If you’ve been following my exploration of strategy and foresight tools, especially scenario planning and the Value-Creating Systems approach, you might have seen or heard me talking about Pierre Wack.
This French business executive brought a philosophical approach influenced by Sufi mysticism into the oil industry, and changed the way businesses look at the future by pioneering the use of scenarios at Royal Dutch Shell. As the Economist put it, “So successful was he that the Anglo-Dutch oil giant was able to anticipate not just one Arab-induced oil shock during [the 1970s], but two.“
Following Wack’s retirement from industry, he taught at Harvard Business School and contributed to the development of South Africa’s post-apartheid future through scenario planning.
The Saïd Business School’s Oxford Futures Library includes Wack’s archive, and they’ve posted a video of one of his 1980s lectures online.
The video quality isn’t great, but the lecture is easy to follow and it remains an elegant, relevant, and compelling articulation of how scenarios benefit any organisation that wants to think about its future.
You can watch the full 55-minute video above or watch Wack’s lecture directly on Vimeo. I’ve included some bullet points and intepretation from my viewing below – to whet your appetite for the full lecture, or to offer you a summary. (Just remember, as Wack might say, there are no short cuts to wisdom).
- “To create, rather than just preserve, value, a firm must discover the forces at work in its social, technological, and economic world and move to make those forces work for it rather than against it” – Wack citing Richard Rummelt
- Most of the time, forecasts are quite good. This is what makes them so dangerous: forecasts fail you just when you need them most. Forecasts fail to anticipate major changes and major shifts in the context in which you operate.
- Scenarios are devices for ordering one’s perceptions about alternative environments in which one’s decisions might be played out.
- Strategies derive from our mental model of the world. We plan, not in order to create a document full of forecasts, but to change the mental map of decisionmakers and make us take responsibility for our worldview. A scenario doesn’t need to be “proven right” as a prediction, it needs to usefully change your mental model.
- You only need scenario planning when the speed of change of the business environment is faster than your own speed of reaction.
- The most dangerous forecasters are those who have just been proven right, because most probably they were right for the wrong reason.
- Usually there will be a “surprise-free scenario” – the future which management expects. Scenario planners should include this in their offer so that their presentations do not seem threatening. It is usually easy to show how fragile the surprise-free scenario is, however.
- Scenario planning is not crystal ball gazing, it is about working out the implications of events which have already happened and are still emerging. If heavy rain falls at the upper part of the Ganges basin, then you’ll see the consequences in two days time downstream at Rishikesh; in three or four days at Allahabad; and then at Benares two days after that. You are recognising the future implications of events which have already occurred – and your focus should be on understanding the forces which drive the system.
- Understanding these factors is key. At Shell, articulating the scenarios – the future visions or stories themselves – was a small proportion of the time spent with executives. Once the scenarios had been presented to leaders, the rest of the time focussed on understanding and exploring the factors.
- Compared to number crunching, scenario planning is fun. It forces planners to take account of a wider context and a richer vision of what awaits them than a mere line on a graph.
- Scenarios should permit you to exercise your judgment: if this future were to transpire, what would you do about it? Scenarios are intended to inform action, not just generate intellectual interest. They are focussed, reducing complexity, allowing you to be creative with the relevant information.