Newsletter No 11. Oct 2008

We very much appreciate the response to our last issue on leadership. We had several responses from people who knew Bob and Guy, we also heard from people who did not, but who recognised the leadership qualities they lived. Thank you all.

Lately it seems that times of uncertainty have suddenly caught up with us. Perhaps it was just an illusion we had for awhile that we were more in control of things than it turns out we were; now that illusion is shattered. You can’t seem to turn around without hearing dire predictions of the world running out of control. But how does it affect us, in our own organisations? And what can we do about it? Are we doomed?

We at LASA don’t think so. On the contrary, we see this as a time of opportunity – after all, the money (or energy) in the economy hasn’t disappeared. It hasn’t been eaten, or magic’d away. But people’s confidence has been shaken, so they are holding back, waiting to see what happens.

In this newsletter we talk about how the use of Scenario Planning can help you and your organisation to “future proof”* your strategy and get a better grip in times like these. If you have a clear understanding of the forces that could affect you, you are well on your way to doing something constructive in response and regaining some true control as you and your organisation move into the future.

In this issue:

The LASA Team

Latest thinking

Uncertainty and Future Proofing* – how Scenario Planning can help

Do you think you can predict the future? And if you do – and you don’t use a crystal ball – how do you do it? Most of us – at least in our businesses – think we can. And we do it by extrapolating from what we have learned (or think we remember) from the past. So that is what we normally base our strategy on. That is what we base our sales predictions on. In your experience, has it ever worked out? Some of it will, but could you have predicted which bit?

In his book, Stumbling on Happiness, Daniel Gilbert says that research has concluded that human beings need to feel in control – whether this is real or an illusion – in order to be mentally healthy. And the reason? Because it feels good to think we are in control. It makes us feel that we matter, that we have an impact, a say in what happens. He says, “Our desire to be in control is so powerful, and the feeling of being in control so rewarding, that people often act as though they can control the uncontrollable.” (pp. 22). Deep down inside, we all seem to believe that we can control the uncontrollable.

We are the apes that ‘look forward’, we can imagine a future rather than having to experience it (as other animals do) to learn about it. Yet often when we do our strategic planning in organisations, we settle on an ‘agreed’ future and develop our strategy for that particular future…. usually a continuation of where we are now, based on our memory of how we got here. So it is actually based on reflections from our past. Yet we know (deep down) that it won’t turn out that way. No one can predict the future. However, it can be an extremely valuable exercise for organisations to do just that, to predict the future (rather several possible futures), and aim to make their strategic plan future proof* - and for this we use scenarios.

Exploring the scene – environmental scanning

We use environmental scanning and scenario planning to exercise our strategic muscles and expand our thinking so that we are not just aware of a range of possible futures and how we might arrive there, but also aware of the levers we would need to pull in our organisation if any one of them were to unfold.

A client of mine was exasperated: ‘How on earth could we have predicted the floods of last year, the rise in petrol prices this year and the collapse of Northern Rock which has thrown mortgages and the housing market into free fall?’ You likely could not have, but you could have looked at one or several of those as a possible future, looked at what you would need to do in that case and be better prepared when you saw the early warning signs that one of the futures you had thought about was starting to unfold. ‘But what if you hadn’t predicted any of those?’ he asked. Just expanding the thinking around how you would react to different futures would have helped. You’d have had more ideas about different things you could do. It could be more proactive rather than just reactive, which gives you the feeling that you’re caught on the back foot.

A Brief History – Scenario Planning in context

During the two decades following WWII, Europe experienced a period of sustained economic growth. Most countries were recovering and restructuring their economies. Growth rates of 5 to 6% were common during that period. OECD countries generally accepted that trends from the past could simply be extrapolated and markets would do the work of allocating resources most effectively, while in the communist blocks, planning was done centrally by large institutions.

Large computers allowed for macro-economic input and output analyses and there were a fascination with the possibility of predicting the future with the aid of complicated algorithms and modelling.

It was not until the early part of the seventies that it became apparent that it was impossible to predict the future using these tools. In the late sixties, the Club of Rome (who were using some of these models) indicated that there might be limits to growth and in 1973 the first oil crisis hit the world. Major changes, which were not covered by any of the models or forecasts available at that time, were experienced and it was clear that the old method of forecasting by extrapolating trends from the past did not work. The old method could not deal with the complex interactivity of large systems.

