SCENARIOS: LEARNING AND ACTING FROM THE FUTURE Part 1: A Blueprint of the History of Scenarios
The origin of the word scenario comes from the Latin word “scaen”, which means scene (Ringland, 1998), and it is traditionally related to the performative arts as the theatre and cinema (Notten, 2002: 18).
The use of scenarios at the planning level has its origin in the military strategic planning field being attributed to Herman Kahn the first reference to this concept as understood and used today (Heijden, et. al., 2002: 126–127).
Due to the contribution of several institutions and individual authors, scenarios and Scenario Planning as a support tool to decision making in uncertain contexts, have been used in a gradually broader and diversified way, having been developed multiple approaches and scenario techniques throughout the last four to five decades.
We identify some of the most important institutions and authors in the history of Scenario Planning since the post Second World War, including some connections and influences between some of those actors.
As a strategic planning tool, the roots of Scenario Planning belong to the military domain, having been used for military strategists through history, assuming the form of war game simulations in many situations (Heijden, et. al 2002).
Von Clausewitz and von Moltke elaborated the first documents that allowed relating scenarios to the definition that we give them today. (Heijden, et. al 2002: 123)
Some projects and initiatives developed before the WW2, although not having a direct causal connection to the emergency and use of scenarios as we understand them in this paper, were important to better understand their historical evolution.
From these projects we can highlight the long-range planning projects, the pioneering nationwide applications and those that were focused on technological change.
These initiatives focused attention on some of the questions that became landmarks and basic assumptions of Scenario Planning: the benefits that arises from the structured and organized exploration of the future; the importance to work with long range time horizons; and privileging a multidisciplinary approach including the incorporation of multiple perspectives.
Some authors relate the origins of Technological Foresight with the work made in the beginning of the 20th century by S. Colum Gilfillan, and the work of W.F. Ogburn in the North American Administration in 1937. This was the first great effort on the part of a national Government to develop some form of Technological Foresight (Bell, 1987; Bright 1998).
William Ogburn led a “Research Committee” (1930–1933) nominated by President Herbert Hoover from which resulted the work “Recent Social Trends in the US” published in 1933. Ogburn’s approach privileged the application of statistical methods to social sciences problems, underlining the quantification of past trends and subsequent projection in long time horizons.
In the post Second World War it’s important to underline the work in the field of technological forecasting made in 1944 by Theodor Von Karman which aimed to give a framework for the technological development of the U.S. Air Force in the period of 1945–1965. Von Karman created the Air Force Scientific Advisory Board, a group of academics, people from the administration, engineers and scientists from the aeronautics industry, which had a great influence in the research and development policy of the US Air Force.
Strongly inspired by these pioneering works, some of the most important initiatives and projects in the domain of Technological Foresight have started in the Academy and Industry with the first movements emerging in 1959, at the Harvard Business School, with the work of Erich Jantsch (“Technological Forecasting in Perspective: a framework for technological forecasting, its techniques and organization”, 1967), sponsored and published by OECD. This work is frequently mentioned as being the genesis of the emergency and development of Technological Foresight, having Jantsch presented one of the first definitions of Scenarios: “(…) scenarios are attempts to set up a logical sequence of events in order to show how, starting from the present situation, they may evolve step by step.” (Jantsch, 1967: 180)
The transformation of scenarios from a reference tool in the military field, to a more general application in the organizational decision-making domain, begun after the Second World War.
Among the major contributions we can identify the pioneering approaches and techniques developed by Herman Kahn, Theodore Gordon and Olaf Helmer in RAND Corporation and the foundational work of the French school “La Prospective” by Gaston Berger and Bertrand de Jouvenel among others (Bell, 1997, Godet, 1993: 21, 1997a: 5).
In 1945 the North American Administration felt the need to create an organization that could make the connection between the military planning and the guidelines supporting the decisions to allocate resources for Research and Development (R&D). It was in this context that a special contract with Douglas Aircraft was established, which led to the creation of Project RAND (an acronym for Research and Development). Later, in 1948, RAND became an independent non-profit organization (www.rand.org).
The US Department of Defense had the difficult task to decide which projects should be financed regarding the development of new defense and military systems, a task that was more difficult to make, given the increasing complexity of the new military systems possible by the scientific and technological advances obtained throughout the war period.
To this situation we should add the increasing intensity of what we can call the “raw material” of any process of Scenario Planning: Uncertainties. According to Heijden (Heijden et al., 2002) the increasing level of uncertainty that the decision makers had to face gave origin to two specific needs (Heijden et al., 2002: 126):
- the need of a methodology that was able to capture the “reliable consensus of opinion” of a diversified group of experts [Delphi Method];
- the need to develop simulation models of future environments able to lead to the exploitation of different alternatives in terms of politics and respective consequences [Scenario Method].
According to Heijden (Heijden et al., 2002: 126) three factors were determinant for the emergence of Scenario Techniques in RAND Corporation:
- The development of the Computers, allowing the capacity of data processing needed for the simulation models;
- Games Theory which supplied the theoretical background for the research of social interactions;
- The need of the US Arm Forces to develop and explore War Game simulation models.
