Coming back from vacation sieving through the mailbox I found an article where scenario planning was mentioned in an interview with Nassim Nicholas Taleb, author of the very interesting book “The Black Swan: The Impact of the Highly Improbable”(Amazon UK). / “The Black Swan: The Impact of the Highly Improbable” (Amazon US). Even if I don’t totally agree with the claims in his book I totally agree with his view on some terribly important issues which concern everybody who deals with foresight and long-range decision making. When it comes to scenario planning he is doing some implicit points in his book but in an interview in Condé Nast Portfolio he speaks up.
The thing you have to be aware of most obviously is scenario planning, because typically if you talk about scenarios, you’ll overestimate the probability of these scenarios. If you examine them at the expense of those you don’t examine, sometimes it has left a lot of people worse off, so scenario planning can be bad. I’ll just take my track record. Those who did scenario planning have not fared better than those who did not do scenario planning. A lot of people have done some kind of “make-sense” type measures, and that has made them more vulnerable because they give the illusion of having done your job. This is the problem with risk management.
In my position as a scenario planning consultant, I can only agree. This is exactly why I try to end my courses and seminars by trying to underline the point that scenario planning is not a method in the traditional sense, but more of an art – a way of thinking that will broaden your thought patterns and open up your perceptions in order to be able to see things you otherwise wouldn’t recognize.
This is exactly why attributing probabilities to the different scenarios is irrelevant – or even dangerous. I think that scenario planning should occur at an earlier stage of reflection when you are still aiming at understanding what is happening around you. First, after the scenario process has sunken in you can revisit it and identify some important insights into the process.
If you treat scenario planning as a direct method for decision making the risk is obvious that either the result will be irrelevant and nobody listens or worse, that you succeed in creating a false sense of security. If you, on the other hand, put some effort to understand the result of a scenario process from a more reflective standpoint it can be an invaluable tool to widen the discussion and the collaborative reflection process within the organization.
I agree with both you and Nassim Nicholas Taleb that scenarios are there to stretch peoples thinking about a problem, gently guiding them toward holistic, systemic thinking. Direct decision making should not be made from one scenario or another. What wise organizations do with scenarios is to identify those parts of all the scenarios created which are desirable and use them in creating a desirable future or a vision. Remembering that not everything that is desirable is possible, the desired/probable might be differentiated from the desired/improbable. Both can be accommodated in the budget and with human resources depending upon the priority each are given. If long-term and short-term are attached to each priority, then a generalized timetable can be developed. Back-casting is also a valuable tool for marking out “what got us to this point?” One works from the desired to the present by answering the above question. Scenarios are meant to open doors and stimulate the practical and the fantastical. Timetables close doors and gets things done. Both are necessary.
Thank you so much Sir ! I’m a Technology Management student and this blog helped me a lot in my assignment. Also cleared the very natural confusion between risk management and scenario planning….
Regards,
Ketan Risbud