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Scenario Methods

There are many different ways to develop scenarios. The three most commonly used - mainly because they are reasonably easy to create, but nevertheless provide great insights - are Four Archetypes, Shell, and the 2x2 Matrix.


A great summary of these is provided on Medium by Alex Fergnani, published in June 2020. See the original article here (a signup to Medium is required), or watch the Video version on YouTube (also embedded at the bottom of this page), or a summary (especially of the 2X2 matrix) below:


"In this article I will attempt to lift the very thick veneer of confusion, often found in online reports, practitioners guides, journal articles, and futures & foresight videos and courses, about three major scenario planning methods: the 4 archetypes method, the Shell approach, and the 2x2 matrix. I will demystify and explain how the scenario narratives creation process is carried out with these methods using evidence. I will compare them and explain when, based on my personal experience, you should use which method. I’ve chosen these methods as they are arguably the most widely used but also misunderstood scenario planning methods. They also have a lot in common, despite the fact that the 4 archetypes is often considered an “alternative futures” technique rather than a “scenario planning” technique. Indeed, they all aim at exploring the limits of plausibility of the future, they all aim at creating explorative rather than normative scenarios (although they can be used normatively); and they all aim at increasing awareness and learning about possible futures to mobilize action in the present.


4 Archetypes

The 4 archetypes method was originally developed by Jim Dator at the University of Hawaii at Mānoa [1]. This method is also known as the 4 generic futures [1,2] or the method of the Mānoa School of futures studies [3]. ... When we create scenario narratives using the 4 archetypes method, we have to go through four major steps:


1.First, we identify the driving forces of change affecting the future with independent research [6]. Driving forces are phenomena and trends in the environment that, due to their recurring nature, have a consistent effect on the future, such as technological and social changes (in this article/video, I demystify the various techniques to collect driving forces in a future & foresight process).


2. Second, we give a value to the driving forces, that is, we determine their direction [6]. For instance, in which direction are developments in AI technology going?


3. Third, we interpret the behavior of the driving forces in the four predetermined archetypal images of the future that give the name to this method: continued growth, collapse, discipline, and transformation [1, 6]. Continued growth is a future of continuation and enhancement of the current trajectory, but also of current problems. An expansion of the present. This future is very similar to business as usual (BAU), but not exactly the same. BAU is the continuation of the present, not a continuation of its trajectory. Collapse is a future where the system reaches its limit and collapses. Discipline is a future of equilibrium. A steady state civilization focused on sustainability. Transformation is a future of radical departure from the present due to a transformative event or phenomenon, either spiritual or technological, where the very concept of being human is redefined [1, 2]. Interpreting the behavior of the driving forces using these four archetypes means that for each archetype we ask the question: “how would the set of driving forces identified behave, together, if this archetype were to occur?” [6].


4. In the final step, we write scenario narratives based on the above interpretation [1, 6]. However, a key feature of this method is that the scenarios cannot be completely produced by our own imagination. We need to support each scenario with references such as reports, speculations, projections, and fictions, which actually had envisioned the four generic archetypal futures before [6].


...


The Shell Method

The shell method was originally developed by the Royal Dutch/Shell company and popularized by Peter Schwartz, a former head of scenario team at Shell, in his book The Art of the Long View [9].


....


The 2x2 Matrix

... Creating scenario narratives with this method consists in a very comprehensive procedure made of six steps:

1.First, we identify the driving forces affecting the futures through research, usually in workshop settings. Participants are asked to work initially by themselves, and then to break out in small groups, to find as many driving forces as possible [13, 14].


2. Second, we cluster the driving forces in groups of driving forces that have a high mutual impact on each other [13, 14]. For instance, developments of artificial intelligence, increases in computing power, and the decrease of its cost could be clustered together.





3. Third, we determine the extreme behaviors of clusters along a continuous axis, that is, we ask: “what would the two extreme behaviors of the clusters be if they were to go upwards and downwards?” These extreme behaviors are called factors [14].




4. Fourth, we rank these factors on two measures, impact and uncertainty, with the goal to find the two or three most impactful and uncertain factors [14].




5. In the fifth step, we locate these two or three factors on a matrix [13, 14]. If we choose two factors, we will have four corresponding scenarios. If we choose three factors, we will have eight corresponding scenarios. The fact that most of scenario planners choose two factors made this the 2x2 method, but we can also have three axes. However, in this latter case, some of the axes’ combinations might be illogical, or it might make sense to merge one or more scenarios as the combinations produce very similar scenarios, so it will be our task to appropriately reduce the eight scenarios according to circumstances to a more manageable number, which might or might not be four.




6. In the final step, we create scenario narratives based on the constraints of the produced matrix [13, 14].


When we create scenarios using this method we need to be very careful not to forget the driving forces that we had identified but were not chosen as critical uncertainties. In other words, for each scenario, we will have to consider the behavior of not just the forces along the matrix, but also of those forces outside of the matrix given the constraint of the matrix in that particular scenario quadrant.


The Three Methods Compared: When to Use Each Method?