Two different lines of thought emerged in RAND Corporation in the beginning of the 1960s, which later inspired two approaches in the development of scenarios.
The first one was led by Herman Kahn who defended a more intuitive and creative approach to think about alternative futures. The second approach, where we can include researchers like Olaf Helmer and Theodore Gordon, defended the importance of having a more formal approach, strongly based in the modelling and subjective probabilization of the future. (Bell, 1994)
Herman Kahn is referred by many authors as “the father of the modern Scenario Planning”. Kahn used scenarios as a “future-now thinking” technique in RAND Corporation, which combined deep analysis and the use of imagination as primary sources to build reports “such as people living in the future might have written” (Notten, 2002: 17, Bell, 1997). Herman Kahn argued that imagination was the basic element to think and explore the future and defended that we should try to “think the unthinkable” as a way to avoid being surprised and to combat against our orthodoxies and our mental maps. For him, scenarios were an excellent opportunity to stimulate and discipline our imaginative and creative thought. (Kahn, 1973, Notten, 2002: 17)
Although the name “scenario” was not Kahn’s idea (Kleiner, 1996), according to Heijden (Heijden et al., 2002: 127) it was Kahn who presented one of the first definitions of scenarios and introduced the word in the strategic planning literature (Godet, 1993: 66), and demonstrated the use of scenarios as a methodological tool for policy planning and decision making in highly uncertain and complex environments.
The work of Kahn generated great controversies which lead to several counter studies, for example, the Reports of the Club of Rome, “The Limits to Growth” (Meadows, D.H., Meadows, D.L., Randers, J. & Behrens III, W.W., 1972). These and other studies were also controversial and were important to focus even the attention on scenarios and scenarios techniques. (Heijden et al., 2002, Godet, 1993: 25–26, Godet, 1997a: 62–63)
In 1961 Kahn leaves RAND Corporation and founds the Hudson Institute starting to apply his scenario methodology to social forecasting and public policy. This is an important landmark in the evolution of scenarios towards a more broaden and diversified scope of applications and objectives.
Olaf Helmer and Theodore Gordon
The approach advocated by Herman Kahn was different from the one that at the same time and also at RAND Corporation was in development by important authors in the field of the Forecasting and Operational Research, where we can identify Theodore Gordon, Olaf Helmer and Norman C. Dalkey. These researchers defended the benefits of more formal methodologies to explore (and to foresee) the future (vd. Delphi Method, Cross Impact Analysis and Trend Impact Analysis) which allow the development of scenarios in a very different way from those proposed by Kahn. (Bell, 1997)
These two distinct approaches to the exploration and study of the future strongly influenced the evolution of Scenario Planning in the following decades, being the basis of two distinct schools of thought and techniques in the domain of Scenario Planning. (Heijden et al., 2002)
Using the publicity and controversy caused by Kahn’s books in the end of the 1950s and beginning of 1960s, Helmer, Gordon and Dalkey, with other researchers from the “Futures Group” (many of whom came from the Stanford Research Institute — SRI, and the California Institute of Technology — Caltech), started to experiment scenarios as a planning tool and became pioneers in the field of Futures Studies in US. (Bell, 1997; Heijden et. al, 2002: 128).
The work of organizations such as SRI was important to transform Scenario Planning as a tool that could be useful to deal with massive societal and technological changes (Ringland, 1998).
Berger, Jouvenel and Godet
What is internationally known as the French school of “La Prospective” is the result of a collective and diverse contribution of different authors and Institutions for more than half a century (Godet, 2000: 6).
We can say that Gaston Berger and Bertrand de Jouvenel laid down the philosophical (“il s’agit d’une philosophie de l’avenir” (Gonod, Gurtler, 2002: 317) and the epistemological foundations of this “indiscipline intellectuelle”, a term coined by Pierre Massé in 1973 (Godet, 1997a: 2).
Strongly inspired by the “Phénomologie du Temps” of Bergson, Gaston Berger is frequently named as the father of “La Prospective”. Berger in his article “L’attitude Prospective” (1959) in the Revue des deux Mondes, says that with “La Prospective” we should “voir loin, large, profond, penser à l’homme, prendre des risques” (Berger, 1959, by Pierre Massé in “Étapes de La Prospective”, Presses Universitaires de France, 1964).
Although we should understand “La Prospective” as a collective movement that has its philosophical inspiration in Berger and Jouvenel, and important contributions from authors as Jacques Lesourne and institutions like DATAR and Futuribles International, it’s Michel Godet that takes “La Prospective” to another level regarding the capability of internationally developing and diffusing a set of modular, flexible and useful methodologies coherent with its philosophical and theoretical background.
