Scenario Building for Strategic Planning Strategizing in Turbulent Environment Through Scenario Planning, Outside - In Strategy, Long Range Planning

1. Building Scenarios for Strategic Planning

2. 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 2

3. 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
Scenario Planning Dr. Awais e Siraj

4. Why Scenarios?
Preparing for the Uncertainties
Scan Monitor Forecast Assess
Prepare for eventuality
Uncertain
Develop
Review Scenarios
Certainty
Keep in Check Contingency
Some Plan
Probability
Low High
Impact on Firm
Scenario Planning Dr. Awais e Siraj

5. Scenarios
• Traditional Planning • Scenario Planning
– Forecasts and Trends – Uncertainty
– Most Likely Future – Multiple Plausible futures
– Uses Factors in – Focuses on variables
Organizational Control outside organization’s
– Standard Forecast control
Report – Utilizes Stories
– By design, results in – Creates broad view from
narrow view multiple futures
Scenario Planning Dr. Awais e Siraj

6. Estimates Forecasts Scenarios
Basis Data Data Intuition
supplemented supplemented Supplemented
by Intuition by Intuition by Data
Statistical Trend Analysis Trend Analysis Environmental
Tools Delphi – Analysis Delphi – Analysis Analysis
Visioning
Reliance Historical Data/ Historical Data/ Perceptions of
Extrapolation Extrapolation Future
Time Period Short Term Short Term Long Term
1-2 Years 2-5 Years 20 – 50 years
6

7. 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 Azizi 7

8. PESTEL – Identifying the Knowledge Gaps 2040
Political Economic
Geopolitical Macroeconomics
Governments Microeconomics
Political Environment
Social Technological
Culture Savvy
Demographics/Family Shy
Faiths/Social Fabric
Ecological Legal
Green Environment Judicial Systems
Natural Resources Laws
Implementation

9. SWOT Analysis – The Connection to Contextual Environment 2040
Strengths Weaknesses
Core Capabilities Inherent
Strategic Advantages Identifiable
Non-changeable
Opportunities Threats
Exploitable Imminent
Sustainable Avoidable
9

10. Shift the Bullets on Post – its (or Cards)
10

11. Mapping, Clustering and Interlinking of Drivers,
Trends and Uncertainties
11

12. Mapping, Clustering and Interlinking of Drivers,
Trends and Uncertainties
High proportion of
Working Age Population
Technological
Development HUB of
IT
Demographic “Nascent” Super
Transition Infrastructure Power with 250
Development Mio Pop/Tech/Peace
High Disposable
Income
Focus on Peace and
Quality of Life within
International Boundaries of
Diplomacy Pakistan
Geostrategic
Manouvering
12

13. The process
• Trends: • Drivers
– are those – “Driving forces are the
underlying and elements that move the
impacting factors plot of a scenario, that
that set the pattern determine the stories
of events and outcome” (Peter Schwartz)
determine
• Drivers help identify
outcomes in the
significant factors
environment and
time scales being • Quest for power, resources
considered and security as primary
drivers
– Technology
– Dependence on • Concerns of major players
others also drives the
13
environment

14. Driving Forces
Demography Economy
Customers
Regulat Suppliers
Substitu
Value &
Beliefs Organization Politics
ions
tes
Products
Competitors Services
Ecosystem Technology
Scenario Planning Dr. Awais e Siraj

15. 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.
15

16. 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

17. s is
of Impact and Uncertainty
ba
n the
lo
itica
t Cr
s
mo c t
is
e pa
Ax High Predictability
t th f Im
/Y
lec mpac tainty n X
t o
Se I cer a
• – U n on
m
–
t the
Plo
•
Low Impact High Impact
High Unpredictability
Scenario Planning Dr. Awais e Siraj

18. Demographic Dividend
Demographic Transition
Geostrategic Geostrategic Maneuvering Geostrategic
Nonsense Sensemaking
Demographic Threat 18

