Scenario Planning -- Thinking ahead is just the easy part

By Simon London, Financial Times; Jul 15, 2003

In 2000 Peter Schwartz and others published The Long Boom, a vision of a future age of happiness and prosperity. It was not, the authors carefully explained, exactly a prediction; more a theme that they wished to introduce into public discussion. Nonetheless, it was a confident picture of the broad sunny uplands awaiting us all, so it is a shame that it was immediately followed by the Nasdaq crash, worldwide recession, 9/11 and war in Iraq

Peter Schwartz is a gem, an original, a fizzing stream of ideas and anecdotes. The éminence grise of scenario planning is also an incorrigible self-publicist.

"I led the scenario team for the Hart-Rudman Commission [on US national security in the 21st century]," he declares on page four of Inevitable Surprises, his latest book.* "Our report, released a few months before George W. Bush was inaugurated in 2000, warned that terrorist incidents represented the greatest threat to the US. In one scenario we anticipated terrorists destroying the World Trade Center by crashing airliners into it. Our most urgent recommendation was that the US needed new levels of capability in homeland defence.

Every word of this is true. The 56-year-old futurist was indeed hired by senior politicos Gary Hart and Warren Rudman to develop plausible scenarios for US national security. One of these was a foreshadowing of the tragic events of September 11 2001. The commission - which Mr Schwartz was hired to help, but on which he did not serve - did go on to recommend increased emphasis on homeland security.

But do not be duped into thinking that even the best scenario planners - and Mr Schwartz is, by common consent, one of the very best - are oracles or seers. As part of their work for Hart-Rudman, for example, Mr Schwartz's team developed a number of possible futures. By definition, most will prove to be wrong. The fact that one turned out to be right is not surprising when you consider that the scenario-building process involved five months of interviews and workshops with some of the sharpest minds in national security.

In conversation at the higgledy-piggledy headquarters of Global Business Network, the consulting group he chairs, Mr Schwartz is more than happy to concede this point: "The test of a good scenario is not whether it gets the future right. That is the easy part. The real test is: does anybody do anything as a result? Does it change minds?"

Judged against this benchmark, the Hart-Rudman scenarios were hardly a shining success. The Bush administration chose in its early months to focus not on "asymmetric threats" such as Islamic terrorism, as the commission recommended, but on ballistic missile defence and China

And herein lies the rub for scenario planners of all stripes. Even scenario sceptics will concede that systematic thinking about possible futures - the essence of scenario planning - can sometimes yield new information and insight. But how many leaders make meaningful adjustments to strategy as a result?

The sad fact is that 30-odd years after Shell and a handful of other companies started using scenario planning in business, it remains a fringe activity. Most business schools teach it only in passing. Interest among senior managers waxes and wanes. Of the handful of US consulting groups with deep expertise, only GBN can claim to be prospering. "We are the last one standing," says Mr Schwartz ruefully.

The chairman's ability to turn out good books is certainly a factor behind GBN's continued success. The Art of the Long View, published in 1991, remains the stan dard introduction to scenario technique.

Inevitable Surprises does not try to advance the state of the art. It explores instead seven "big trends", including ageing populations, global climate change and a new geopolitics. In the lingo of scenario planning, these "predetermined elements" are irresistible forces that provide the shifting bedrock on which the future is built.

This is a good read. Thirty pages on population trends and immigration. Thirty pages on the frontiers of physics, computer science and space. It is popular futurism in the tradition of Alvin Tofler's Future Shock (1969) or Mr Schwartz's own The Long Boom (1999), which argued that the world could be heading for a period of unprecedented growth and prosperity driven by information, innovation and the internet.

If you thought utopian optimism vaporised with the dotcom bubble, think again. Inevitable Surprises offers up 30 pages on "the return of the long boom"

Mr Schwartz leans forward in his chair and the words come tumbling out: "If broadband had been put in place at the pace that was envisaged, the internet bubble might not have burst. A lot of business models predicated on rich information flow would have worked: Enron broadband, video on demand?"

But surely the widespread availability of broadband internet access would not have rescued the US - let alone the world - economy?

"Oh, I think it would have done," he fires back. "Pervasive dense information is like cheap energy. One of the things that drove the 20th century was cheap energy - it expanded the wealth of society enormously. I think the same thing is going to happen relentlessly with information. We had a hiccup because the evolution of the infrastructure got out of phase."