One of the distinctive contributions of Godet is based on the capability of using the contribution made by several authors and Institutions, ranging from Zwicky developments in the Morphological analysis in the 1940s in the California Institute of Technology (Caltech) that Godet used to design the Morphol software, or the initial contributions of RAND Corporations and authors like Gordon and Hayward regarding for example the Cross Impact Analysis method that later Godet developed with Duperrin to create in the mid 1970s the SMIC Prob Expert method and later the software integrated in his Scenarios Method toolbox.
Using Godet’s own words “(…) I have been honing the tools of La Prospective by insisting on appropriation through participatory methods and on the use of simple tools to approach complexity. My message remains the same: an operational imperfection is better than some nonexistent perfection. (…) The approach which I have developed over the past twenty-five years may be characterized as a blend of tools and systems analysis procedures, e.g. the MICMAC method to identify key variables, the MACTOR method for actors’ strategies, MORPHOL to make Morphological Analysis for scenario-building and the SMIC-Prob-Expert for the probability of scenarios.” (Godet, 2000: 6)
Shell: Scenarios goes mainstream
Although the use of Senarios has started to spread out as a strategic tool in the 1950s and 1960s with the work and pioneering applications of RAND Corporation, the Hudson Institute and other Think Tanks, its diffusion as a business tool was highly stimulated and recognized after Royal Dutch Shell has incorporated the scenarios in its strategic planning process at the beginning of the 1970s (Wack, 1985a, Cornelius at. al, 2005) being critical in this process the leadership of Pierre Wack and his concept of “reperceiving the future” (Wack, 1985b: 147).
Strongly influenced by Herman Kahn, Royal Dutch/Shell created the “Group Planning” in 1964. The work developed in Shell, particularly from the beginning of the 1970s, under the leadership of Pierre Wack, and the way Scenario Planning helped Shell to anticipate the oil shock of 1973 allowing the incorporation of uncertainty in the strategic planning process, were decisive contributions for the projection of Scenario Planning as one the most used methodologies or tools in the field of strategic management till nowadays (Notten, 2002: 17).
Pierre Wack was the Director of the Planning Department of the Royal Dutch/Shell between 1971 and 1981 and precursor (with Edward Newland) of the Scenario Planning process at Shell. One of the basic questions of Wack was the role and the way we should work (with) “uncertainties”. Wack presented one the most powerful and straightforward distinctions between scenarios (“decision scenarios”) and forecasting: “Decision scenarios describe different worlds, not just different outcomes in the same world”. (Wack, 1985b: 146).
More important than the anticipation of the oil shock to understand the approach of Scenario Planning was Wack’s presentation and description regarding how that process was developed and implemented in Shell, highlighting important questions that are still today critical methodological and operational challenges of any scenario planning project.
One of these questions relates with the need and the challenge to connect or link scenarios to the decision maker and the decision making process. (Wack, 1985a: 74, Wilson, 2000)
The pioneering work of Pierre Wack was continued later in Shell by other important authors for whom Scenario Planning was one of the most important management tools. Among these we can highlight Peter Schwartz who headed the Scenario Planning team for Royal Dutch/Shell Group of Companies in London from 1982 to 1986. Peter Schwartz was the successor of Wack, having extended the scope of scenarios beyond the energy questions. He was also professor in Stanford University, the founder of the Stanford Research Institute (SRI International) and the Global Business Network in 1997. In 1991 he publishes the book “The Art of The Long View” (1991), one of the “best sellers” on Scenario Planning. Schwartz is currently a Senior Vice President of Strategic Planning for Salesforce, also leading the Salesforce Futures LAB.
Kees van der Heijden was also responsible for the Planning Group at Shell, having written “Scenarios: The Art of Strategic Conversation” (1996) and had an important role in deepening the methodological framework of Scenario Planning, formalizing what Wack, and in particular Schwartz, developed and presented in a more intuitive way. For him Scenario Planning was a process to stimulate organizational strategic conversations.
Arie De Geus was in the Royal Dutch/Shell for more than three decades having equally worked with scenarios, being one of the most important authors in the fields of decision-making processes and change management, he is a fundamental reference and widely credited author in the area of organizational learning.
Scenario Planning moved towards the interpretation of trends and processes (and not only the interpretation of market data) and the development of “possible models of the future” (and not just one “certain model”), leading to more adapted strategies to emergent phenomenon and multiple alternative and possible futures.
In the last two decades, there was a multitude of variations of these “intuitive logics” Scenario Planning methods initially designed and implemented in Shell, SRI and Global Business Network, among others.
In 1985, Michael Porter published a chapter on Scenario Planning proposing that companies should use external forces as a platform for planning.
Using a slightly different method from the Royal Dutch/Shell and GBN approaches but inspired by the contributions of both and by the work of Pierre Wack, Michael Porter presents a methodology for the construction of Industrial Scenarios, in his book “Competitive Advantage — Creating and Supporting a Performance Superior” (1985).
More formal approaches in mathematical terms and incorporating the subjective probabilization of experts (vd. CIA — Cross Impact Analysis and TIA — Trend Impact Analysis) initially developed in the RAND Corporation were the basis for the development of methodologies and applications of scenarios used by a large number of consulting companies and other organizations.
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