Strategic Position 173
Although the prediction of future events is impossible, much of the uncertainty
of the future can nonetheless be made more intelligible and become subject to
more effective managerial decision making. To accomplish this, several different
scenarios can be created to capture the most plausible eventualities.
The creation of a scenario is a demanding task. It begins with an awareness of
important events and then seeks to understand them as part of broader trends,
some of which are largely inescapable and others which are uncertain. Once
a series of trends has been recognized and analyzed, then the task is to look at
the structural patterns and the causal forces and relationships that are producing
the trends. A scenario is produced out of these analyses. As Van der Heijden puts
it, “The scenario is a story, a narrative that links historical and present events with
hypothetical events taking place in the future” (1996, 213).
It is possible to trace, for example, the interlocking events, trends, and economic
and cultural realities involved in the extraordinary development and global
influence of the Internet, as Friedman (2005) has done in The World Is Flat. Those
analyses can then be combined with others to create scenarios on such topics as
the future of international scientific research or international student flows among
countries or economic development through information technology.
Although often misunderstood, the purpose of the process is not to develop
the best or most predictive scenario. Rather, the goal is to reduce uncertainty
to manageable proportions by developing several scenarios, each of which
is a plausible possibility for the future. The task is demanding because each
scenario must be internally coherent and based on good supporting information.
One cannot try to make things fit artificially simply to make a point. The causal
relationships in the scenario have to mimic the real world of interacting events,
trends, forces, and powers (Van der Heijden 1996). If they are able to do this,
they also serve the critical purpose of challenging the existing assumptions and
models of reality of the organization’s decision makers. We again find the theme
that organizations can learn best when they clear away outworn mind-sets.
Once several scenarios have been created, how are they to be used? They
function as a testing ground for strategy at a variety of different levels (Van der
Heijden 1996). The focus of scenario analysis can be to test a strategic vision,
a broad strategic initiative, a single project, or a major decision. Whatever the
level, its purpose is to assess whether the option in question is adequate to
meet the contextual challenges of each of the scenarios. If not, it will have to
be modified to function effectively under all the plausible conditions it may
face. Obviously, one or more of the scenarios may define conditions that are
more favorable for a given strategic option than the others. Yet the test of the
strategy against an adverse set of future circumstances prepares the organiza-
tion for success under a wide variety of contingencies. Based on its analysis, the
organization may decide that its proposal meets all the tests, or it may choose
to reconfigure aspects of its strategy in order to come to terms with various
threatening or opportune circumstances; or it could delay acting on the strategic
option until a later time or abandon it.