Quote of the day “Almost no one expected what was coming. It’s not fair to blame us for not...

Quote of the day “Almost no one expected what was

coming. It’s not fair to blame us for not predicting the unthinkable.”

Daniel H. Mudd, former CEO of Fannie May

quoted in the NY Times Sunday, October 5, 2008

© 2013 University of Notre Dame. All rights reserved. This PowerPoint presentation may not be duplicated, distributed or excerpted without the University’s advance written consent.

Anticipating Change… To Make Better Decisions about the Future

© 2013 University of Notre Dame. All rights reserved.

Today’s Learning Objectives

1. To gain an awareness of scenarios and how they

can be useful for helping leaders anticipate uncertain change and its consequences

2. To explore real world examples of how

organizations cope with and capitalize on complexity

3. To understand some of the shortcomings of the method and how to mitigate these risks of scenario mis-use


Framework Forecasting

Baseline Forecasts

Expected Scenario

Past

Present


Expected Scenario

“The most likely future, isn’t”

Herman Kahn


Is your forecast robust past Thanksgiving?

Level of Turkey Satisfaction

Trend Extrapolation: The Turkey Problem

Source: Nassim Talem, 2010

© 2013 University of Notre Dame. All rights reserved..

http://futuresavvy.net/wp-content/uploads/2009/11/trend-break.png

http://futuresavvy.net/wp-content/uploads/2009/11/trend-break.png

• It requires evidence - forces us to be evidence-based

• It forces us to identify driving forces and have clarity on the indicators

• It projects current trends, based on the best available data to project the most likely “surprise-free” future scenario

• It serves as a starting point for consideration of the impacts of uncertain disruptions and development

of alternative scenarios

If the probability of the expected future occurring is low, why is a baseline forecast important?


A 2010 study based on 1500 face-to-face CEO interviews

What CEO’s are Saying About Complexity and Uncertainty

http://cde.cerosmedia.com/Capitalizing-on-Complexity-2010-IBM/1J4c175d753f64c012.cde


http://cde.cerosmedia.com/Capitalizing-on-Complexity-2010-IBM/1J4c175d753f64c012.cde

Source: Capitalizing on Complexity, IBM 2010


Organizations are experiencing significant upheavalChanges in the new economic environment are large-scale, substantial and drastically different.

More volatileDeeper/faster cycles, more risk

More uncertainLess predictable

More complexMultifaceted, interconnected

Structurally differentSustained change




The Complexity GapWhile eight out of ten CEOs anticipate significant complexity ahead, less than half feel prepared to handle it.

30%Complexity gap


How CEOs can capitalize on complexity



Framework Forecasting

Three simple questionsWhat is going to happen? –

Expected ScenarioWhat might happen instead? –

Alternative ScenariosWhat do you want to happen? –

Preferred Scenario(s)

Three simple questionsWhat is going to happen? –

Expected ScenarioWhat might happen instead? –

Alternative ScenariosWhat do you want to happen? –

Preferred Scenario(s)Adapted From: “Framework Forecasting”, Peter Bishop

Limit o

f Plausib

ility

Limit of Plausibility

AlternativeScenario

Preferred Scenario

Baseline Forecasts

Expected Scenario

Past

Present

AlternativeScenario

AlternativeScenario

Disruption


The Power of Scenarios Scenarios Process Expands Your Thinking

Provides a Method for “Thinking the Unthinkable” Challenge Conventional Wisdom & Cognitive Proximity

Scenarios create “Memories of the Future” To “experience” the disruption in advance

i.e. – “flight simulator” Leverage “Intuition”

Enable Companies to “Wind Tunnel Test” Strategies Vulnerability Analysis, Gap Analysis

Identify “Signposts” as early indicators© 2013 University of Notre Dame. All rights reserved..

17

Scenarios “The person who writes scenarios

must be a good story teller”

Why? Does this add value?

http://www.shell.com/home/content/aboutshell/our_strategy/shell_global_scenarios/scenarios_videos/video/

http://www.youtube.com/watch?v=jQ2uIPeiEYQ


http://www.youtube.com/watch?v=jQ2uIPeiEYQ

18

Scenarios

“Nearly always, if the scenario development has been conducted well, the results will be disturbing”

Why is this so? How can this be useful for business?


20

Scenarios

How can leaders use scenarios without abdicating leadership?

“Give me a one-handed economist…”

Harry Truman


Steer a course between the false certainty of a single forecast and the confused paralysis that often strikes in trouble times.

Scenarios and Abdication of Leadership

Set forth a goal that is“Robust under different Scenarios”

1.

2.


Scenario Development

“Double Uncertainty Matrix” [Global Business Network]

“Alt Futures” [Institute For The Future] “Aspirational Futures”

[Institute for Alternative Futures]

Deductive Method Inductive Methods


• Foresight Forecast• Team Assignment (75 points)• Due ________________

• Assignment is Posted on _____

Next Foresight Project Deliverable

Upcoming Deliverables:• First Draft Due _____________• Peer Reviews Due _______________• Final Papers Due _______________• In-Class Presentations on __________________ • Foresight End of Semester Event on ________________


Next Class – Scenario Development Methods

Read: 20/20 Foresight, Chapter 1Scan websites of foresight thought

leaders: Institute for the Future

▪ www.iftf.org Institute for Alternative Futures

▪ www.altfutures.com Global Business Network

▪ www.gbn.com

Scanning Post 3 Due _____________© 2013 University of Notre Dame. All rights reserved.

http://www.iftf.org/

http://www.altfutures.com/

http://www.gbn.com/

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