Speaker 1: Hi, my name is Kevin Quigley. I'm the director of the McKechnie Institute for Public Policy and Governance at Dalhousie University in Halifax, Nova Scotia. This is a brief introductory lecture to scenario planning. So thanks for joining our video. First question is what is scenario planning? A scenario is a description of a possible future. It's a hypothetical sequence of events that is helpful in investigating causes and necessary decision points. It's not a prediction of the future. Scenario planning goes beyond typical forecasting exercises and thinking in terms of incremental changes. Rather, it describes quite different futures and invites us to think of how to respond to them. There are actually many methods when it comes to scenario planning. In this presentation, we will refer to intuitive logics method and draw on the work of van der Heggen and van Asselt and others with some modifications of our own. This lecture introduces the next steps, pardon me, this lecture introduces the steps involved in scenario planning. It does not develop the complexity of each stage. Each stage of the process requires reflection and includes trade-offs and considerations. On our website, you will find a full report on scenario planning and a brief user-friendly report for those wishing to use scenario planning processes, techniques, and tools. So why would you do scenario planning? Van der Heggen, one of the key thinkers in this area, starts off by saying the most important question to address by the scenario planner is why do you do this in the first place? Here are five possible reasons. One is to change the mental map of organizational leaders. Two, overcome groupthink. Three, foster out-of-the-box thinking. Four, understand how the organization can continue to fulfill its mission in light of uncertainty. And five, encourage adaptive capacity in the organization. Scenario planning is quite different from incremental changes in organizations based on forecasting in that you're invited to think of quite different futures. And that's part of the reason why it challenges people's mental models, groupthink, and various tendencies that occur in organizations that exist over time. So when should we use scenario planning? So right now, of course, we're experiencing COVID-19, and a pandemic is one such time when you're thinking about significant change like COVID-19. But actually, there are quite a few other occasions when scenario planning has been quite popular or useful. We think about dramatic changes through climate change, financial collapses like the 07-08 financial collapse, the terrorist attacks of September 11. Those were periods of significant uncertainty, and that uncertainty brought about challenges of various organizations to understand the social context in which your organization existed, challenged people to think about how they can fulfill their mission. The key is there was significant change, significant uncertainty, and that loaned itself to scenario planning that, again, characterizes highly uncertain futures or different types of futures and how you can meet the challenges of those different futures. How do we structure a scenario planning session? There are three key things to keep in mind. One is participants reflect a wide array of views in the organization. So participants don't necessarily have to come from each part of the organization, but they have to be at least aware of the perspective of different parts of the organization. Two, it has to be fairly broad in its reach. Many stakeholders should be included, or at least their interests have to be included in the sessions. And three, people come as individuals and there are no hierarchies during the session. So one individual is equal to another. This is easier said than done. There are some challenges when you think about that. If the boss is in the room, for example, sometimes that can throw off the dynamics of a roundtable discussion that people might want to be seen as agreeing with the boss, etc. So you have hierarchies at play that can cause a bit of a challenge. So in that respect, you might want to think about how you organize your sessions in light of the power dynamics and who's in one room at a time or who's involved in various roundtables. A couple other things to think about. It's important also to have creative thinkers in the room. People are prepared to engage in scenario exercises. The purpose of the exercise is to challenge people's imagination to a certain extent and think of things that they hadn't perhaps thought of before. So you really need a willing audience, a willing participant who can think creatively but is prepared to accept those sort of creative parameters in the exercise.

