The Fletcher School

A Graduate School of International Affairs

Fletcher Features

Planning for the Future:
A Scholarly Methodology for Today
by Annalee C. Babb



Popular business guru and futurist Peter Schwartz calls scenario planning “the art of the long view”. As one of a few very well-known management consultants responsible for popularizing this strategic planning methodology in corporations and in the US military, Schwartz remains convinced that it is the only way to visualize and capture the intangible variables that drive change at all levels of society. Undoubtedly, in light of the tragic events of September 11 and the widespread uncertainty that has resulted from the “globalization” of terror, any technique likely to assist in planning for and living through insecurity is likely to gain wider currency at both the national and global levels.

Unfortunately, aside from those schools with distinct business degrees, scenario planning as a scholarly methodology has not received the attention it deserves throughout the halls of academia. But there are those, including yours truly and Associate Director of the International Business Relations Program (IBR - http://www.fletcher.tufts.edu/ibr), Dorothy Orszulak, who hope this will change. Last spring, Fletcher took a step in the right direction when, as part of IBR’s Global Speaker Series and Tufts University’s 150-year anniversary celebration, Fletcher invited Mr. Peter Kennedy, then Senior Manager at Deloitte Consulting in Boston (http://www.fletcher.tufts.edu/ibr/gss/bio/kennedy.htm), to give a presentation on scenario-based strategic planning. Mr. Kennedy is now a principal and founding member of The Futures Strategy Group, a Glastonbury, Conn.-based consultancy specializing in long-term planning and scenario-based strategy development. Mr. Kennedy and his partners are using scenario planning to support the planning activities of some of the lead agencies in the coming Department of Homeland Security Mr. Kennedy’s talk was titled An Introduction to Scenario Planning: Theory, Practice and the Case of the Panama Canal. In defining scenario planning at the start of his address, Kennedy suggested it is a way of thinking, a way of working through challenges in order to imagine alternative conditions and possibilities. Its ultimate goal, he said, is to help decision makers formulate robust strategies that will hold up against a range of potential futures.

“When people typically create an image of the future,” explained Kennedy, “they focus on the thing they care the most about and assume that the enabling structure will stay the same.” This approach, he said, actually works to undermine whatever it is a person is trying to figure out because it mistakenly presumes that the future will look, more or less, like today. This results in complex variables either being ignored or modeled. If they cannot be ignored or modeled, said Kennedy, then managers and decision-makers tend to take comfort in the fact that the competition can’t do better. Clearly, there is a limited range of utility in such an approach, and that is where scenario planning comes in.

Kennedy was quick to point out that scenarios are not forecasts of what will be. Rather, they are descriptions of alternative future environments that depict the plausible evolution of events and trends, present a range of possibilities central to an organization or problem, and capture the elements in clients’ strategic concerns that are vital to the survival of their organization.

As to why any group might choose scenario-planning as a strategic device, Kennedy revealed that the methodology is most useful when ambiguity is high, the pace of change and the degree of turmoil are great, the planning horizon extends to 5 or more years out and conventional assumptions need to be challenged in a systematic way. Kennedy did point out, however, that scenario planning is not always the recommended planning tool. Managers of acutely troubled enterprises should rely on more traditional business planning tools that focus tightly on the next 12-24 months.

As Kennedy explained, through a meticulous research and interviewing process, the scenario builder must first identify the drivers or variables impelling change. Typically, one might look at the economy, technology, the regulatory environment, markets and competition, and consumer behavior, among other areas. Kennedy revealed he often starts with about 200 drivers before he moves on to the next stage of merging and collapsing them into broader, more universal scenario “dimensions”.

In the end, four or five dimensions are typically chosen to map the planning “uncertainty space”. Choosing and defining the dimensions represent some of the most mentally taxing work in the scenario development process. It is best accomplished in close collaboration between client and consultant.

A four dimension scenario space will yield 16 different scenario worlds. The math works out as follows: Each dimension is defined in simple high-low, strong-weak, rich- poor polar extremes. Say one dimension is “U.S. Economic Health”. The extremes of this might turn out to be “strong” or “weak”. Another typical dimension is “Trend in Globalization”. This might be varied in terms of the globalization trend “increasing” or “decreasing”. Add two additional dimensions and similarly vary them. Then combine all the possibilities of the four dimensions. The result is 16 combinations of the four dimensions.

