“We live in a world that is networked like never before. New patterns and new relationships threaten stability in every part of environment. Scenario planning helps us make sense of these intricate relationships.”
We live in turbulent times. Unprecedented advances in globalisation and technology over the past 40 years mean that we now live in a society that is networked unlike ever before. Our political systems, our economies, our social and environmental milieus are all intricately and delicately interconnected. Tiny changes in one area of our lives can have huge repercussions in many other areas. Identifying, understanding, and interpreting these relationships is vital to creating sustainable growth and operational resilience.
The VUCA concept (volatility, uncertainty, complexity, ambiguity) used by the US military has had a resurgence in popularity in the last couple of years, but we prefer the TUNA version (turbulent, uncertain, novel, ambiguous) developed by Rafael Ramirez and Angela Wilkinson of the Scenario Planning programme at Oxford University’s Said Business School. The difference between the two is nuanced, but it is hugely important; novelty replaces complexity in the Oxford model. The staggering advances in technology in recent years, particularly in areas like artificial intelligence and machine learning, mean that dealing with complex problems should not unduly concern us. However new patterns and new relationships emerging can be hugely disruptive, particularly against a backdrop of information overload. It is these new patterns that tend to cause the biggest problems for decision makers. This is where scenario planning fits in. It helps organisations prepare for the unexpected.
“Scenario planning is not about trying to predict the unpredictable. It is about being better prepared for unexpected outcomes to expected events.”
Most organisations will claim to engage in some form of scenario planning, but often the traditional approaches fall short. They tend to fit one of two models: Either they are just different versions of the planner’s current base-case, often anchored by a fixed set of judgements and thereby producing outcomes that look very like the current business plan. Alternatively, as Professor Ramirez says; “For many executives…scenario planning considers imaginary counterfactuals in the tail of their economic modelling”. These are attempts at “blue-sky” thinking, often not grounded in reality. They are futile attempts to predict the unpredictable.
The Oxford Scenario Planning Approach (OSPA) used by MindAlpha is not about trying to predict the unpredictable. It entails re-framing known information to create sets of plausible future states that would be transformative or disruptive for an organisation or its operating environment. The OSPA method provides a framework, a methodology and a set of tools that allow organisations to view the world from several different perspectives, simultaneously. The goal is to be better prepared for unexpected outcomes to expected events.
“As the world we live in becomes ever more turbulent and ambiguous, scenario planning should be a part of every organisation’s day to day business model.”
Scenario planning is not something you just do when the outlook starts to look clouded. As the world we live in becomes increasingly turbulent and uncertain, and as novel and ambiguous patterns develop with increasing frequency and with exponentially disruptive outcomes, every organisation should embed a rigorous scenario planning framework into its day to day business model.
Scenarios should not be something you buy “off-the-shelf”. They need to be generated by your own people, because they are the ones with the best data and the best understanding of the end application. However, a robust framework is required to prevent the cognitive biases that impede so many operational processes from getting in the way. The MindAlpha approach to scenario planning does not tell you what data to look at, nor does it try to interpret it for you. It guides you in how to reframe the data you already have and reshape the way you visualise and analyse that information, to identify plausible potential future disruptive shocks.
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