Part 3 — Core uncertainties.

Once you have explored the external environment and selected the most important "game changing" developments, you start searching within that selection for critical uncertainties that will form the basis of your scenarios. This is the crux of scenario thinking and at the same time the most counter-intuitive step. As humans we do not like uncertainty; we look for certainty. A common reaction to uncertainty is therefore often to ignore it. Hardly a good strategy, because our world is uncertain. Taking every uncertainty into account is not healthy either. It leads to paralysis, like the donkey in the philosopher Buridan's thought experiment. It could not choose between two bales of hay and starved to death. With scenarios you try to find a middle way: you go looking for uncertainties that could drastically change your operating environment. By thinking these through in scenarios (the next step), you can anticipate and make future-proof choices.

Critical uncertainties form the basis of scenarios. We have good experiences with scenarios that are built on an axis cross with two critical uncertainties. You do not have to limit yourself to two, of course, but bear in mind that with every uncertainty or axis you add, the number of scenarios doubles. If you choose four critical uncertainties as the basis, you get 2x2x2x2, or 16, scenarios. Try working those out and then discussing them. You will not become much wiser. From experience we know that four scenarios is really the maximum for a good strategic discussion together.

To arrive at that, you will first have to go through two steps. The first is analysing your "net list" of trends to know which critical uncertainties are possible. The second step is actually choosing an axis cross, because several are often possible. The axis cross is like scaffolding on a building site. It is needed to build properly, but at the end you should remove it and have a solid house standing. The same applies to scenarios. The axis cross forms the starting point for thinking through several possible futures, but ultimately every story of the future should be perfectly readable and plausible once you remove the axis cross from view.

Analysing for possible critical uncertainties

A possible critical uncertainty should meet three criteria: 1. high impact, 2. high uncertainty, 3. high causal influence. You filter your "trend complex", your "net list" of external developments, against these.

Want to know more about this trend analysis and the final choice of an axis cross as the basis for scenarios? Download the article here.

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Jeroen Toet is a senior strategist at Jester Strategy and co-author of the book Scenario planning in practice. For more than 10 years he has been helping organisations in the private and public sector make future-proof choices through a range of foresight methods, including scenario planning.

Questions about the article? Please contact Jeroen: j.toet@jester.nl or 06 11 451311.