Mental maps of the future

The most important aim of scenario planning is to challenge, test and sometimes change the decision maker‘s view about the present and future. This process leads to a recreation of the decision maker‘s ―mental maps‖ of the world (Wilson, in Fahey and Randall, 1998).

The scenario development discernible in such an approach consists of six major stages. The terminology varies and the number of stages varies in alternative models, but the focus of this thesis is on the common basic elements and processes among these models. These stages are: identify and analyze the organizational issues that will provide the decision focus, specify the key decision factors, identify and analyze the key environmental forces, establish the scenario logics, select and elaborate the scenarios, and finally interpret the scenarios (Schoemaker, 1993; Schoemaker 1995; Schwartz, 1998, pp241-248; Wilson in Fahey and Randall, 1998; Ratcliffe, 2000). The explanation for these six stages is provided below:

Stage 1: Identify and analyze the organizational issues that will provide the decision focus:

This step explains which strategic decisions should provide the focus for the scenarios. This step should include management consensus regarding the selection of strategic decisions. It is worth mentioning that if the scope of the

126 decision or strategy is considered narrower, it will make the process of scenario construction easier (Wilson, in Fahey and Randall, 1998).

Stage 2: Specify the key decision factors:

At this stage the following question should be answered: what are the important issues we would like to know about the future in order to make our decision? (Wilson, in Fahey and Randall, 1998).

Stage 3: Identify and analyze the key environmental forces:

This section can be divided into two subsections. The first stage is to identify the forces that will determine the future course and value of the key decision factors. These driving forces are cultural; demographic; economic; environmental; governmental and also technological (Wilson, in Fahey and Randall, 1998; Ratcliffe, 2000). The next stage starts the sorting of these forces, by considering that all of them are not equally crucial and the level of uncertainty (probability of happening) related to each of them are different. To be systematic in this sorting process of forces, an impact/uncertainty matrix can be utilized to place each force within a high-medium-low sorting system (Figure 7.1) (Wilson, in Fahey and Randall, 1998). Each of these forces should be rated based on:

 The level of its impact on the key decision factors;

 The degree of uncertainty about the direction and pace of its future.

When using this ranking process, only those forces with a higher degree of uncertainty and also higher degree of impact should be selected. Therefore, the crucial scenario driving forces can be realized (Wilson, in Fahey and Randall, 1998). Forces that are low uncertainty/ high impact are features which already exist, are positive and embedded in the reality of the system being studied.

127 Forces which are high uncertainty/low impact are largely unimportant to the system outcomes.

Figure 7.1: Illustrative Impact/Uncertainty Matrix adapted from Wilson, in Fahey and Randall, 1998.

Stage 4: Establish the scenario logics:

It is possible to develop scenarios using the forces which are placed in the three upper-right quadrants of the impact/uncertainty matrix. However, in some situations where many important forces exist this would result in a large number of scenarios which would be very difficult to use in any planning system. Developing the structure that leads to the production of a manageable number of scenarios is the main objective of this step (Wilson, in Fahey and Randall, 1998). Scenario logic helps researchers to achieve their objectives. Scenario logics are ―organizing principles around which the scenarios are structured.

They focus on the critical external uncertainties for the business, and present alternative theories of the way the world might work. Each addresses an important area of uncertainty‖ (Wilson, in Fahey and Randall, 1998, p90). All

of the alternative future states should be logical, meaning that for each of the outcomes a persuasive and rational case can be made (Wilson, in Fahey and Randall, 1998).

128 Stage 5: Select and elaborate the scenarios:

According to Wilson, in Fahey and Randall‘s (1998) specific rules for developing a manageable number of scenarios should be followed. Even after reducing the number of scenarios in the previous stage, sometimes researchers end up with a situation incorporating a number of scenarios. At this stage some specific selection procedures among these forces are needed, otherwise the decision maker who wants to use them will be overwhelmed. Five basic criteria exist in order to reduce the number of scenarios and to prevent the problem of facing a large number of choices:

1. Plausibility: Scenarios should fall within the realms of possibility.

2. Differentiation: The structure of each scenario should be different. In other words they should not be close to other alternatives.

3. Consistency: Scenarios should be built in such a way that they maintain internal consistency.

4. Decision-Making Utility: Each of scenarios and the set of all scenarios should contribute specific insight into the future that will be relevant to the decision focus that was selected.

5. Challenge: The scenarios should challenge accepted customs and properties about the future.

Stage 6: Interpret the scenarios:

―This step poses the fundamental question of how the task, issue or decision

identified at step one looks in the light of the scenarios constructed. What are the strategic implications? How does the decision fit into each scenario? What options are suggested? Are any particular vulnerability exposed? Is the decision or strategy robust enough? Does it seem to work in only one scenario and thus qualify as high-risk? How can the strategy or decision be adapted to make it more robust?‖. In this way, step six gives decision makers the ability to turn

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