In Praise of Uncertainty, and Scenario Planning
Why training our minds to open is critical
Before I get too far into this blogging thing, I have something to confess: like Austen’s heroine, I have no talent for certainty.
I mean, I’m happily married, have had two jobs in 20 years and my favourite sweatpants for possibly longer but, when it comes to what to believe about the world, I can see the many sides of an issue. In university, I was perceived as a raging capitalist in my Labour History class and a card-carrying socialist in Organizational Behaviour. My Birkman essentially diagnosed me as a chameleon.
That post I wrote a couple of weeks ago about the need to evolve pension mandates? I had to make a list of my own objections to my points and answer them before I could be remotely comfortable hitting publish. We live in a complex and uncertain world. I’m skeptical of false simplicity when there is always more to learn. So, while blogging is a challenge, scenario planning comes naturally.
And I am unabashedly passionate about scenario planning.
With roots in military planning and the work of futurists, scenario planning blossomed in the business world during the 1970s as Royal Dutch Shell leveraged the methodology to anticipate outcomes in the oil market. Codified by Peter Schwartz in the classic The Art of the Long View (originally published in 1991, and a fascinating read today both for what has changed and what has stayed the same), the process is essentially as follows:
Identify your issue to solve or decision to make;
List all the things that can impact your success or failure;
Research the things you need to know more about, and separate trends (which are predictable) from uncertainties (which are not);
Choose the most important uncertainties – the ones that can have the biggest impact on your issue or decision;
Combine these uncertainties into scenario frames (for example, in a two-by-two matrix) to make opposing versions of the future;
Imagine what each of these futures might be like – describe the context they create for your issue or decision in detail;
Decide how you would act in each possible future – consider how your approaches are the same or different and identify your assumptions about success; and, finally
Act and learn – and monitor indicators that can help you understand which future is unfolding.
To me, this is heady stuff! My idea of fun, in the footsteps of Pierre Wack, is creating stories about the future to shift the mind-set of decision-makers.
Scenario planning embraces and structures uncertainty, requiring bold imagination and meticulous research. Rather than feeling overwhelmed or overconfident in response to complexity, diverse and differing stakeholders can align on the possibility of multiple, plausible futures and decide how to act in each one. While we can’t know exactly what lies ahead, we can be prepared and make informed decisions while remaining open and alert to change.
Scenario planning forces us to admit the possibility of alternative worlds, outcomes other than the ones we may passionately desire or believe in. It trains our minds to be open, an incalculable benefit in our increasingly polarized world.
It’s a powerful approach, but it isn’t always easy. Scenario planning requires an investment of valuable time, an effort to think differently and can even involve facing our fears. But it should be a standard decision-making tool for leaders, particularly those operating in long-term time horizons like pensions and real-asset investors.
I have witnessed the power of investing partnerships that are rooted in shared scenarios for the future of an asset class. I have seen mission-driven organizations accelerate their impact, powered by a clear view of their relevance in any future.
One infrastructure investor described the process to me as providing him with “scenario-coloured glasses,” a natural lens he used to filter the data and experiences of his working day into an understanding of how his context was changing. For him, this informed confidence and practiced curiousity became an operating advantage.
In preparing to launch fuse, I created a scenario plan for my own life (seriously!) and used it to help me make the choice to build something new. Big questions – like whether Canadian pensions need to revisit their mandates in a changing world – can only be answered with tools like scenario planning that build the structure, creativity and confidence to open our minds to change.
Developing a talent for uncertainty is my life hack for making an impact in our changing and changeable world. I’d love to hear about yours: drop me a line at hi@fusestrategy.co.