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The Grimm Reality

If they were still alive today, Jacob and Wilhelm Grimm would have been brilliant at writing scenarios. You may recall from your childhood that these two German brothers produced a collection of some of the most colourful and enduring fairy tales of all time – notably Snow White, Cinderella, Sleeping Beauty and Little Red Riding Hood. In the early part of the nineteenth century when they wrote these tales, multinational companies did not exist and scenario planning was not a paid occupation. Now they would be wined and dined by some of the most powerful foxes in business, looking for stories to enthral the young and old alike in their organisations; or maybe J. K. Rowling would be author of choice because of Harry Potter’s rise to fame. It is not a coincidence that the book that has recently topped the New York nonfiction bestsellers’ list for a long time employs the Grimm technique. It is entitled Who Moved My Cheese? by Dr Spencer Johnson. The story is about mice and little people and their different behaviour when their current stockpile of cheese in a maze is exhausted and they have to go in search of new cheese. It is just as enchanting as Cinderella but delivers a powerful message of how to view change as an opportunity rather than a threat.

Scenarios are stories about possible futures. Many hedgehogs in business confuse the term “scenario” with a forecast or prediction of a single future. Nothing could be further from the truth. Scenarios are, in fact, multiple pathways into a future that is unknown. While constrained by the rules of the game and driven by the key uncertainties, they should evoke the same feelings as a really good novel. Each scenario must have a simple, vivid theme which is logically consistent in itself, but differs materially from the other scenarios in the set. It must have a compelling title which enters the common vocabulary of the audience being addressed. The title should conjure up the image of the scenario without the need for the text to be read. There must not be too many scenarios, as the human mind is only capable of thinking in three dimensions. For this reason and because a prime objective of scenario work is to reduce the complex to the easily understandable, we advocate two or three scenarios (four at the very outside) for any particular situation. Only pure mathematicians can think in four or more dimensions!

However, let’s go back to first principles and the Oxford English Dictionary. It defines a scenario as “a sketch or outline of the plot of a play, giving particulars of the scenes, situations, etc.”. An alternative meaning taken from a dictionary of music is “an Italian term, meaning a sketch of the scenes and main points of an opera libretto, drawn up and settled preliminary to filling in the detail”. Obviously, Italian composers used to peddle scenarios around well-heeled, music-loving bankers in the hope of raising money for a full production before they wasted too much effort on the score. The first known use of scenarios in a connection outside the creative arts and inside the more clinical world of science came from the sociologist, novelist and screenwriter Leo Roysten. He suggested to a group of physicists, who were searching for a name for alternative descriptions of how satellites might behave, that they call them “scenarios”. He explained that this was the term used in the film industry to describe the outlines of future films. It seems fitting, therefore, to examine the scenarios that must have been playing in the minds of the crew of Apollo 13 and their helpers to get them back home.

When the proverbial hits the fan

Ever had the feeling that you’re always in it and it’s just the level that changes? After the on-board explosion, the crew of Apollo 13 were so far in it they needed chin-high waders! Their situation called to mind Murphy’s law: “Everything that can go wrong will go wrong” and O’Brien’s variation: “Murphy was an optimist”. As one problem was solved, another one arose. To summarise their predicament: an explosion had destroyed a vital oxygen supply, virtually robbing the command and lunar modules of power and the crew of water and limiting the supply of oxygen. In order to conserve power, the three-man crew had to move from the main navigational command module to the two-man lunar module designed only to travel to the moon’s surface and back to the command module. They could only return to the command module just before splashdown.

Moreover, the explosion came after the craft had made its mid-course correction out of an immediate-return-to-Earth trajectory. So it was committed to travelling into an orbit of the moon and couldn’t simply hitch a ride in the form of a direct trajectory back to Earth. The two craft, although attached, were incompatible in certain ways – the lunar module navigational system was not designed for getting back to Earth and the square canisters used to remove carbon dioxide from the command module did not fit into the round openings of the lunar module environmental system.

Without the ability to navigate, they had no hope of getting home. If carbon dioxide wasn’t removed, the crew would asphyxiate. Power was needed to steer the craft: yet power was all but non-existent. The power that remained needed to be conserved and so all but the essential requirements were cut. When the power was cut, the temperature dropped. When the temperature dropped, condensation formed on all the electrical circuitry, posing the danger of arcing and complete failure when it came time to power-up. All in all, the crew were up to their necks in it.

To follow up on our fan analogy: prima facie it would seem that, when the proverbial hits the fan, it will not be distributed evenly and therefore no predictable pattern can be discerned. You can bet, however, that all concerned on the craft and in Houston went through the type of thinking process embedded in our matrix to narrow down the range of possible dispersion patterns. They examined the rules of the game, which mainly comprised the laws of physics; they selected two key uncertainties, namely the availability of power and oxygen; and they formulated various scenarios of the likely outcomes. Seeing that they didn’t know how much power was available and they didn’t know how long they could survive in the face of carbon dioxide build up and lack of water, this all might sound airy-fairy and contrived. Which is why the Brothers Grimm would be pretty handy here! But it gave them a better clue to the options open to them and the best course of action. You will notice below that the first two scenarios on offer were utterly negative. Yet, they had good education value by informing the team as to what they should do to minimise the chance of either of these scenarios materialising.

