1. Disruptive Scenario Planning
Innovation Pioneers Tank meeting at the A-House, Stockholm

2. IP Soft – The Digital Labor Company
UK National Innovation Awards winner 2017
Amelia is a chat robot for customer service and support desks with cognitive learning capability
Most human artificial intelligence to date
In Sweden, used by for instance SEB and Telia
Other client include Cisco, Accenture and Deloitte

3. Automation and AI is going to decimate middle class jobs
Stephen Hawking, Scientist
AI and automation will create jobs
Ginni Rometty, IBM CEO

4. History of scenario planning
War game analysis by the US forces
Royal Dutch Shell used for oil prices prediction
Disruptive Scenario Planning at Googol
Herman Kahn, Hudson Institute
The “oil shock”
40’
50’
60’
70’
80’
90’
00’
10’
20’
Time
Rand corp
Strategic application planning in companies
Scenario planning spread globally

5. Military scenario planning
Key question to answer
Time & Scope
Stakeholders
Trend and force mapping
Finding key uncertainties
Force linking
Decision making
Quantitative methods dev’t
Scenario assessment
Scenario writing
Scenario definition
Extremes identification

6. Herman Kahn (1922 - 1983) Pierre Wack (1922 - 1997)
Pierre Wack (1922–1997) was an unconventional French oil executive who was the first to develop the use of scenario planning in the private sector, at Royal Dutch Shell’s London headquarters in the 1970s. So successful was he that the Anglo-Dutch oil giant was able to anticipate not just one Arab-induced oil shock during that decade, but two. His 1985 articles "Scenarios: Uncharted Waters Ahead"[1] and "Scenarios: Shooting the Rapids"[2] are considered among the first to bring the thoughts and theories of futurist Herman Kahn into business strategy.
Herman Kahn (February 15, 1922 – July 7, 1983) was a founder of the Hudson Institute and one of the preeminent futurists of the latter part of the twentieth century. He originally came to prominence as a military strategist and systems theorist while employed at the RAND Corporation. He became known for analyzing the likely consequences of nuclear war and recommending ways to improve survivability, making him one of three historical inspirations for the title character of Stanley Kubrick's classic black comedy film satire Dr. Strangelove.
Herman Kahn ( )
Pierre Wack ( )

7. Good example
The scenarios that the Shell Planning Group created enabled the company to shift investments from the expansion of production capacity to upgrading refinery output, years ahead of its competitors.

8. Bad example
On the strength of a single-point forecast IBM essentially outsourced the microprocessor to Intel and the operating system to Microsoft, choosing instead to focus on mainframes.

9. Five ways to envision the future…
Effect
Time
Forecasting of an ongoing development
Contingency planning if we stop doing something
Sensitivity analysis of one parameter at a time
Back casting
Hype/fad testing
Effect
Time
Effect
Time
Effect
Time
Effect
Time

10. …plus one more – Scenario planning
Footnote: Please note that the most likely scenario A+D is not dealt with, nor is A+E, A+F, D+B or D+C !
Changes several parameters at a time
Facilitates pattern recognition
Assists in decision making
Challenges prevailing mindsets
Effect of parameter 1
Time
Effect of parameter 2
Time

11. Disruptive vs non-disruptive scenarios
Disruption: An event that creates an… ”unplanned, often negative (?!) deviation from the expected delivery…according to the target of the organization”
A & D represents what we expect to happen
B,C,E and F represents the extreme and unexpected effects, sometimes created by extreme events, disruptions. Combined they form different disruptive scenarios.
Effect of parameter 1
Time
Effect of parameter 2
Time

12. Rehearsing the future to avoid surprises by breaking through the ”illusion of certainty”

13. Scenario ≠ Forecast Some DO NOTs
DO NOT estimate plausibility! Estimate uncertainty instead.
DO NOT focus on what you can’t control, focus on the effect on You and what You can do.
DO NOT expect that you will come up with a forecast, because that forecast will be wrong
DO NOT use scenario planning on sure changes or when the time frame is too short for paradigmatic change to happen
Scenario ≠ Forecast

14. WHY
Constructing a range of plausible futures to use as a backdrop for discussing strategies
Visualizes the complex world of the future in simpler ways
To increase the sensitivity of an organization to unfold the uncertain nature of the future
Facilitating contingency planning
Preparing the organisation for “any” future
Avoiding surprises
Heightening recognition of weak signals coming before changes
Finding/ identifying early indicators to look for
To be used in discussion whose success depends on an uncertain future
Prevents groupthink, especially on extrapolations
Compensates for 2 errors in decision making
Overconfidence
Tunnel vision
In that it prevents overprediction and underprediction of change

15. WHEN We know (knowledge) We don’t know We know (awareness) (awareness)
Things we don’t know that we know
Things we know that we know
We don’t know
(awareness)
We know
(awareness)
Things we don’t know that we don’t know
Things we know that we don’t know
We don’t know
(knowledge)