Speaker 2: So step one, setting the scenario agenda. When you bring a group together to do scenario planning,

Speaker 1: it's not a bad idea to start with the mission statement of your organization. The reason I would say that, and not every scenario planning academic would suggest that you start with a mission statement, but I think it's helpful to have some overarching theme, some unifying force to bring you together to solve problems. And if you have a mission statement that is clearly articulated, it's not a bad idea to have something like that in play at the beginning to justify why this group of people would get together and think about the impact that the high uncertainty circumstance has on that mission statement. So it's sort of a unifying statement in a way, a justification for the scenario planning exercise. That said, at the end of the scenario planning exercise, you may wish to go back and revisit your mission statement, but it's not a bad idea to have some sort of mission statement there at the beginning to organize people's thought and give you an overall thrust to what you're trying to accomplish, what you're trying to support. Second key consideration is determining the timeline. Are you thinking about the future in the next six months, in the next year, in the next 10 years? Depends a little bit on what the circumstances are, of course. If we think about COVID-19, some organizations are going to be thinking about short-term survival in the next six months, and they might want to do some exercises that focus specifically on the next six-month period. But they may also want to think about the next year or two years or three years and how this might fundamentally change their sector and how they're going to address those challenges. So there are different ways to do it, but it's important to determine at the outset what particular timeline you're looking at for this particular exercise. You can do several exercises. Some exercises might focus on six months, and the same group can focus on an exercise that might last or might focus on two, three years out, but it's important to determine that up front. Step three, you should generate a SWOT or PESTEL analysis, so strengths, weaknesses, opportunities, and threats, and political, economic, social, technological, legal, environmental analysis also. Essentially, just sort of laying the groundwork for the information that you have available and the contextual issues that are in play that you need to take into account when you start this exercise. And you would share that analysis with the participants at the scenario planning exercise. And then the fourth step is to set the context. So setting the context is really about understanding the circumstances in which you find yourself. You might ask yourself some questions like, what are the current circumstances for this organization? And what are the causal factors that are led to the current situation? This question does not necessarily pertain exclusively to COVID-19. Here we consider status quo operations, followed by the causes that led to the current situation. And then you might get to the question of what caused a step change in the landscape. And at that stage, you might think of what exactly was brought about by COVID-19 or the circumstances of COVID-19. What vulnerabilities did expose in your organization? So in this question, participants can describe the impact that COVID-19 has had on their organization as well as their key stakeholders. Why is your organization designed the way it is? Whose plan created or restricted the current situation? To understand the future outcomes, it's important to identify the key actors, influencers, and decision makers who've created the current scenarios. What were the motivations behind these actors that created or restricted change in the organization? To reiterate the reason for this step in the scenario planning process, we need to understand the present context before we try to anticipate the future. Step two in scenario planning is determining the driving forces. A driving force is an environmental factor that influences a possible outcome of a critical uncertainty for the organization. So these are concepts over which you may have some control, but you may not control actually, and they will have a significant impact in the success of your organization. And so that's why we call them critical uncertainties. They're critical for your organization, but they're highly uncertain. So we might look at things like customers, your ability to travel, your access to natural resources, your ability to trade with different countries, your ability to cross borders, social distancing measures, whether they're in practice or not, how restrictive are they in terms of the work that you do, budget, cash flow, debt, unemployment rate, is it up or down, do you have access to the appropriate labor, are you able to access immigrant labor that you might need, or immigration goals that you set for your organization, housing capacity, cost of energy, access to the U.S. market, value of the Canadian U.S. dollar, government support programs that actually have come about because of COVID-19 in particular, how long will those programs exist, and what impact will that have on your organization? This part of the exercise is a brainstorming exercise where the group articulates various factors, various critical uncertainties that the organization should grapple with, try to understand, try to understand the consequences of before they move to the next stage. So this is really brainstorming about various concepts, driving forces that influence your business. So the next thing you would do is score each of those factors according to the impact on the business and the uncertainty. And the factors that are determined to be the highest on this grid, for example, the impact uncertainty grid, would be the two that you would work with for your scenario planning exercise. So you sketch four scenarios, or you frame the scenarios in this way. Once you've determined one driving force, you think of the driving force as high-low, and the second driving force as high-low as well. So in scenario one, the driving force is high, and driving force two is low. In scenario two, the driving force one is high, driving force two is also high. Scenario three, driving force one is low, driving force two is low, and driving force in scenario four, driving force one is low, and driving force two is high. So in practical terms, what does that look like? Well, imagine you selected customer as your driving force and the supply of labor, which is to say the