Box 13: Scenarios building process
Source: SKOLKOVO Institute for Emerging Market Studies
The scenario method was developed by the American scientist and military strategist Herman Kahn in the late 1960s as part of work commissioned by the US government to analyse the likely consequences of a nuclear war and find ways to increase chances of survival. Subsequently, the scenario method was widely used in corporate strategic planning in the 1970s in the world of the global crisis thanks to the practical work of Pierre Wack, who successfully adapted Herman Kahn’s work for business strategies.
The scenario method is based on the identification of critical uncertainties, which are understood as current or future phenomena that can be transformed in a global or local context. As a rule, factors are analysed across the entire spectrum of changes, including geopolitical, economic, social, technological and environmental, while evaluating parameters such as the level of uncertainty and the level of significance or some other factor for the future.
A feature of the method is its cross-disciplinary contextual binding: scenarios are produced on the basis of several cycles of interviews and seminars with experts from various fields, and re-integrated to achieve the most weighted multivariate scenarios. Scenario framework helps to provide plausible long-terms visions, the possibility of choices in the ambiguity of an open future.
The value of the scenario approach is that it engages with flexibility and variability in strategising. By incorporating many possible futures, the scenario method makes it possible to capitalize on the unexpected. This distinctive feature is particularly important in the contexts and environments characterized by instability, uncertainty, complexity, and ambiguity.
In recent years the scenario methodology has been significantly improved by scholars at the Saïd Business School at Oxford University. In 2016, Professor Rafael Ramirez and Dr Angela Wilkinson introduced the Oxford Scenario Planning Approach (OSPA) which is a “distinctive methodology for helping strategists realize their role in using scenario planning to enable their organizations to learn faster and better about changing conditions”. The approach developed by Oxford University scientists engages TUNA conditions (turbulence, uncertainty, novelty, and ambiguity) in order to build maps of possible futures, identify new challenges, and avoid missing unforeseen opportunities. “The OSPA enables strategists and policymakers to become more capable and flexible futures thinkers and, more importantly, to realize the value of this in rethinking what is going on and what can and should be done”.