Breaking the Crystal Ball: 5 Shifts to Understand the Unpredictable Future

Why bother trying to understand the future?

This is a question I’m often asked by clients. They argue that it is almost impossible to predict what will happen in a complex and uncertain world.

I agree with them. However, the purpose of any future study is NOT to predict the future. Instead, it is to understand the alternative futures that might occur, and then prepare for them accordingly. Additionally, it is focused on the capabilities you will need to succeed in a future environment, rather than what specific strategy you should follow.

Scenario thinking can change the way you think about the future

Scenario thinking is my go-to process when I’m trying to future proof or prepare an organisation for an uncertain future. It’s not useful in situation where you know what changes are on the horizon or when conditions are relatively predictable. There are more straightforward approaches that can be used in these situations.?

However, where you are uncertain about the nature, likelihood and impact of change that will significantly affect your industry, scenario thinking is incredibly useful.?

Importantly, it enables 5 key shifts in the way you think, understand and prepare for the future.

Shift 1: Recognise you face multiple futures

In most uncertain environments, it is the complexity of numerous interacting factors that produce the uncertainty and change. These factors can interact with each other in multiple ways. Consequently, it is difficult to predict the precise direction and intensity of the change.

?Given this, there is a range of different ways in which the future can unfold. Therefore, we have recognise that there is rarely only one future. In most cases, we face multiple futures.

Shift 2: Let uncertainty be your friend

It is important to embrace uncertainty in the way we understand and prepare for the future. In many cases, uncertainty should not only be considered as risk, but also a space in which opportunity and change occurs.

In this way, an understanding of the uncertainties in your environment can act as a pathway to the way that the different futures might unfold.

Consider the following example in which a metropolitan area was considering the future requirements for their transport network. The two critical uncertainties were people’s need to travel, and their propensity to share transport.

By using these two critical uncertainties, it was possible to construct 4 alternative scenarios of the future.

Shift 3: Backcast - it’s more useful than forecasting

Much of conventional planning involves forecasting into the future. When we set a plan with several milestones into the future, we are, in effect, predicting the future. We are assuming that the conditions in the future will allow us to pursue and achieve those milestone goals.?

Because prediction is unreliable in uncertain environments, it is more useful to work from the future and plan backwards. Backcasting means we begin by understanding the conditions and requirements of the different futures, and then backcast these to the present.

?This allows us to prepare for the range of conditions we are likely to encounter in the future.

Shift 4: Build future capabilities to create resilience

Understanding the conditions in each of the future scenarios, allows us define the capabilities needed to be successful in each.

This is a key point mentioned in the introduction. Scenario thinking is focused on building the requisite capabilities for the future, rather than trying to predict what strategies may be required.

Clearly, there may be a wide range of these capabilities required across a range of future scenarios — and few organisations can afford to invest in all these capabilities at the same time.

?Instead, we find that as we backcast these capabilities to the present, there are a good proportion of these capabilities (20% - 30%) that are common, or nearly common, across all the scenarios. These common (or nearly common) capabilities represent the ‘low-regret’ bets to be made by the organisation. These capabilities are likely to be required across all the future scenarios, and are worthy of investment now.

Shift 5: Use divergent thinking

A real benefit of scenario thinking is that it facilitates divergent thinking. This is a critical phase in innovation or any creative pursuit. By relaxing the rules of logic and thinking in a non-linear manner, we are able make new associations and form perspectives that produce breakthroughs and insights.

In this way, the term ‘scenario planning’ is something of misnomer. By encouraging divergent thinking, scenario thinking is a creative way to set strategy. Planning, on the other hand, is a more logical and linear process that often drives out creative thinking.

Prepare for the future proactively

In a fast moving world, it is often costly to react after the change has occurred. Opportunities may be lost and it places you and the organisation in danger if you are unable to react quickly enough.

Scenario thinking, on the other hand, provides an understanding of the alternative futures that can occur. This allows an organisation (or individual) to prepare by building or acquiring those capabilities that will enable them to respond appropriately to future conditions. Proactive preparation will generally trump reactive responses.