For most planners, anything more than four or five scenarios to explore is unwieldy. Therefore, the list of 16 must be narrowed down to a more manageable four or five. The four or five ultimately chosen should represent the range of threat or opportunity the organization will face over the planning horizon. The next important step is to flesh out the scenarios with descriptions of all the relevant drivers that help define the future operating environment. Various literary and creative techniques are used to make the scenario “story” come alive for the reader.

In the end, the scenarios are just tools for enabling planners to think expansively and rigorously about the future. The key step in the process is a workshop in which client groups are formed around each scenario world. In each “reality”, participants assess future needs, relate these to current capabilities, and develop robust strategies and preliminary implementation plans that can fill the gap between current capabilities and future requirements.

For those who might question the rigor of this approach, a two-hour session like the one Kennedy conducted should be more than enough to erase any skepticism as to its scholarly relevance. In order to illustrate the process and how it works in practice, Kennedy presented a case study featuring the Panama Canal Commission’s (PCC) use of scenario planning in the period leading up to the formal hand-over of the Canal to Panama. Canal Planners used scenarios to bring together key Canal stakeholders to explore risks and opportunities that the new Canal management would confront when Panama took over the Canal.

A joint consultant-PCC team created four very long-term alternative future environments set out 25 years in the future. This planning horizon was unusually long because of the long lead time involved in some of the key engineering projects being contemplated by Canal management.

The first scenario was Full Ahead, a world with dynamic, globally integrated markets. In this scenario, the WTO ruled and growth was driven by the private sector. However, there were pockets of poverty, wide income gaps, and people who did not have the skills and connections to compete in a frenetic, market-driven world. Next was New Rivals which was still a very globalized world, but one in which the United States was left behind because of grave fiscal imbalances created by unfunded entitlement programs. This was the world of the emerging markets.

Collision Course was a future with major foreign policy crises akin to what might happen if one could envision an expanded 9/11. It was a world in which, as Kennedy put it, “things go wrong”; the kind of world, he said “that keeps you up at night, wondering about things getting really bad from the standpoint of disintegration of politics and national governments”.

In this world, the globalization trend was reversed. The US economy was moderately strong, but only due to military spending. There was a great deal of government control and economic integration was limited at the regional (e.g., NAFTA, EU, etc.) level. Finally, Pollution Control was a world centered around the idea of global warming, environmental degradation and natural disasters. Air traffic was extremely expensive, and this made shipping more attractive, although the challenges of maintaining the Canal’s ecosystem were increased.

Following the creation of these scenarios, there was a four-day workshop where key decision makers of the Panama Canal Commission and their stakeholders were placed in one of the various futures and asked to develop strategies to deal with that particular future. Four worlds, four groups, none of the worlds knew what the others looked like, but they each struggled with the same questions: Who is your customer going to be? What does your business model look like? How is the Canal Authority and Panama going to prosper? At the end, the groups came together to “stress test” and compare their findings with the goal of identifying the strategies that might work across all of the worlds.

As Kennedy made clear, “The process … applies whether or not you are dealing with Panama, United States intelligence or the Ford Motor Company. You are taking a cross section or a sampling of what the future could be in as robust and rigorous a way as possible. You are taking four different images and you are building a set of strategies and then you are identifying a core set of things that you need to be doing no matter what happens in the future. From that, you are going to be able to understand what are the enduring critical success factors: what kind of people you’re going to need, what kind of technology, what kind of alliances, geographical reach, what kind of culture (is necessary) to be successful in the face of (a) combined image of the future.”

This, in a nutshell, is the “art of the long view”. Importantly, Kennedy emphasizes, no probabilities are attached to any of the scenario worlds. The probability of any one turning out to be the real future is zero. Each is equally probable and improbable. What matters are the challenges and upside opportunities embedded in the scenario collection. This is where creativity and hard thinking come in. If scenario planners do their jobs, they will have already dressed rehearsed important conditions--and even specific events-- far in advance of these actually occurring. Herein lies the power and value of scenario planning. If Kennedy’s presentation is any indication, scenario planning is a methodology that should find great success at a school of international relations like Fletcher, which, after all, is supposed to remain on the cutting edge of change in the global political economy.


Annalee C. Babb is a Fletcher Ph.D. candidate writing on the topic Small States, the Internet and Development: Pathways to Power in a Global Information Society. She is using scenario planning as her methodology.