Exploring the Future through Scenarios

Abstract

Two types of scenarios are commonly used to explore the future in a structured fashion: deductive and inductive. Deductive scenarios take a top-down approach, producing scenarios that allow leaders to monitor a small set of trends and script specific strategic actions to depending on how these trends evolve over time. This makes them ideally suited for high-level strategy or risk management applications. Inductive scenarios, however, take a bottom-up approach that is more conducive to innovation and design applications, allowing inventors and designers to envision entirely new issues and trends that may shape customer needs and desires in the future. In deductive scenarios, which are often used to develop business strategy or evaluate the future impacts of possible decisions, strategists select the top critically uncertain trends in the external business environment, and the alternative futures are determined by the different ways those trends may impact the world and interact with other trends whose direction and impact are more probable. Deductive scenarios are mutually exclusive--the emergence of one scenario precludes the emergence of any others--and the scope of the scenarios is defined at the beginning of the process. Inductive scenarios, on the other hand, emerge from the study of possible interactions among many trends and weak signals. Systems thinking methods are used to organize the interactions into causal loops that combine to form the scenario's overall system. Unlike deductive scenarios, inductive scenarios are not explicitly mutually exclusive--multiple scenarios may emerge and can coexist--and the space of the scenarios emerges during their development. This emergent property of inductive scenarios makes them desirable for innovation and design activities. The systems thinking diagrams may suggest entirely new emerging issues and trends that may impact the future business environment. These emergent trends signal new customer needs that other methods cannot surface. Their richness of detail gives inventors and designers an intimate view of the constraints and customer pain points that may arrive in the future. The PepsiCo research foresights initiative used inductive scenarios to inform the company's research agenda. (1) Mapping interactions of trends and weak signals in influence diagrams creates the basis for the inductive scenarios. The process begins with a collection of future trends and weak signal impacts, often developed using implications wheels, (2) and is best implemented via workshops that include diverse points of view. The IRI 2038 project used this inductive approach to create scenarios about the future of the art and science of research and technology management (Figure 1). Like the deductive approach, the inductive process starts by identifying future projections of strong trends, such as globalization or sustainability. However, inductive scenarios are not constrained in the number of emerging weak signal impacts that can be used to form the scenarios. In the IRI 2038 process, participants received a list of approximately 50 trends and weak signals. In Step 2, they were asked to identify three to five trends or signals they believed would influence the others in a significant way. Participants mapped these interactions in Step 3. The heavy lifting in building inductive scenarios happens in Step 4, where scenario systems maps are created to capture and simplify the essence of the influence diagrams (Figure 2). In this example, for the scenario Africa leapfrogs developed countries, developed-economy manufacturing systems have embraced flexible manufacturing and customization while environmental concerns have virtually stopped new plant construction. The advent of 3D printers means that anyone can manufacture and market a new product, and many do, driven by more readily available consumer data. …