The three methods have structural differences that determine which one should be used when we practice foresight in an organization. The 4 archetypes method and the 2x2 method are deductive. The former is deductive because it pre-imposes archetypal images of the future before creating scenarios. The latter is deductive because it pre-imposes factors, also often called “critical uncertainties” by borrowing from the Shell approach language. This is different from Shell, which is primarily an inductive method because scenario narratives emerge from the data without categorical imposition beforehand. Primarily inductive because Peter Schwartz wrote that this process can also be facilitated by attempting to fit the data, that is, the critical uncertainties, driving forces, and predetermined elements, into some common plots, such as winners and losers, challenge and response, and evolution [9]. Winners and losers is a future of contentions due to a widespread mindset of resources’ scarcity; challenge and response is a future of strong environmental imbalances, where organizations are tested in their ability to adapt; and evolution is a future of incremental systematic growth [9]. It therefore appears that at least in the way Schwartz conceptualized it, the Shell method can be considered a hybrid between inductive and deductive scenario planning.


Given these structural differences, how do we determine when to use each method? The 4 archetypes method has been documented to be very quick to apply, as pre-imposing the 4 archetypes in a scenario planning process allows groups of individuals to quickly create or experience possible scenarios in a rather straightforward manner [5]. The 4 archetypes are also quite creative and frame-breaking. Indeed, this method has been documented to enhance creativity [4]. However, this method might not work with all groups. In my personal experience I have noticed that it works best with younger audiences and audiences that are already familiar with disciplines such as storytelling and design. This kind of audiences will very easily connect with the archetypes and start playing around with them. On the other hand, if our audience consists of a group of senior corporate executives, scientists, or engineers, the 2x2 method might be more appropriate. If practiced correctly, 2x2 is a very comprehensive process made of many steps. This gives off a feeling of model maturity, model legitimation, and model rigor, which will make the scenario planning process more easily accepted by such audiences. But these guidelines are not watertight. If our audience is a diverse group, or composed by younger executives, startup founders, entrepreneurs, or social scientists, the 4 archetypes might be our best pick.


In sharp contrast with the 4 archetypes method is the Shell method, which involves an open ended dialogue about the futures without clear indication on when the scenario planning process will end. Although the quality of the deliverable of such a thorough process can be high, I personally believe that this method requires a commitment of time and resources that goes beyond what organizations practicing foresight today are willing to commit to. Today’s organizations wish to use the output of foresight practice in a rather expedited manner. This explains the recent success of more engaging foresight methods such as futures games (see this article/video on futures games). With futures games, we can carry out a complete foresight process in a very limited time frame while maintaining the engagement of the audience. With Shell, we risk losing that engagement.


Moreover, it has to be noted that Shell doesn’t share its methodological expertise in detail. For instance, we know that scenario planners at Shell create global scenarios, local scenarios, as well as more focused, product line scenarios. However, the detailed process by which this is carried out in practice has not been documented in the scenario planning literature. So if we choose to create scenarios with the Shell method, we are left to follow a rather incomplete guide, which is Peter Schwartz’s book.


....


Finally, I want to emphasize that this is my opinion as a scenario facilitator, rather than the result of research. Any scenario planning method, including those not mentioned in this article, can be fruitfully used to achieve predetermined goals, if the context is appropriate.


To see articles like this more often, you can support Alex’s videos/articles here: https://www.patreon.com/alexfergnani?fan_landing=true


References

[1] Dator, J. (2009). Alternative futures at the Manoa School. Journal of Futures Studies, 14(2), 1–18.

[2] Bezold, C. (2009). Jim Dator’s Alternative Futures and the Path to IAF’s Aspirational Futures. Journal of Futures Studies, 14(2): 123–134.

[3] Jones, C. (1992). The Manoa School of Futures Studies. Futures Research Quarterly, 8(4): 19–25.

[4] Curry, A., & Schultz, W. (2009). Roads Less Travelled: Different Methods, Different Futures. Journal of Futures Studies, 13(4), 35–60.

[5] Serra Del Pino, J. (1998). The challenge of teaching futures studies. American Behavioral Scientist, 42(3): 484–492.

[6] Bengston, D., N., Dator, J., Dockry, M., J., & Yee, A. (2016). Alternative Futures for Forest Based Nanomaterials: An Application of the Manoa School’s Alternative Futures Method. World Future Review, 8(4): 197–221.

[7] Dator, J. (2014). “New beginnings” within a new normal for the four futures. Foresight, 16(6): 496–511

[8] Fergnani, A. (2019). Scenario archetypes of the futures of capitalism: The conflict between the psychological attachment to capitalism and the prospect of its dissolution. Futures, 105: 1–16.

[9] Schwartz, P. (1996). The Art of the Long View. New York, NY: Doubleday.

[10] Ramirez, R., & Wilkinson, A. (2014). Rethinking the 2 × 2 scenario method: Grid or frames?. Technological Forecasting and Social Change, 86: 254–264.

[11] Wack, P. (1985a). Scenarios: uncharted waters ahead. Harvard Business Review, 63(5): 73–89.

[12] Wack, P. (1985b). Scenarios: shooting the rapids. Harvard Business Review, 63(6): 139–150.

[13] Chermack, T. J. (2011). Scenario planning in organizations: How to create, use, and assess scenarios. San Francisco. CA: Berrett-Koehler.

[14] Cairns, G., & Wright, G. (2018). Scenario thinking: Preparing your organization for the future in an unpredictable world. London, UK: Palgrave Macmillan.




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