In the early seventies some companies, and in particular Shell, started to experiment with scenarios and introduced them as a part of their planning process. The main idea behind scenario thinking is that the future cannot be predicted; but one can at least think of possible different future developments. Looking at more than one future, explicitly taking relevant uncertainties as a starting point can then enrich the planning process.

Scenarios were constructed as plausible and consistent developments of political, economic, social and technological aspects of the business environment following different patterns. These were stories about the future with some quantification of macro-variables for each of the different future stories. These stories about different futures could then be used against which to judge plans and decisions. They were also useful for understanding risks and rewards of various options, decisions and projects. Scenarios provide an enriched context and allow for a risk/reward evaluation in a more comprehensive way than the old project cash flow with its single future.

Scenarios – Definition, their Purpose and Role

A scenario is an interpretation of the present, archetypal image of the future, and an internally consistent story about the path from present to future.

The word scenario comes from the film industry where it is used to describe a detailed plan. Scenarios as they are used in organisations are, in fact, the opposite of a plan. They are internally consistent descriptions of how a future business environment might develop over the next ten or twenty years. Since scenarios are ‘only’ stories, people can discuss almost anything, even previously taboo subjects. Developing them is a constructive process that turns people’s thoughts towards building a common future rather than agonising about the past. Scenarios are not predictions of a future; rather they are credible possible futures.

Scenarios contain robust planning assumptions while at the same time they highlight key uncertainties. In scenarios we look systematically at linkages and dynamics of various parts of our business environment. Scenarios are more than just stories about the future. When a group engages in conversations about the future and builds scenarios, they also build a shared understanding and language. They will clearly uncover common ground and increase their capability to anticipate and recognise change in the business environment. As indicated earlier, scenarios can be used for testing and generating options and helping people to create a shared vision. It gives people a clear view of what they can do and how that can affect the organisation in various possible futures.

In summary, scenarios provide a coherent framework for integrating diverse signals and developments, they provide creative images, which challenge existing mental maps, and they provide a perspective on key uncertainties and strategic issues. They are tools for learning and they provide a common language for communication among diverse groups with different functional and business backgrounds. Scenarios should describe very different futures because it is only by looking at different developments that we will be alert to ‘trigger points’ so that we can challenge the ‘official future’ and learn.

How does it work?

Taking it one step further we can start to think of scenario planning as a tool for raising awareness of the possibility of a range of different ways in which the future may unfold, built on some of the factors through which the outside world affects us. We scan the environment to look at factors of high uncertainty, project those factors forward and develop imaginative stories to describe what affects that projected future may have on an organisation. To use a metaphor, we can compare an organisation to a ship. Even a small ship (or organisation) takes time to turn or stop or even to change direction. The larger the organisation, the longer it takes to turn, so wouldn’t it be useful to have some sort of marker to tell you when you need to start to turn?

Once we have some coherent stories we examine our strategy and see how it would work in a particular future. Questions we ask are:

  • What would we need to change?
  • How would we need to manage and lead our organisations?
  • What are the levers we would need to ‘pull’?
We then examine each future scenario in turn.
  • Are there parts of your strategy that would work in more than one future?
  • Are there parts that wouldn’t work in any of them?
  • What might you change to make the strategy more robust (i.e. viable in several possible futures)?
A very important part of this stage is to identify the early warning signs or indicators that you are in a particular future scenario. Actually it is unlikely that any one future scenario will unfold in its entirety, however if you can identify the direction the future is taking as it unfolds, you can identify what you need to do in order to respond quickly. This is where the indicators help you. Scenario planning helps you to know what to look for and to know what it means when you find it. You have stretched your future thinking muscles. You have given thought to what you would do in extreme circumstances and therefore, when extreme circumstances (ANY extreme circumstances) arise, you are not caught unawares - you are prepared to act.

However, a word of caution: once you have developed your strategy, do not fall into the trap of putting it complacently on the shelf, or considering it set in stone. You need to continually review and develop it, keeping it fresh and up-to-date. For this we advocate Action Learning - which we will discuss in our next newsletter.

In conclusion, then, we can actually take advantage of the uncertain times we live in today by exercising our ‘future scenario’ muscles and future proofing* our organisation. It will also help us to feel more in control as we will have identified a clear way forward, as well as different options to call upon should we need them.

* Future proofing is used with thanks to SAMI Consulting.

© Patricia Lustig, 2008

Latest Books

The Power of the Tale. Using Narratives for Organisational Success.

Julie Allan, Gerard Fairclough and Barbara Heinzen.
ISBN 0-470-84227-X.