So there you have it. All that lies between here and unparalleled prosperity is the so-called "last mile" broadband connection into consumers' homes.

You have to wonder whether Mr Schwartz really believes this. How can someone so deeply schooled in contingencies believe the current global economic malaise is just a hiccup?

There are two possible answers. First, he is the intellectual heir to Herman Kahn, founding father of scenario planning, who made his name at Rand in the 1950s by "thinking the unthinkable" about possible scenarios for thermonuclear war. This grisly claim to fame notwithstanding, Mr Kahn was also an economic optimist. He spent much of the 1970s debunking arguments saying that global economic growth would grind to a halt. The Long Boom follows in this tradition.

Second, Mr Schwartz knows the value of book sales, magazine articles and interviews. Controversy, publicity and even a little notoriety are good for business. Hence the I-told-you-so statements about 9/11. Hence the claims in conversation to have been partially responsible for momentous corporate events ranging from the Chevron-Texaco merger ("We told them to do it - and lo and behold they did it") to Hewlett-Packard's grand alliance with Intel in microprocessors ("The Itanium chip strategy was ours"). Hence entertaining but way-out books such as The Long Boom and Inevitable Surprises.

Yet you cannot help wondering whether this kind of pop futurism is part of the reason scenario planning remains on the margins. From the vantage point of many boardrooms, the distinction between scenario planning, futurism and science fiction must seem hazy.

It probably does not help that many big wheels in scenario planning have had a distinctly counter-cultural flavour. Thus the late Pierre Wack, who introduced scenario technique to Shell, was a student of Zen and Gurdjieff, the Suffi mystic. Mr Schwartz, a 1960s-era student radical, laces his books with references to Zen. Stewart Brand, a GBN co-founder, was one of the original Merry Pranksters that launched the hippy movement. Indeed, the whole "network" concept behind GBN was originally about tapping the insights of "remarkable people" - artists, poets, computer scientists, social scientists, astronauts - anyone deemed to have unique insight into how the future might unfold.

For a disinterested observer, this is all good fun. But how does it play with straitlaced business people whose idea of a good time is a quiet night in with an Excel spreadsheet and a copy of Michael Porter's Competitive Strategy?

It is certainly possible to think of scenarios in which scenario planning moves more into the mainstream. They all require more methodology and less mysticism, more science and less art. Mr Schwartz believes this is already happening: "The methodology is becoming ever more refined. We are moving out of the realms of remarkable individual creativity and into a more systematic approach - one that is teachable."

If so, what the field really needs is not Inevitable Surprises but a follow-up to The Art of the Long View - something with the analytical rigour of Michael Porter and the vim and imagination of Peter Schwartz.

Since Prof Porter's strategy consulting group, Monitor, is now the proud owner of GBN, this scenario is not as wacky as it sounds. Let us hope it is a predetermined element.

*Inevitable Surprises: Thinking Ahead in a Time of Turbulence by Peter Schwartz, Gotham Books, $27

Companion Book Review -- Inevitable surprises -- by Peter Schwartz

Free Press £12.99, 245 pages

Undaunted, Schwartz is back, and he is sticking to his guns. The Long Boom will still happen, for much the same reasons he laid out last time: productivity gains, globalisation, infrastructure improvements.

Other aspects of the next 20 years or so are also inevitable surprises: inevitable in the sense that the factors driving them are already present; surprises in the sense that they are receiving insufficient policy attention and no one is planning for their consequences. These range from the probably benign (developments in technology) to the problematic (an ageing population in the developed world; mass migration into Europe) and the pestilential (the continued prevalence of Aids and worse diseases lining up to succeed it). And, of course, we may get hit by an asteroid.

In geopolitics, the news is good for most people. The developed world will get better; the developing world, including China and India, will get better fast. But there are potential flashpoints along the edge (Indonesia is one) and Africa, he thinks, is more or less doomed, heading rapidly backwards into the 19th century. On balance, the world will be cleaner but also more deadly.

If these surprises are indeed inevitable, how should we react? Schwartz emphasises the need to keep learning and to look for early-warning indicators. Scenario-planning enthusiasts compare their art to knowing you are going to appear in a play, but not knowing which one until you stand in the wings. Thinking about the future is like reading all the possible plays, so that you're better prepared. But, says Schwartz in effect, if you don't like any of them, it's too late to change the script.

Review by David Honigmann, FT.com site; Sept. 11,2003

For more great reviews visit www.ft.com

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