Whether you call it a ‘polycrisis’ or a ‘permacrisis’, there is no doubt that we are living in an age where multiple crises are unfolding simultaneously, many of which will occupy us for a long time.
With the future holding unknown possibilities, scenario analysis is a useful tool to bring people together to think creatively -without bias – about the future.
Scenarios have been used since ancient times, and more recently, by companies such as Shell to consider multiple versions of the future to help make decisions and inform strategy.
The biggest misconception around scenarios is that they are about predicting the future. This is not the case. It’s impossible to forecast the future with any accuracy and, in a world of multiple crises, the crystal ball gets even foggier.
Take the example of the rapid development of generative AI, which has occupied many executives since Microsoft-backed Open AI’s ChatGPT was launched last November. Since then, a whole range of worst-case scenarios have proliferated, with people predicting a dangerous race to the bottom, and the end of privacy and free will. On the other hand, there are more optimistic scenarios such as greater shared economic prosperity and more fulfilling jobs. The risk is that the imperfect use of scenarios will end up causing even greater uncertainty.
Four types of scenarios
So what are scenarios and how can you best go about using them?
One way to think of them is as a script outlining the setting and the scenes of the future. They are used to analyze the impact of something on a target area, for example the impact of a technology like AI on the labor market. Executives should ask themselves two questions:
- What opportunities and threats do you see for your company?
- How can you thrive in these futures?
There are four types of scenarios: