Scenario thinking for innovation and risk

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About 15 minutes into the film Lawrence of Arabia, where Lawrence (Peter O’Toole) and a travelling companion are resting at a well during an arduous trip through the desert.

 

It‘s an unusually long shot, with a peptic-looking Peter O’Toole and his guide out in the sun; far away, just perceptible on the horizon, a speck. It grows; something is approaching from a far corner of the screen. It keeps moving toward them.

 

What is it? A band of horsemen? Turks? Bedouins? They wait. They watch. They wait. Two men standing there, not knowing what to do about an approaching unknown. The shot keeps rolling.

 

What‘s visible, finally, is another man galloping in on a camel. Who is he? Mesmerized, they stand and watch, not knowing what is happening or what to do.

 

Finally, O’Toole’s companion suspects something terrible is about to happen, runs towards his own camel, grabs his revolver and…Bam!

 

From this desert specter, a rifle retort, and O’Toole’s buddy is dead. The camera is still rolling on the dead man. Omar Sharif climbs down from his camel, rifle in hand, walks over and says: “He’s dead.” O’Toole replies: “Yes…why?”

You are probably wondering, what is this introduction all about?

Have you worked it out?

It illustrates the paralysis that can result from facing uncertainty in a “predict and control” frame of mind, leading to panic reactions when time is up, mostly with less than optimal outcomes.

 

A “scenario thinker” may be able to overcome paralysis in such a situation. He or she will recognize the point beyond which the effort to work out what will happen produces diminishing returns, and will refocus sooner on a different question:

 

“What do we do if…?” and then: “What does this mean for what we do now?”

 

This approach requires keeping several futures simultaneously in the mind, which can seem difficult and uncomfortable to many “energetic problem-solvers.”

 

Therefore, critical to the success of risk management is sharing knowledge so as to bring in scenario thinking for innovation and risk management.  Scenario thinking, which can also be called scenario planning is a method of taking people outside their normal comfort zones and also bringing in alternative thinking to the strategic and risk management process.

 

I first began using scenario planning a few years ago where I had the pleasure of spending a few months firstly researching the process, including meeting some very esteemed individuals from research and corporate, and then implementing it.  Over the ensuing years I have continually used scenario thinking in all my endeavours.

 

Scenario thinking is not just for large organisations or for significant projects, scenario thinking can be applied to everything you do.  For instance, the creation of this site was my scenario thinking from almost 2 years ago.  I was thinking about the value in bringing to “paper” some of the thinking I had over the past 18 years of working in various roles ranging from accounting, audit, technology and risk, and how each of these areas were actually interlinked to each other.  During this time I was also looking for places where alternative thinking about risk and risk management was occurring and I could not locate such a place.

 

Scenario thinking can be used by any organisation to consider the future.  Consider the physical music industry and more recently the physical book industry.  If both of these industries had of performed scenario planning a number of years back, both would have actively considered the future potential of electronic “take-over”.  Then they could have considered that future and what actions they would have performed.  In this instance, perhaps the likes of Borders and Angus & Robertson here in Australia, would not have “missed” the opportunity to establish the electronic book industry, rather than now being a victim of it.  Worth considering.

 

Shell have been using scenario planning for years.  For anyone interested in close to “best practice” in scenarios, then have a look at their site.  Part of the process for them is to generate reports on their scenarios.  Some may ask why generate such elaborate reports?  Well, for me the answer is quite simply that by making them into reports (or some organisations create newspapers of their scenarios), then this makes them appear more “real” and also takes the participants into the “world of scenario thinking”.

 

There are many sources on the internet relating to scenario planning, a good place to start is here.

 

Some good examples of scenario planning are:
If you are interested in learning more or receiving some support in scenario thinking / planning then please contact us here in our Forums or through our contact form.

 

Cheers,

 

 

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Scott North has extensive experience in enterprise risk management, internal audit, operational risk and compliance, risk strategy, scenario planning, technology risk, technology business analysis, systems design, financial accounting, and management accounting. Scott is a Fellow of the Australian Institute of Chartered Accountants with a Masters Degree from the University of Melbourne in Business and Information Technology. Scott is also a Fellow of the University of Melbourne.

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