Corporate foresight and scenario planning is the discipline of developing the details of various potential future realities so businesses can better react to changes within markets and technologies. Scenario planning works by identifying factors central to changing economies and helps scenario participants recognize and confront their preconceptions related to how they believe the future will unfold. Underlying assumptions critical to the success of scenario planning include: multiple futures are possible; change (also known as “drivers”) can be identified and studied; and the future can be influenced. This methodology can contribute to multiple verticals of an organization such as risk management, corporate development, innovation, and strategy.
Foresight and scenario planning techniques provide both management and foresight participants with a vision of the future that stands outside of their assumptions, preparing everyone to respond more maturely when unprecedented changes occur. In a survey of American foresight practitioners, the top three most common uses of scenarios were found to be for ideation (creation of new products), products and service evaluation (determining the potential success of products across all scenarios), and strategic planning. These same practitioners saw the biggest benefits of the field relate to helping shape the future by developing plans to affect change, the flexibility it provides corporations, and the opportunity awareness that mapping the future can bring.
Although the foresight and futures fields expand beyond scenario methodology, scenarios are considered one of the most powerful tools for business leaders. Royal Dutch Shell was one of the earliest businesses leveraging scenarios. In 1971, a scenario-based report was sent to Shell’s Board of Directors that portrayed many aspects of the impending oil crisis. Shell states that thanks to this scenario planning, their company was better positioned to react to the 1973 oil embargos. They found that they recovered more quickly from this crisis than their competitors. Shell’s work inspired other companies such as Motorola, GE, and the United Parcel Services to pursue scenario activities, and they were one of many examples demonstrating that “management under uncertainty” necessitates differentiated tools from traditional strategy activities.
Foresight at ATB
We have seen scenarios drive historical successes, and we are finding similar wins within our Innovation Lab by leveraging scenarios to open our minds to diverse perspectives. We wanted our scenarios to recognize the extremes of possibility, not probability. By focusing on what could be probable, we would allow our thinking to fall into familiar blindspots, counteracting the many benefits of scenario planning. Instead, we want our key scenarios to map (to an extreme) what could happen in the future. By demonstrating, discussing, and working with the extremes, we open our minds to uncomfortable and disagreeable potential realities that allow us to question our everyday assumptions. Our future will likely not be an exact match of any scenario; instead, each scenario will contain some strands of truth.
Our team utilized the archetype method of scenario planning in order to create scenarios that were easier to digest and remember. The archetype method of scenario planning harnesses pre-determined patterns of change to map out potential futures. Although there are countless archetypes following various levels of complexity, we decided to choose four archetypes that follow the most simplistic patterns— Baseline, Transformation, Collapse, and New Equilibrium.
One of the biggest values we see from scenario planning aligns with the beliefs of other foresight practitioners as mentioned previously— the ability to shape the future. Our scenarios are designed to map how our world could veer towards positive or negative outcomes. ATB was created to help drive Alberta to foster a culture of innovation and success, and with these scenarios in hand we are starting to see a clearer path towards continued growth. But with a future so uncertain and complex we know we can’t instigate this transformation alone. By making these scenarios public, we hope other organizations can start to experiment with complex and multifaceted futures and join our actions today to create the future we want tomorrow.