Predicting the future by using a crystal ball, reading coffee grounds or other methods rarely yields results. In certain scenarios, however, it is possible to manipulate factors in order to develop a more realistic idea of possible outcomes – and thus gain a better understanding of our present time.
By Klaus Dosch
Translated from the German by Larissa Burkart and Merle Kolmorgen
Knowing what the future holds is an age-old dream of mankind that still provides trend researchers, pollsters, and fortune tellers with work and income. Centuries ago there were several well-known fortune tellers such as Spurinna, who allegedly warned Julius Caesar about his impending assassination; Nostradamus, who is probably one of the most well-known seers in history; and Saint Malachy, who predicted that there would be 276 more popes before Judgement Day; as well as many others.
What all these prophecies have in common is that you can choose to believe them – or not. Those who believed the world was going to end on 21 December 2012 because a cycle of the Mayan calendar ended on this date, were sorely disappointed on the morning of 22 December 2012. The earth was still revolving around the sun, and there was no evidence of the impending apocalyptic doomsday. These types of predictions are rarely a basis for making good decisions. Just as Caesar did not heed Spurinna's prophecy, nobody seriously considered the prophecy about the world's end to come true and thus, 6 months prior to 21 December 2012, nobody considered quitting their job, convert all their possessions into cash, and acting as if there were no tomorrow.
Actually, it is not tempting to know what happens in the future – perhaps with the exception of lottery numbers or stock prices. For those, however, who don't want to stand on the sidelines, the questions of why and what if are vital. Being able to answer these questions means being endowed with the power to change something. The why includes dependencies, causalities, and conditions. The what if means thinking ahead of time with the desired result of being prepared for crucial developments in life, within the region, or in business. This version of risk management, which goes beyond statistics, is required in order to become resilient.
Those who understand the importance of future developments will have a well-functioning early warning system in place. Their system will track how causality affects their particular reality, thereby altering their perception. They can try to have an effect on the causalities in order to modify future developments. They can do this through various methods such as creating alliances or negotiating with their colleagues and thus change the future. This way, they are able to change their own businesses (or their own lives) so as to avoid undesirable consequences.
Theory and practice
Shell has been trying for several decades to understand how the world changes and what impact these changes have on the Shell company. Since the 1960s, an interdisciplinary team of scientists have worked on predicting future scenarios. The team made its first major appearance in the beginning of the 1970s when contemplating the possibility of an oil crisis in their mock scenarios. At this time, crude oil was mainly extracted in the Arab part of the Near East. After Egypt's and Syria's defeat in the Yom Kippur War in 1973, the oil producing countries in the Near East demonstrated solidarity with their sister Arab nations by turning off the oil tap for the Western nations – the first oil crisis erupted. In Germany, a couple of car-free Sundays were organised, but Shell was prepared.
The Shell scientists had described this development before in a mock scenario, so preparations had been made for this possible development and a contingency plan had already been prepared. The rival companies, however, remained paralysed from shock for some time, which provided Shell with a valuable advantage in the market.
Peter Schwartz, who is the former head of Shell's scenario group and has a comprehensive knowledge of predicting future outcomes, accurately describes the dilemma of predicting outcomes. There are so many social and technological advances every year and every decade which arise suddenly and unexpectedly. So how shall people, companies, or other institutions predict outcomes when they simply cannot know what the future holds?
For this purpose, scenarios are considered to be a proven method. They are not just mere stories that plausibly and vividly describe what will happen in the future and why. Good outcome predictions capture the readers' attention, they allow them to immerse themselves into the worlds that are being described, and they allow them to experience what happens in these worlds. They investigate the consequences, search for winners and losers, chances and risks; they kindle the curiosity to explore the obscure worlds of the future conceptually.
Factors for four worlds
How can scenarios be developed? First of all, the question that needs to be answered by using the outcome predictions needs to be defined more precisely. Yes or no questions are not useful for these types of scenarios. Questions which may be used for making predictions on are: How will the wind power industry develop in Germany? or What are the options of a community after the largest employer has moved out of the region? Also, scenarios should be focused on the distant future.
Once the precise questions have been developed, the framework of the scenario has to be built. What are the factors that will influence future events the most and are also particularly uncertain at the same time? It is useful to consult a number of people in order to detect these influencing factors. The more perspectives that are amassed, the better. To build the framework, the two most important factors, which are also the most uncertain ones, have to be ascertained. Besides, they have to be linearly independent in the mathematical sense. To put it more simply: each factor must not depend on the other one. Figuratively speaking, if one factor is changed or removed, the other factor must not be affected. These factors represent the core of the scenarios and thus are incredibly important; detecting them may take considerable time.
When there is a consensus on the two factors, they form a coordinate grid system. The endpoints of the axes represent the two extreme dimensions of the respective factors. Hence, with that the four worlds in the desired outcome are roughly characterised.
The art of the scenario predictions lies in describing the ways into each of these four worlds. Here it is about cause-and-effect relationships, not about chronological narratives. Anyone who deeply reflects upon a scenario must consider the way in which it has been described in order for it to be logical and compelling.
Besides enabling thinking ahead of time, scenarios are an excellent means of communication. They help connect the people who develop it to form a creative team. A team who has the ability to manage strategic issues independently of the daily business operation. There are few better methods which enable team cohesion. Take the next opportunity you have to try it! Or you can take the opportunity to learn from the scenarios already described on our list.
Models of future outcomes:
Aachener Stiftung Kathy Beys, Indeland 2050 Szenarien, Aachen, 2008
Peter Schwartz, The Art of the Long View: Planning for the Future in an Uncertain World. Doubleday, New York, 1996.
Kees van der Heijden, The Art of Strategic Conversation - 2nd ed., John Wiley & Sons Ltd., Chichester, West Sussex, GB, 2005.
Paul Raskin et al., Great Transition – The Promise and Lure of the Times Ahead, A report of the Global Scenario Group, Boston, 2002.
Klaus Dosch is a geologist and the scientific director of the foundation Aachener Stiftung Kathy Beys. His last articles in the factory magazine were 'Nutzen statt Besitzen, ein neues Geschäftsmodell' (Using instead of owning: a new business model) and 'Trennen tut gut' (Separating feels good) in factory magazine Separating.
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