Scenario Planning Linking Scenarios to Strategy

Building Scenarios for Strategic Planning

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Scenarios•Origin

– World War II– US Air Force (RAND Corporation Herman Kahn

– 1950’s)

•“Scenarios describe hypothetically a succession of events with the objective of drawing attention to causal relationships and working towards decisions”.

– Arab Israel War – 1967– Yom Kippur War – 1973

–Oil Crises

Scenario Planning Dr. Awais e Siraj

What are Scenarios?

• A descriptions of a Plausible future(s)– A set of future events or circumstances

that would affect an organization’s performance

• Perceptions about alternate future environments

• Longer view in a world of great uncertainty

Why Scenarios?Preparing for the Uncertainties


Prepare for eventuality

Review

Keep in Check ContingencyPlan

Develop Scenarios

Uncertain

SomeProbability

Low High

AssessForecastMonitorScan

Impact on Firm

Cer

tain

ty


Scenarios

• Traditional Planning– Forecasts and Trends– Most Likely Future– Uses Factors in

Organizational Control

– Standard Forecast Report

– By design, results in narrow view

• Scenario Planning– Uncertainty– Multiple Plausible

futures– Focuses on variables

outside organization’s control

– Utilizes Stories– Creates broad view

from multiple futures

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EstimatesForecast

sScenarios

Basis Data supplemented by Intuition

Data supplement

ed by Intuition

Intuition Supplemented

by Data

Statistical Tools

Trend AnalysisDelphi – Analysis

Trend AnalysisDelphi – Analysis

Environmental AnalysisVisioning

Reliance Historical Data/ Extrapolation

Historical Data/

Extrapolation

Perceptions of Future

Time Period

Short Term1-2 Years

Short Term2-5 Years

Long Term20 – 50 years

The process

• Dots on the Horizon– Signals

• First tank crossing Soviet – Afghan Border

• First Immigrant crossing Afghan Border into Pakistan in 1979

• Breakdown of Taliban/Unocal Negotiation on Oil Pipeline

• Picture of Bilawal Bhutto Zardari with President of US

• Bou Azizi7

2040

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LegalJudicial SystemsLawsImplementation

EcologicalGreen EnvironmentNatural Resources

TechnologicalSavvyShy

SocialCultureDemographics/FamilyFaiths/Social Fabric

EconomicMacroeconomicsMicroeconomics

PoliticalGeopoliticalGovernmentsPolitical Environment

PESTEL – Identifying the Knowledge Gaps

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SWOT Analysis – The Connection to Contextual Environment

ThreatsImminentAvoidable

Opportunities

WeaknessesInherentIdentifiableNon-changeable

StrengthsCore CapabilitiesStrategic Advantages

ExploitableSustainable

2040

Shift the Bullets on Post – its (or Cards)

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Mapping, Clustering and Interlinking of Drivers, Trends and Uncertainties

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High proportion of Working Age Population

InfrastructureDevelopment

Geostrategic Manouvering

High Disposable Income

Focus on Peace and Quality of Life withinBoundaries of Pakistan

International Diplomacy

“Nascent” SuperPower with 250

Mio Pop/Tech/Peace

Demographic Transition

Mapping, Clustering and Interlinking of Drivers, Trends and Uncertainties

Technological Development HUB of

IT

The process• Trends:

– are those underlying and impacting factors that set the pattern of events and determine outcomes in the environment and time scales being considered

– Technology– Dependence on

others 13

• Drivers– “Driving forces are the

elements that move the plot of a scenario, that determine the stories outcome” (Peter Schwartz)

• Drivers help identify significant factors

• Quest for power, resources and security as primary drivers

• Concerns of major players also drives the environment


Driving Forces

Demography

Organization

Ecosystem

Economy

Politics

Technology

Value & Beliefs

Customers

Suppliers

ProductsServicesCompetitors

Regulations

Substitutes

The Process

• Assumptions– Best Educated Guess– Relative certainties are often thought of as

assumptions.– Those statements about the future that are

very likely to occur and hence they can be written in any scenario.

– They also do not represent variables or unknowns about the future so they are not typically adjusted to one extreme or the other to enrich a set of strategic planning scenarios.

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The Process

• Uncertainties• Factors over which there are major

question marks

• Create a context for contingencies

• What ‘might’ work at the end of Horizon Year?

– What may not work?

• Defuse bias and disarm personal agendas– Geopolitical and social world

– Pace of innovation and adoption

– Population and wealth 16

Impact and Uncertainty

High Predictability


Low Impact High Impact

High Unpredictability

•Select

the most

Critica

l on th

e

basis of

–Im

pact

–Unce

rtainty of Im

pact

•Plot t

hem on an X/Y Axis

Demographic Dividend

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Geostrategic Nonsense

GeostrategicSensemaking

Demographic Threat

Dem

ogra

ph

ic T

ran

siti

on

Geostrategic Maneuvering

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The SuPakistan

Moenjodaro

The Riyasats

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SCENARIOS FOR PAKISTAN - HORIZON YEAR 2040

Welcome to Riyasat Hai Muttahidda Islami. What you see today on the map as a syndicate of small countries used to be a big country called Pakistan till 2020 which was part of an even bigger United India till 1947. The arrival of US in Afghanistan in 2001 marked the beginning of this era. For a decade, there were hardly any successes recorded by US and NATO troops while in Afghanistan. By the year 2012 the tables started turning. On one end, growing terrorism continued to remain an excuse for super powers to stay in the region and kept tension between Pakistan, India, US, Iran and Afghanistan, China and Russia escalated. A very interesting development took its shape on the other end. Population dynamics began to show their muscle. 70% percent of the Pakistani population which were below the age of 35 years, bustling with energy and eager to live a life of their own, began working on a destiny of their own. Through mutual consensus and a lot of deliberation among mounting resistance, they decided to divide the country into smaller units on the model of Middle East, each sharing the border yet sustaining on their own resource be that trade or agriculture. They made a decision based on the fact that all the giants of the region are never going to come to their senses. They focused on technology and infrastructure development, thus strengthening their roots and ensuring long term stability and competitiveness. Therefore, while all the big powers were still struggling to establish their supremacy, this part went on its road to renewed and peaceful life.