The first scenario was “Close but No Cigar”. Assuming they didn’t have enough power to get back to Earth, they could still effectively control the carbon dioxide and conserve water and food. They wouldn’t die immediately. They would hover agonisingly close to Earth until gradually and slowly they would starve to death or die of thirst. The second scenario was “Tin Tomb”. Assuming they had enough power to get back to Earth, their survival mechanisms could fail them before they got there. They would be DOA (dead on arrival) with the command module being converted into a very expensive body bag. The third and positive scenario was “Sweet as Apple Pie”. Assuming they had enough power to get back to Earth and their survival mechanisms remained intact, they would arrive to a hero’s welcome and have apple pie with the president on the White House lawn.

We know what you’re thinking: even if the astronauts were allergic to apples, they would focus on the last scenario to help them formulate their options. But that misses the whole point of scenario planning. It is only by studying all three scenarios simultaneously and looking at what you want to achieve as well as what you want to avoid that you get a feel for all the options. In the extreme case of life and death, we have a natural tendency anyway to do all this in the blink of an eye. It is when our lives are not at stake, and there is no emergency, that the error of concentrating on only the desired future creeps in. Take the hockey-stick projection so beloved in many companies. Like the Nike swoosh, it accepts a trough in the short term, but a market soaring to infinity thereafter. To adapt Keynes’s famous quote, in the long term we are all optimistic! But Pollyanna would not have survived at the controls of Apollo 13.

Negotiating the rapids with the wisdom of Wack

The point we want to make from the previous narrative is that the uncertainties of a situation can be built on to give you a chance of success. There is a logic to identifying the two key uncertainties that would have the greatest impact on your business, life or situation at hand; but these uncertainties need to be translated into scenarios to give you a vision of your options. In other words, the bridging mechanism to get you from the key uncertainties to the options available is the set of scenarios or stories – the more vivid, the more contrasting but underpinned by logic, the better. This will encourage you to think the unthinkable and identify opportunities you didn’t even think were there.

Problem: just when you need the Brothers Grimm for your next scenario planning session, you realise that they lived in the early nineteenth century. So where do you find the talent for story-telling? An answer: multiple perspectives from inside your own backyard. The diversity of knowledge and insight of different people within a company can provide the richness of material to develop scenarios. And it needn’t just be your intellectual top guns. Encouraging ordinary people to engage in more creative and divergent thinking has the added advantage for a company of promoting expression and helping people to converse. It is this very harnessing of diversity and encouraging of creativity within groups and individual frames of mind that equip people to dream up scenarios of an unusual nature and then expand on the range of options necessary for decision-making. As Peter Schwartz said: “Scenario-making is intensely participatory, or it fails.”

Imagine you and your staff are on a corporate outward bound course. You arrive at the bank of a wide river, and there’s a rowing boat in front of you with which to cross the river. After a quick bout of team-building and strategic planning, you as the leader set the objective: to get to that specific tree on the other side. After examining your options, you work out the specific strengths of each member of your team to deal with the task at hand. Roles are delegated and, with a blood-curdling war cry, you and your team launch yourselves into the river and paddle like mad to get to that tree. Moments later you are swept downstream by the river’s powerful current that you didn’t know about and factor into the equation. According to Paul Valéry, a twentieth-century French poet and philosopher, “a fact poorly observed is more treacherous than faulty reasoning”. Ian Mitroff in Smart Thinking For Crazy Times put it another way: many serious errors of management can be traced to solving the wrong problems precisely. If the team had undertaken some scenario planning in advance of plunging in, the unknown magnitude of the river’s current would have been one of the key drivers in designing the scenarios. The other driver would have been the unknown combined physical stamina and co-ordination of the team under such circumstances. Using these two uncertainties as drivers, the unexpected outcome might have been captured in a scenario with a catchy name like “Deliverance”. As Pierre Wack said: “It is better to be vaguely right than precisely wrong”. Then you can make contingency plans – like walking back up the river to that tree, totally drenched to the bone!

It’s all in the name

As we said earlier, graphic names for scenarios do help enormously in spreading the word. They become part of the in-house vernacular whenever the future is being discussed in a company. “Imperial Twilight” was one such name. It was applied to a scenario developed in the 1980s to show that the arms race between America and the Soviet Union was unsustainable because the Soviet Union was running out of money. The upshot would be the end of the Soviet Union, which is exactly what transpired. An environmental scenario sketched during the same decade was entitled “Rich Heritage”. It drew attention to the fact that the present generation inhabiting the planet had to pass on to the next generation the same level of biodiversity as it had inherited. What one advertising executive said about brand names applies equally to scenario names. He commented: “A good name keeps the pie in the sky because pies on the ground are pretty boring objects.” There’s magic in a name!