16. WHEN NO
is low
the uncertainty is high relative to the managers' ability to predict or adjust
…the company does not perceive or generate new opportunities
…the quality of strategic thinking is low or set back by bureaucrazy or routines
…the industry has experienced (or is about to experience) significant change
…the company wants a common language without stifling diversity
…there are strong differences of opinion on what way to go within the company
…the competitors are using scenario analysis…

17. Simplified strategy planning process
Key focal issue
Trends (PESTLEI)
Timeframe
Orientation
Driving forces:
Predetermined
Uncertainties
Ranking by LoU & I
Exploration
Framework 2x2
Catchy headline
Narrative
Plausible
Creation
Implications
Robustness test
Strategic options
Option
Mgmt. process
Backdrop for strategic decisions
Warning signals
Integration
Garvin and Levesque, 2006

18. Further simplified strategy planning process of today – our HOW
Decide key focal issue
Analyze key trends (PESTLE)
Set timeframe
Define uncertainties
Information gathering
Rank by importance
Identify extremes
Select pivot points
Use framework 2x2
Scenario structuring
Find catchy headline
Write narrative
Make it plausible
Scenario writing
Evaluate implications
Set warning signals
Start strategic work
Winning capabilities
Scenario usage
3 – 9 months including significant research, a series of workshops, senior management debriefings etc.
15 to 30 participants representing a cross-section of the company or organization but often also customers, suppliers, regulators, industry experts, academics and other relevant outsiders
Liedtka et al, 1995

19. Our demo case – “ABC Company”
ABC Company is a multinational company, based in the US, selling ITC products on a global market
They are using Linux OS as a base in their products and for their internal use as well
Their CEO, Umberto N. Certain (The Younger), among his staff nick-named Mr Uncertainty, has called for a review regarding their use of Linux Operating System in their products. As it is an open source software – will it continue, will it be developed, will it be expensive – all this has high implication on the future of ABC Company. What strategy should they apply…?
Scenario Planning is needed! ?

20. Information gathering regarding “Linux Strategy at ABC Company”
Key focal issue and time frame: “How will Linux affect our company, its customers, and suppliers around the globe over the next 10 years?”
Key trends: The key factors found were…
Customer push
Government mandate
Supplier push
Windows backlash
Copyright laws
Terrorist strike against Microsoft
Anti-American sentiment
Company profitability
Budget reductions
Vendor adoption
Application availability
Future of Linus Torvalds
Future of Bill Gates
Key uncertainties

21. Your workshop case – “Manning Ltd.”
Manning Ltd. is one of the oldest staffing companies in the UK
They have grown constantly since the start in 1910 and they never really thought that the future would be anything else than a prolongation of past success
However, their old chairwoman Fleur Foresight has recently seen a demo on how a chat robot replaced 60% of the staff at one of their largest clients in the telco industry and became worried about her company’s future
She calls for a comprehensive scenario planning and turns to the distinguished network Innovation Pioneers for help…
Not a recent picture of Fleur Foresight

22. “WS 0” Information already gathered for Manning Ltd
Key focal issue and timeframe: ”How will automation and artificial intelligence influence us in 10 years”
Key trends & their uncertainties (first 10 from Innovationsriksdagen 2017):
Artificial intelligence
Autonomous vehicles
Virtual reality
Internet of Things
Robots
Drones
eCommerce
Natural interfaces
Block chain
Genetic modification of humans
Urbanization
Immigration
Key uncertainties

23. Ranking by importance for “Linux Strategy at ABC Company”
Key uncertainties: The key factors from “WS 0” were…
Customer push
Government mandate
Supplier push
Windows backlash
Copyright laws
Terrorist strike against Microsoft
Anti-American sentiment
Company profitability
Budget reductions
Vendor adoption
Application availability
Future of Linus Torvalds
Future of Bill Gates
External push/ acceptance
Importance to us 4 1 10 2 3 11 9 8 7
Total cost of ownership 6 5
Uncertainty 12
The most critical uncertainties were these 2 groups:
External push/acceptance
Total cost of ownership 13

24. Selecting pivot points for “Linux Strategy at ABC Company”
The 4 scenarios are
In the “Niche market” Linux will play a minor role, it is cheap but the market don’t want it
In “Penguins rule” it is cheap and in high demand
In “Why bother” it is both expensive and unwanted
In “Penguins for profit” it is wanted and it has gone from Free of Charge to be rather expensive
The 4 scenarios are consistent
They could happen in 10 years
They axes are compatible
MS will not interact
Total cost of ownership (High)
“ Why bother”
“ Penguins for profit”
External push/
Acceptance (low)
External push/
Acceptance (High)
“ Niche market”
“ Penguins rule”
Total cost of ownership (Low)

25. WS 1 Scenario structuring for Manning Ltd, 60 mins
Ranking by importance
Define importance and level of uncertainty of your “uncertainties”
What relationships do they have?
How will they influence each other?
Cluster the most important uncertainties together and name both clusters (instead of U1 and U2)
Select scenario pivot points
Make the axes “digital”
Either they will happen to 100% or not at all
Create the 4 extreme scenarios
Check for consistency
Importance to us (high)
“U2” (Extreme point high) U1
Scenario 4 U2
Scenario 3
Uncertainty level
(high) U1
(Extreme point low)
“U1”
(Extreme point high)
Scenario 1
Scenario 2
U2 (Extreme point low)

26. The most effective scenarios have the following characteristics
Story: a vivid description is central to engaging each participant in this new world.
Decision-making power: provide insights useful to the question under consideration.
Plausibility: the future and events described must be realistically possible.
Consistency: without internal consistency, the scenarios will not be credible; each story must be logically generated to engage participants.
Differentiation: each scenario should be structurally or qualitatively different; expressing magnitude of change is not enough.
Memorable: easy to remember and differentiated; selecting scenarios with rich content is crucial.
Challenge: each must challenge the organization’s received wisdom about the future.