Welcome to Pakistan. Please allow me to give you a brief history of the developments in the last 25 years:In the year 2012, Bilawal Bhutto Zardari sworn in as theyoungest Prime Minister of Pakistan. He was just 24 years old at that time. This was a landmark in the history of Pakistan as he was the youngest head of state ever. He brought with him the energy of a 24 year old and political wisdom of his forefathers. This was also the beginning of death of orthodox political culture driven by nepotism, family traditions and corruption. He brought a new wave of young people all over. The average age of the parliament dropped down to 35 years with very few veteran politicians. His focus was on two fronts: Technological development, for which he encouraged and forcefully motivated the vibrant youth that now formed more than 70 percent of Pakistan’s population, to divert all their energies in the development of the country. His second focus was on the diplomatic front. On one end, he and strengthened the tarnishing relationships with China by establishing the rail road link between Gawader and Urumchi which gave access to Chinese goods to warm waters and on to rest of the world. On the other end, he played a key role in establishing peace in Afghanistan and brought the influence of US to its minimum. By developing close ties with Iran, (Which officially declared itself a nuclear power in 2015) major challenges of energy in Pakistan were sorted out and a 20 year No war pact with India brought military escalation to a halt. So, the Pakistan that you see today is the result of 20 years of tireless efforts of the youth of Pakistan who came to its rescue when it was about to collapse after 60 years of its existence in 2010. $

I was born in 2010. My father and mother keep telling me about the “war on terror” that started in 2001, almost 10 years before my birth. As a child, I also remember listening to a lot of stories about this and its manifestation through every day chaos, inflation, corruption, terrorism, kidnapping and military actions. My fellow country men always used to lay blames on countries like United States, UK, Russia, Afghanistan, India, Iran and China and it was easy for me to relate these stories to my geography lesson. Some called it ‘war for oil’ while others called it ‘war for water’. I had no idea what is happening. I had my own dreams and desires about the kind of life I wanted to spend. However for the last ten years, there is no discussion on war. My elders say that ever since United States has taken away its forces from Afghanistan, peace has returned. But I don’t see much change. India, China, Afghanistan, Russia and UK are still the same but why my country is in ruins? We don’t have electricity, education, water, agriculture, business. There are no opportunities for decent jobs. Millions of youth like me are either dead or have migrated from the country for good. We don’t know what to do. We wish to live a peaceful, happy life with luxuries of the world but it is difficult for us to even make a decent living. Some of our wiser friends tell us that we are now more like our neighbor Afghanistan of the last decades of 20th Century or like Sub Saharan Africa.

A lot of people may have their own analysis of what lead to the third world war in 2025 but I would build my theses on the bullish attitudes of powers like US, China, Iran, India, North Korea and Russia and the population demographics of sub - continent. While all super powers provided the technological equipment for the war, India and Pakistan fueled the fire in the shape of its young manpower in addition to its nuclear arsenal. According to statistics, population of both countries grew at about 3% per annum in second half of 20th Century. However, through series of aggressive steps they were able to bring down the growth at less than 2% per annum but this lead to another interesting phenomenon. From 1990’s to 2040, subcontinent went through a phenomenon called demographic transition meaning thereby that 70% of the population of both countries remained below the age of 35 years. Without any planning for education, technology and development, this provided an ideal resource for warlordism, terrorism, infighting, chaos, distrust, insecurity and collapse of social system. So, the Pakistan and India that you see today on the map are mere war grounds and the remains of the aftermath of 3rd world war that ended in 2030. They are yet to recover from Nuclear destruction.

Demographic Threat

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Stakeholder analysis

• To test our understanding of the business problem

• To test the internal logic of our story lines– Who is key to decision making at this time?

– What really matters to him?

– Who are the customers with a high interest?

– Who are the predatory stakeholders?


Considering the relative position of different stakeholders

Scenario PlanningDr. Awais e Siraj

Degree of Power

High

High

Low

Low Level of Interest

Scenario - Option Matrix


Withdraw

Continue as is

Short-terminvestments

Long-terminvestment

Scenario

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Scenario

2

Scenario 3

Scenario 4

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STRATEGIC CHOICES FOR PAKISTAN - HORIZON YEAR 2040

Demographic Threat

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No

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• Youth Engagement• Technological Development

• International Diplomacy

• Demographic Dividend• Youth Engagement• Technological Development

• Entrepreneurship• Political Wisdom• Get out of proxy wars

• Rethinking Military Strategy

• Nuclear De – Escalation


Scenarios - Nutshell

• Decisions pre-tested against a range of what fate may offer are more likely to:– Stand the test of time– Produce robust and resilient strategies– Create distinct competitive advantage

The Ultimate Goals of a Strategist!

Scenario Planning Linking Scenarios to Strategy

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