19. SCENARIOS FOR PAKISTAN - HORIZON YEAR 2040
Demographic Dividend
The Riyasats The SuPakistan
Welcome to Pakistan. Please allow me to give you a brief history of the developments in the last
Welcome to Riyasat Hai Muttahidda Islami. What you see today on the map as a syndicate of 25 years:
small countries used to be a big country called Pakistan till 2020 which was part of an even In the year 2012, Bilawal Bhutto Zardari sworn in as theyoungest Prime Minister of Pakistan. He
bigger United India till 1947. The arrival of US in Afghanistan in 2001 marked the beginning of was just 24 years old at that time. This was a landmark in the history of Pakistan as he was the
this era. For a decade, there were hardly any successes recorded by US and NATO troops 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
while in Afghanistan. By the year 2012 the tables started turning. On one end, growing
driven by nepotism, family traditions and corruption. He brought a new wave of young people all
terrorism continued to remain an excuse for super powers to stay in the region and kept over. The average age of the parliament dropped down to 35 years with very few veteran
Geostrategic Sensemaking
tension between Pakistan, India, US, Iran and Afghanistan, China and Russia escalated. A politicians. His focus was on two fronts: Technological development, for which he encouraged
very interesting development took its shape on the other end. Population dynamics began to and forcefully motivated the vibrant youth that now formed more than 70 percent of Pakistan’s
show their muscle. 70% percent of the Pakistani population which were below the age of 35 population, to divert all their energies in the development of the country. His second focus was on
years, bustling with energy and eager to live a life of their own, began working on a destiny of the diplomatic front. On one end, he and strengthened the tarnishing relationships with China by
their own. Through mutual consensus and a lot of deliberation among mounting resistance, establishing the rail road link between Gawader and Urumchi which gave access to Chinese
Geostrategic Nonsense
goods to warm waters and on to rest of the world. On the other end, he played a key role in
they decided to divide the country into smaller units on the model of Middle East, each
establishing peace in Afghanistan and brought the influence of US to its minimum. By developing
sharing the border yet sustaining on their own resource be that trade or agriculture. They close ties with Iran, (Which officially declared itself a nuclear power in 2015) major challenges of
made a decision based on the fact that all the giants of the region are never going to come to energy in Pakistan were sorted out and a 20 year No war pact with India brought military
their senses. They focused on technology and infrastructure development, thus strengthening escalation to a halt. So, the Pakistan that you see today is the result of 20 years of tireless efforts
their roots and ensuring long term stability and competitiveness. Therefore, while all the big of the youth of Pakistan who came to its rescue when it was about to collapse after 60 years of its
powers were still struggling to establish their supremacy, this part went on its road to renewed existence in 2010. $
and peaceful life.
A lot of people may have their own analysis of what lead to the third world I was born in 2010. My father and mother keep telling me about the “war on
war in 2025 but I would build my theses on the bullish attitudes of powers terror” that started in 2001, almost 10 years before my birth. As a child, I also
like US, China, Iran, India, North Korea and Russia and the population remember listening to a lot of stories about this and its manifestation through
demographics of sub - continent. While all super powers provided the every day chaos, inflation, corruption, terrorism, kidnapping and military
technological equipment for the war, India and Pakistan fueled the fire in actions. My fellow country men always used to lay blames on countries like
the shape of its young manpower in addition to its nuclear arsenal. United States, UK, Russia, Afghanistan, India, Iran and China and it was
According to statistics, population of both countries grew at about 3% per easy for me to relate these stories to my geography lesson. Some called it
annum in second half of 20th Century. However, through series of ‘war for oil’ while others called it ‘war for water’. I had no idea what is
aggressive steps they were able to bring down the growth at less than 2% happening. I had my own dreams and desires about the kind of life I wanted
per annum but this lead to another interesting phenomenon. From 1990’s to spend.
to 2040, subcontinent went through a phenomenon called demographic However for the last ten years, there is no discussion on war. My elders say
transition meaning thereby that 70% of the population of both countries that ever since United States has taken away its forces from Afghanistan,
remained below the age of 35 years. Without any planning for education, peace has returned. But I don’t see much change. India, China, Afghanistan,
technology and development, this provided an ideal resource for Russia and UK are still the same but why my country is in ruins? We don’t
warlordism, terrorism, infighting, chaos, distrust, insecurity and collapse of have electricity, education, water, agriculture, business. There are no
social system. So, the Pakistan and India that you see today on the map opportunities for decent jobs. Millions of youth like me are either dead or
are mere war grounds and the remains of the aftermath of 3rd world war have migrated from the country for good. We don’t know what to do. We wish
that ended in 2030. They are yet to recover from Nuclear destruction. 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
19
Hiroshima Revisited Demographic Threat or like Sub Saharan Africa. Moenjodaro

20. 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?
Scenario Planning Dr. Awais e Siraj

21. Considering the relative position of different
stakeholders
High
Context Setters Players
Unaffected Involved Actors
Degree of
Power
Crowd Subjects
Low Unaffected Bystanders Involved Bystanders
Low Level of Interest High
Scenario Planning Awais e Siraj
Dr.

22. Scenario - Option Matrix
1 2
io 4
ar rio o3 io
ce
n
en
a
na
ri ar
S Sc e en
Sc Sc
Withdraw
Continue as is
Short-term
investments
Long-term
investment
Scenario Planning Dr. Awais e Siraj

23. STRATEGIC CHOICES FOR PAKISTAN - HORIZON YEAR 2040
Demographic Dividend
The Riyasats The SuPakistan
• Youth Engagement • International Diplomacy
• Technological • Demographic Dividend
Development
Geostrategic Sensemaking
• Youth Engagement
Geostrategic Nonsense
• Technological
Development
• Entrepreneurship
• Political Wisdom • Rethinking Military
• Get out of proxy wars Strategy
• Nuclear De – Escalation
Moenjodaro Hiroshima Revisited
23
Demographic Threat

24. 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 Dr. Awais e Siraj