27. Scenario writing regarding “Linux Strategy at ABC Company”
Total cost of ownership (High)
“ Why bother”
Wall Street Journal, May 10th , 2027
The Rise and Fall of the Linux Dynasty.
Linux was officially declared dead today, as Linus Torvalds accepted the position of Chief Technical Officer at Microsoft. In a press release, Linux declared his complete abandonment of the open source version of the operating system that he created.
.The hurdles were too high to overcome,. Linus said. Its advantages were never accepted as significant enough to warrant the high costs of conversion and difficulty finding technical support. Torvalds indicated he was was working with Microsoft to find the next new technology
“ Penguins for profit”
Wall Street Journal, May 10th , 2027
Linux Ten Years Hereafter.
After years of litigation, Microsoft and Linux have reached parity with similar product lines and international support. While Microsoft still owns 50% of desktops, Linux and Microsoft share the transactions processing space. Linux has the majority of
middleware and mobile solutions. Although widespread
litigation, intellectual property issues and limited supply of skilled
workers had driven up costs, the technical superiority and
elegance of Linux continued to attract new users, especially as
vendors delivered new products to fit with both platforms
External push/
Acceptance (Low)
External push/
Acceptance (High)
“ Niche market”
Wall Street Journal, May 10th , 2027
Who Stuffed the Penguin?.
We can today derive some lessons for the future as we look back
at a platform that was heralded in 2003 as having great promise.
Open Source was an open question back then. Unfortunately,
the question was answered in large part by SCO prevailing in its
lawsuit regarding their Intellectual Property contained within the
Linux base code. Despite low costs associated with Linux, lack
of confidence in its future and few leaders in the field led many .
although not all -- companies to abandon their conversion efforts
“ Penguins rule”
Wall Street Journal, May 10th , 2027 .
Linux Dethrones MS.
In a move that just a few years back was not even a twinkle in
Linus Torvald.s eye, Linux finally surpassed Microsoft as the
dominant desktop and general-purpose operating system. As
major vendors entered the field with new applications, driving
down costs, more and more organizations and governments
began to adopt the technology. With a plentiful supply of skilled
technicians and improved security, Linux became the de facto
standard in the industry.
Total cost of ownership (Low)

28. Scenario writing for Manning Ltd, 60 mins
Uncertainty 1 (High)
“ Scenario 3”
Dagens Nyheter, May 10th , 2027
“ Scenario 4”
Dagens Industri May 10th , 2027
Uncertainty 2 (Low)
Uncertainty 2 (High)
“ Scenario 2”
Veckans affärer, May 10th , 2027
“ Scenario 1”
Göteborgsposten May 10th , 2027
Uncertainty 1 (Low)

29. Scenario usage regarding “Linux strategy for ABC company”
Total cost of ownership (High)
“ Why bother”
“ Penguins for profit”
Early warning signals
Fewer Linux vendors and suppliers primarily due to consolidation
Relatively no impact on customers, connectivity,
Strategies to use
Maintain legal awareness
Track the technology
Develop an exit strategy
Avoid acquisition of new Linux-based technology
Early warning signals
Vendors emphasize support and capability of Linux services; hardware optimized for Linux Operating System
Customers move from Microsoft to Linux, due to Linux’s superior technical performance
Connectivity . Applications must run on Linux platforms
Strategies to use
Maintain strategic relationships with multiple major Linux vendors
Leverage all options to minimize costs
Reassess existing portfolio to define conversion priorities
External push/
Acceptance (Low)
External push/
Acceptance (High)
Early warning signals
Fewer vendors and product offerings
Operating systems become irrelevant
Customers generally not driving toward Linux
Strategies to use
Maintain legal awareness
Track the technology closely
Identify areas for fit with Linux
Maintain Linux core team
Early warning signals
Lower prices; new vendors in the market
IT must respond to high demand for Linux-based systems; retraining and
budget impact
Applications required to interface with Open Source databases
Strategies to use
Migrate all systems to Linux environment
Re-evaluate applications architecture
Re-rationalize tools, frameworks, architectures and procedures for a Linux world
“ Niche market”
Total cost of ownership (Low)
“ Penguins rule”

30. Scenario usage for Manning Ltd, 60 mins
Uncertainty 1 (high)
Early warning signals
Strategies to use
Early warning signals
Strategies to use
Uncertainty 2 (Low)
Uncertainty 2 (High)
Early warning signals
Strategies to use
Early warning signals
Strategies to use
Uncertainty 1 (Low)