At a recent workshop addressing job creation, a diverse body of interested parties identified the key uncertainties of job creation in the area as the commitment and involvement of the communities within the area, and the level of investment from outside into the area. From this, four music-themed scenarios were developed:

“PHILHARMONIC ORCHESTRA”

Potential investors, excited by the display of enthusiasm and entrepreneurship of the community in the region, agree to build a series of holiday resorts and develop factories and commercial properties that will draw on the experience and facilities in the region. This attracts more investment and attention, resulting in a boost to tourism and the local economy, providing jobs and opportunities for the community. The orchestra, made up of different clusters of skilled instrumentalists, work together in harmony to produce a world-class symphonic sound.

“CREATIVE DISCORD”

Excited by the arrival of potential investors, the local community put on a display of spontaneous enthusiasm and entrepreneurship in the form of establishing a network of separate markets. The investors, for whatever reason, decline to invest; but the community, now aware of their own potential, maintain the momentum and the region becomes a hotbed of entrepreneurial enterprises. The result: the communities play different tunes at different tempos. Although the overall sound is discordant, each group of players is bowled along by their own enthusiasm as they toot their particular horns.

“LONELY BUSKER”

Investors, for whatever reason, decline to invest. The enthusiasm of the communities is low to non-existent. Land issues are a major problem and no parties are willing to address the issues actively. Like the lonely busker on the street pavement, playing his harmonica with his cap in his hand and hoping for the odd cent from a passer-by, each community survives by eking out a living.

“DEAFENING SILENCE”

Potential investors are excited about the area, see opportunities and plunge in. But there has been no prior consultation with the communities to examine what is best for the area. Each party has different expectations, with the consequence that investors stand over their subsequently abandoned factories and resorts like a conductor facing an empty orchestra pit.

Through the looking glass

When Alice protested through the looking glass that you can’t believe impossible things, the Queen set the issue straight: “I daresay you haven’t had much practice. When I was your age, I always did it for half an hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.” Lewis Carroll lit up the lives of many Victorian children by taking them into his world of make-believe. Coincidentally, in Alice’s Adventures in Wonderland, hedgehogs feature as the balls in royal games of croquet with flamingoes as the mallets and soldiers – bent double – as the hoops. Since all three prefer to move of their own volition rather than behave as inert objects, the games usually end in chaos with the Queen calling for the heads of all those who misbehaved, and the king subsequently pardoning them.

The secret of successful scenario planning is not just the richness of the story line or the striking nature of the title. The content of the scenarios must also be relevant for them to come alive, not only in outer space, but also in inner space. Each person within a group has his or her own model of the real world and what is relevant based on his or her experiences. This is referred to as the person’s “microcosm”. The real world and its relevant parts are then the “macrocosm”. Scenarios link the world of perception with the world of fact. In order to gain new insight from scenarios, one has to identify which information is of strategic importance and then transform it into material which penetrates the consciousness of the people for whom the information has potential consequences. It may not be new information but something that is already known and is right in front of the nose of the observers. It is just being misperceived. That is why Pierre Wack called scenario planning “the gentle art of reperceiving”.

To put it in business terms: a company’s perception of its business environment (microcosm) is as important as the actual state of the market (macrocosm) because its strategy comes from this perception. To be effective, then, the real target of scenario planning should be the microcosm of the decision makers. Unless their mental images of reality are influenced, the impact of scenarios will be negligible. In short: unless their minds are opened, their options will be closed. Pierre Wack cited the example of the oil scenarios he produced for Shell before the first oil price shock in the early 1970s. Although they were suitably prophetic in highlighting the instability of the market, they didn’t connect with the senior executives of Shell. Pierre realised that unless he uncovered the managerial mind-set, his writing of further scenarios would be useless. He therefore did a whole series of interviews with managers to unearth what really made them tick and what language should be used to communicate new ideas to them. Consequently, Pierre’s next set of scenarios on the second oil price shock, as we mentioned earlier on, really struck home.

1-2-3-4

It would be remiss of us as authors if we didn’t end the scenario section with a golf story. After all, a round of golf has eighteen stories – one for each hole – and if you include the drink in the pub afterwards, nineteen. We have stressed on several occasions how scenario planning should embrace the unthinkable. Well, a photograph hanging in the corridor of the Durban Country Club reveals four golfers who played together and achieved just that. On the same par-four hole, the eighteenth, one player got an albatross, which is three under par and therefore a one; he drove the green. The second player got an eagle, which is two under par and therefore a two. The third and fourth players only managed a birdie and a par, in other words a three and a four. Now, would anyone in the entire golfing world ever write a scenario for that? It happened on 21 April 1994.