When it comes to predicting the future, even very experienced and knowledgeable people get it wrong. Just have a look at these three examples:
- 1876: "This 'telephone' has too many shortcomings to be seriously considered as a means of communication." — William Orton, President of Western Union.
- 1966: "Remote shopping, while entirely feasible, will flop.” — Time Magazine.
- 2007: “There’s no chance that the iPhone is going to get any significant market share.” — Steve Ballmer, Microsoft CEO.
Although the future has always been insecure and challenging, it seems as if the number and speed of changes has increased massively in recent years. Societies and companies are confronted with multidimensional transformations: technological, geo-political, cultural as well as social ecosystems are changing rapidly, compelling enterprises to adjust their strategies. These transformations are often characterized by tremendous uncertainty. To adopt strategies in such a quickly changing environment, companies cannot solely rely on traditional processes. One instrument that enables one to deal with complex multidimensional changes is a scenario technique or scenario-based strategizing.
But what are scenarios? The term ‘scenario’ is often used to refer to “business scenarios”: different pictures of what a business or the whole company itself could be like in the future. The best- and worst-case calculations in typical business models are examples of this scenario type. This kind of understanding assumes that the right decisions have been made in reaction to the future environment and that only a small corridor of uncertainty remains. Scenario-based strategizing starts with a different understanding of the concept of scenarios: pictures of a future that is beyond the organization’s control. These scenarios are maps of the future – not unlike street maps – in which decisions must be made.
Scenarios of this kind do not try to predict the future, but they do describe different plausible pictures of the future. These pictures help to categorize and evaluate developments as soon as any first indicators or early warning signs can be detected. Usually, we only notice what fits our perceptual categories. When we see only a small part of a familiar item or movement, we can easily infer the larger pattern or structure. For instance, when we see a certain characteristic swiping gesture, we immediately know that someone is using a tablet or smartphone. Ten years ago, when we were not yet familiar with smartphones, we might not have even noticed this movement – and missed getting a glimpse of one of the first prototypes. Future scenarios provide conceptual frameworks that enable us to perceive important developments which we need to react to. Most importantly, they also enable us to prepare our reactions well in advance.
The environment is changing constantly, and scenarios must be updated regularly to retain their power. Furthermore, the success of scenario-based strategizing depends on the participation of experts and employees, on fast and open communication and on the courage of all the parties involved to identify the developments that might be the first indicators of an important change.
Scenario planning of the type just described has great potential for Enterprise Architecture (EA) planning. Historically, EA is often interpreted as mainly contributing value through its descriptions of existing baseline architectures as compared to target ones. However, too often, the thinking that goes into the definition of different possibilities or candidates for the target architectures is overly shallow and biased, lacking the inclusion of world-class strategizing approaches. EA Principals, together with EIDOS Parmenides, is working to change this through increasing communication about better integration of strategic planning techniques into EA definitions, including through facilitated workshops. For some examples of scenario-based planning, visit https://parmenides-eidos.com.
Authored by Dr. Tobias Adam, CEO of Parmenides AG, an EA Principals Partner