With good examples and exercises, this helps you to see how you can use story-telling in your own organisation. Stories are memorable, entertaining, people-centric and can help to explain or make clear something that is quite complex easily and quickly. They encourage creativity and help to handle emotion and the 'un-discussable'. After all, a 'story' isn't real life, is it? We are really excited by this book, especially because of our earlier work on story-telling at work (speaker at Corporate Memory, Corporate Amnesia workshop) and our current work with Scenario Planning (see Chapter 8).

Scenario Planning – Second Edition.

Gill Ringland.
ISBN: 0-470-01881-X.

This is THE seminal book on Scenario Planning for me. Sort of an A-Z of the history and “how to” of Scenario Planning from a recognised expert who can also write well. Easy to follow and clearly structured it starts with explaining the history of Scenario Planning and how scenarios link to strategic planning; tit hen gives many real life examples of how they have been used and the benefits that came out of using them. Part I is ‘the book’ containing everything you need to know. The following sections are further reading and reference materials if you would like to find out more.

Stumbling on Happiness

Daniel Gilbert.
ISBN 0-00-718312-7

Gilbert is a quirky guide through how our minds really work – not how we think they work, but how they actually do (and how we can be sure about that). It is fascinating and fun, although I frequently found myself astounded at how our minds manage to convince us that what they tell us is really true, or really what happened when it patently did not. I knew memory was fallible, but didn’t realise how we are set up to deceive ourselves. This is particularly important to understand when we talk about scenarios and how we plan for the future. If we realise that people are built to imagine a good future and therefore not to worry about possible catastrophes… well it makes it all the more important to make ourselves look at several scenarios including unpleasant ones so that we can prepare ourselves for a future that will unfold but will not be the one we think it will.

HR Corner

We all have our pet theories about AGE in the workforce - ranging from amusing stereotypes to blatant prejudices which could land you in hot water since Age was included in UK discrimination legislation in October 2006.

Some useful tips for employers have recently come from a piece of research into demographics at work by CIPD, Penna and People Metrics, about the preferences of four ‘generations’ in the Workforce, identified as the:

  • ‘Veterans’ born pre 1948, those who are 60 +
  • ‘Baby Boomers’ born 1948 – 63, aged between 45 and 59
  • ‘Generation X born 1964 – 78, aged between 30 and 44 (Thatcher’s Children)
  • ‘Generation Y born 1979 – 91, aged between 18 and 29

Popular belief traditionally has it that Generation Y constantly looks for new jobs and doesn’t plan to stay put, rating highly an organisation’s behaviour toward society; whereas the Baby Boomers will be loyal to their organisations long-term and are less bothered by matters of Corporate Social Responsibility.

It’s interesting how myths vanish when examined under the spotlight and facts are collected. Over 5,500 employees were surveyed across Europe, finding for instance that CSR matters much more to the Baby Boomers than to Generation Y - over half of whom plan to stay with their current employer for the next five years.

What really surprised the researchers was that there is more similarity in employees’ views than there are differences. Shockingly, only one employee in four felt fully engaged in their organisation - regardless of their age.

For members of all generations to feel engaged the research revealed that:

  • People must gain a sense of purpose from their work
  • People must be treated with respect in their workplace
  • People must have a ‘good employer’ that has a good reputation in its sector

All groups rate an employer for:

  • The job itself
  • Benefits
  • Career opportunities
  • The working environment
  • The organisation as a potential employer

Against the odds the most disaffected group was discovered to be the Baby Boomers – feeling overlooked as they get older as employers focus attention on the X’s and Y’s. The Boomers reported that they want more challenging work; access to development and to feel more engaged with socially responsible organisations. Representing 30% of the current workforce employers would do well to pay them some attention quickly to make full use of their skills and experience, particularly in the light of a recent McKinsey report that shows the single biggest managerial preoccupation in the next five years is finding talented people and that the cost and availability of talent is a significant constraint on growth – perhaps employers should re-focus on one-third of their home grown talent and show more appreciation for those employees ‘already in stock’ before they have moved on to someone else who does recognise their worth?

Isn’t it interesting that we seem to need research evidence to confirm that ‘people are people’ and our needs are more similar than they are different when we are ‘sliced and diced’ by criteria such as age, gender, race, religion, dis/ability etc.