labor that performs the actions in your organization. So customer demand for what you do is either high or low, and the supply of labor is either high or low. And so what you would do in step five is you try to describe what these futures look like. So the next step in the scenario development process is to work with members in the organization to describe the circumstances in each scenario. Starting with each state of each scenario, work backwards and determine what it would take to make that scenario occur. What are the key events and structures necessary to lead to each scenario outcome? Determine who allows or motivates each scenario to occur, and why it would unfold that way. Each scenario should consist of a narrative and an understanding of how that future would unfold. This exercise is process oriented, and the purpose is to understand the relevant factors that contribute to different potential futures for the organization. The participants in this exercise are meant to bring this knowledge into their future work and policymaking decisions. A scenario is not a prediction of the future, but rather an attempt to understand all the causal factors that impact the organization and how to address them. In this slide, we've tried to identify some key questions you might think about when developing the scenarios. What does this scenario look like? How did you get to this scenario? What are the underlying causes that led to this? What are the potential critical failures? What are the opportunities? And then finally, you should give each scenario a name that helps you to remember the particular circumstances. So finally, step six is policy development. So at this particular stage, the purpose is to develop policies that will allow you to respond to each of those scenarios and all of those scenarios. So if you think, for example, that they're part of the feature of scenario planning is identifying which variables drive your organization. And in many cases, you have limited control over those driving forces. So if you think of the US dollar, for example, the strength of the US dollar might have a huge impact on how you get your business done. But you have virtually no control over the value of the US dollar. So you're really describing futures over which you have little control. Arguably, you have some control over your customer demand, for example, or availability of labor, but still, it can be quite constrained during a period of great uncertainty. So you characterize those four futures, and you want to develop policies that will allow you to be successful no matter which of those four futures materialize. Because after all, you don't really have a lot of control over those futures or which one's going to emerge. It may be that you want to put some policies in place that are going to nudge your organization in a particular direction. But nevertheless, you want to develop policies that will allow you to be successful, no matter which future emerges, that will enhance your adaptive capacity. When you think about developing policy, you might want to think about using a cybernetic understanding of control, which is to say, you think about information gathering, standard setting, and behavior modification. So when we think about information gathering, what policies are you going to put in place that will allow you to gather the information that you need to make informed decisions in this period of uncertainty? How will you have your information sensors out to detect market trends? Number two, what standards will you put in place in the period of uncertainty, rules, regulations, guidelines, and it should be noted that these standards should probably be flexible. Because we're in a period of uncertainty, and adaptive capacity will be important. And then third, what kind of behaviors do you want to encourage? And how are you going to encourage those kinds of behaviors, through incentives, through penalties, through training, through culture change, and what is realistic to accomplish in the timeframe that you're dealing with. So if you're looking at a sort of six month timeframe in your scenario planning exercise, culture change might be harder to achieve. But if you're thinking about two, three years out, it might be easier to achieve culture change. Although how would you accomplish that culture change? How are you going to change the culture in your organization to achieve the goals you would like to achieve? There are some limits to scenario planning, our work on our website develops it in more detail. But just to hit on a few key points, scenario planning is best employed when the future is very uncertain. Two, it lacks a standardized methodology, the field of scenario planning has a number of different methods. The method we've talked about here is very narrative focused. But there are a number that are based more on, on forecasting and available data. But there's a number of methods. And our paper describes more of the methods in detail, if you'd like to consider other methods. The two by two matrix can be described by some as overly simplistic for certain situations, you might think that there are more variables than just the two drivers that you've identified. Although in that case, I would suggest that it's also possible to have go through various scenario exercises where you use different variables. The other thing is, with a two by two matrix, what it helps you do is have a conversation about different futures. That's the purpose to have conversations about what the future might look like and how to adapt. So insofar as the exercise allows you to have conversations, narratives, identify causes, and then address some of the vulnerabilities that come about because of those causes, then it can be considered a success. So I'm not sure the two by two matrix is going to capture all the organizational complexity, but I think it can allow you to have some important conversations. Fourth, some scenario planners have avoided including politics in the exercise, saying that political decisions really have to be left to a political realm, and they didn't want to politicize the exercise. That's a decision that you can you can take, but some have noted that it's perhaps a little unrealistic because politics does play in these decisions that revolve around scenarios. So actually thinking about different political scenarios and different political decisions is a viable way to think about scenario planning. There's more material available for you on our website about scenario planning. We hope this has been a useful introduction to the concept for you. Thanks so much.