
To determine what is a good scenario it is convenient to start from what they are not:
- They do not weigh probabilities but consider possibilities They are not the list of things that we would like to happen or that we think should happen They are not descriptions of pessimistic and optimistic hypotheses that can be realized.
Conversely, a good scenario exercise will produce a set of stories about the future that:
- - They are internally consistent and plausible - They cover a wide range of possible events - They challenge conventional wisdom and lead thinking in new directions - They are memorable - They are relevant to their intended audience
Many have tried to understand the future simply through prediction, although to date the success record is poor, says Ged Davis, who adds:
"Forecasters extrapolate from the past, translating into the future the patterns they saw in the past and disregard the well-known saying": A trend is a trend until it breaks. " It is bankruptcies that should interest us the most because it is where the greatest risk lies and also the greatest opportunity. Consulting firm McKinsey has estimated that in the period 1980-1993, 103 companies together eroded their shareholders' equity by $ 300 billion due to errors in estimating future events by investing in oil at high prices.
The scenario approach recognizes that only some questions can be foreseen, while others are essentially unknown. Scenarios have more to do with strategic thinking than strategic planning.
One of the difficulties that affects forecasters, and to some extent also those who build scenarios, is the tyranny of the present that influences and conditions us. We see the world from biased mental schemes that limit the breadth with which we could contemplate a more diverse set of futures.
The scenarios try to go beyond those limited mental schemes, recognizing that the possibilities are influenced by people with different backgrounds and different worldviews from ours. In many organizations it is frequent to find “uniform group thinking”.
That is, conformity for fear of discrepancy that exists in many companies; the dynamics of anxiety, control, power, submission, etc., which lead to groups tending to function as if there were unanimity. (This is the reason why I have proposed and accepted the work we did in the previous retreat). The scenarios challenge this type of thinking and, if they had not previously worked in groups to understand its dynamics, many would call it "fantastic thinking".
One of the most difficult aspects of looking to the future is to capture the discontinuities of the business environment. The forecast never addresses this issue. An organization open to change is more likely to survive and prosper than one that is continually towed by events. Many “surprises” are possible and we will need to identify some. We will not always succeed; in fact we will not grasp some alternatives. The use of scenarios does not require us to be successful in everything; it is enough that the future surprises us less than those who have not elaborated this type of thinking.
The objective is to prepare ourselves for a wide range of eventualities, ideally being able to interpret what others see as “crisis” as normal human affairs; and as regards the company, develop policies better adapted to business environments than those of our competitors. When we are immersed in the company it can be very difficult to understand the nature of the change. We have to avoid the “chimney vision”, have a vision of the world that we are sure of and that can lead us to unfortunate decisions that, at the time, may have seemed reasonable to us.
The goal of the scenarios is to help your users prepare for the future. Those who build them must try to create an adequate challenge for learning to occur.
Davis says that, by definition, scenarios begin with an understanding of the mental models of their builders and users, their concerns and interests. We all have mind maps, glasses through which we see the world and the scenarios have to challenge those maps because the factors that shape the future may not be part of our particular worldviews.
Again I have to remind you that what we intended, and have achieved, in the previous retreat was precisely to recognize that we have our own maps, and that we do not have to part with them, although we do recognize them in order to work as a team.