Jill Lang CFCIPD People Potential

Reference ‘Gen up: how the four generations work’ Penna in partnership with CIPD and People Metrics – www.penna.com

Interesting Links

A Summer Flower Gent August 2008 © PMLustig

Latest News from LASA

  • This past summer saw Tricia and Nic doing LASA’s annual volunteering stint at Green And Away, a tented, sustainable conference centre near Worcester. We volunteered during several sustainable weekend conferences including Resurgence and The Herbalists conferences.
  • Tricia and Nic visited ex-colleagues from Logica SA/NV where they worked in the 80’s. It was a lovely chance to catch up with people and realise what fun it all was.
  • As Tricia becomes more and more involved in strategy and scenarios work (with SAMI Consulting), she has been made a Principal and Nic has been nominated as an Associate for his software support package for virtual learning and team working.
  • Tricia facilitated a difficult Board meeting to help an SME with developing a strategy to improve profitability.

Quotes

Learn from the past, watch the present, create the future
- unknown

When it comes to the future there are three kinds of people: those who let it happen, those who make it happen and those who wonder what happened.
- John M. Richardson, JR.

Leaders establish the vision for the future and set the strategy for getting there; they cause change. They motivate and inspire others to go in the right direction and they, along with everyone else, sacrifice to get there.
- John Kotter

The future belongs to those who dare
- Anonymous

Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.
- Albert Einstein

Losers live in the past. Winners learn from the past and enjoy working in the present, towards the future.
- Denis Waitley

Remember today for it is the beginning of always. Today marks the start of a brave new future filled with all your dreams can hold. Think truly to the future and make those dreams come true.
- Anonymous

In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists.
- Eric Hoffer

Prediction is very difficult, especially of the future.
- Niels Bohr

• The trouble with our times is that the future is not what it used to be.
- Paul Valery

Joke corner

Bad day at the office:

Rob is a commercial saturation diver for Global Divers in Louisiana . He performs underwater repairs on offshore drilling rigs. Below is an E-mail he sent to his sister. She then sent it to a radio station in Ft. Wayne, Indiana, who was sponsoring a worst job experience contest - which she won.


Hi Sue,

Just another note from your bottom-dwelling brother. Last week I had a bad day at the office. I know you've been feeling down lately at work, so I thought I would share my dilemma with you to make you realize it's not so bad after all.

Before I can tell you what happened to me, I first must bore you with a few technicalities of my job. As you know, my office lies at the bottom of the sea. I wear a suit to the office. It's a wetsuit. This time of year the water is quite cool.

So what we do to keep warm is this: We have a diesel-powered industrial water heater. This $20,000 piece of equipment sucks the water out of the sea, heats it to a delightful temperature, then pumps it down to the diver through a garden hose which is taped to the air hose.

Now this sounds like a darn good plan, and I've used it several times with no complaints. What I do, when I get to the bottom and start working, is take the hose and stuff it down the back of my wetsuit. This floods my whole suit with warm water. It's like working in a Jacuzzi. Everything was going well until all of a sudden, my bum started to itch.

So, of course, I scratched it. This only made things worse. Within a few seconds my bum started to burn! I pulled the hose out from my back, but the damage was done. In agony I realized what had happened. The hot water machine had sucked up a jellyfish and pumped it into my suit. Now, since I don't have any hair on my back, the jellyfish couldn't stick to it….However, the crack of my bum was not as fortunate. When I scratched what I thought was an itch, I was actually grinding the jellyfish into the crack of my bum.

I informed the dive supervisor of my dilemma over the communicator. His instructions were unclear due to the fact that he, along with five other divers, were all laughing hysterically. Needless to say I aborted the dive.

I was instructed to make three agonizing in-water decompression stops totalling thirty-five minutes before I could reach the surface to begin my chamber dry decompression. When I arrived at the surface, I was wearing nothing but my brass helmet..

As I climbed out of the water, the medic, with tears of laughter running down his face, handed me a tube of cream and told me to rub it on my bum as soon as I got in the chamber. The cream put the fire out, but I couldn't poo for two days because my bum was swollen shut.

So, next time you're having a bad day at work, think about how much worse it would be if you had a jellyfish shoved up your arse. Now repeat to yourself, I love my job, I love my job, I love my job. Remember whenever you have a bad day, ask yourself, is this a jellyfish bad day?

May you NEVER have a jellyfish bad day!!!!!

Love
Rob

LASA Website

If this interests you, there are other interesting resources on the LASA Insight website so why not take a look by going to www.lasa-insight.com

Comments and Feedback

If you have any comments or feedback on - or suggestions for - this newsletter then please email them to us  here

@Patricia Lustig 2008