How Emotion-Sensing Technology Can Reshape the Workplace

As companies search for new ways to improve performance, some executives have begun paying attention to developments in emotion-sensing technologies (ESTs) and software fueled by artificial emotional intelligence. Although we are still in the early days, research shows that these technologies, which read such things as eye movements, facial expressions, and skin conductance, can help employees make better decisions, improve concentration, and alleviate stress. While important privacy issues need to be addressed, the opportunities are significant.

Consider the technology developed by Koninklijke Philips Electronics N.V. and ABN AMRO Bank N.V., both based in Amsterdam, to reduce trading risk in financial markets. Research has shown that traders in heightened emotional states will overpay for assets and downplay risk, a condition known as “auction fever” or “bidding frenzy.” To address this problem, the companies jointly developed a tool called the Rationalizer that has two components: a bracelet attached to the trader’s wrist that measures emotions via electrodermal activity (similar to the way a lie detector works) and a display showing the strength of the person’s emotions using light patterns and colors. Researchers have found that when users become aware of their heightened emotional states, they are more likely to rethink their decisions. In addition to helping individuals improve performance, the aggregated data from such settings can help managers understand how internal and external environmental factors influence the risks taken by groups.

Individuals are also more prone to make mistakes when they are not paying enough attention. Although multitasking has become standard in many jobs, there are some activities, such as air-traffic control and fast-paced buying and selling, where maintaining one’s undivided attention is critical. In a high-profile foul-up in 2005, a trader working for Mizuho Securities Co. in Tokyo intended to sell a single share of a stock it owned for about 610,000 yen (which was approximately $ 5,000). By mistake, he placed an order to sell 610,000 shares for one yen. The company was unable to cancel the sell order, leading to an estimated loss of $ 224 million.

Although such egregious blunders are rare, the story speaks to how important it is to hold the attention of employees involved in high-stakes activities. ESTs can help people improve their focus, often with relatively minimal technological investment. For example, recent research has found that slow or uneven cursor movements can be an indication of distraction or negative emotions. Detection doesn’t require installing expensive hardware, but rather just some additional code or software to computers or smartphones.

Professional athletes have been early adopters of tools that can help people sharpen their focus to gain a competitive edge. Major League Baseball All-Star Carlos Quentin, National Basketball Association All-Star Kyle Korver, and Olympic gold medal swimmer Eric Shanteau are among those who have used special headsets produced by San Francisco-based SenseLabs Inc. to monitor cognitive performance and develop customized training aimed at shoring up their personal weaknesses. Microsoft Corp. has also conducted research on the use of wearable sensors in an effort to understand, among other things, what work activities are associated with changes in emotion and when people working on certain types of tasks should take breaks.

In settings where employee engagement is critical, the ability of managers to recognize boredom is vital. Assuming that data can be accessed without compromising privacy or anonymity, managers will soon be able to watch for signs of boredom in an underperforming team and take steps to counter it. Indeed, researchers at Telefónica I+D in Barcelona have developed an algorithm that analyzes smartphone activity for such signs. On the basis of a combination of data points — including how often users check their email, whether they log in to Instagram, whether they are adjusting their device settings, and how much battery power they consume — the algorithm correctly identifies user boredom more than 80% of the time. It can tell when employees use their phones to pass the time as opposed to pursuing specific goals.

In light of such discoveries, managers can seek to redesign processes that induce boredom or alternate them with other activities that employees find more engaging. ESTs, moreover, might help managers figure out which work schedules work best for particular teams: Employees in one group may be most productive in the early morning, while another group may do better later in the day. Meeting schedules could be organized to take advantage of this information.

Reducing Stress and Burnout

Although some types of stress can help people focus, research shows that too much stress is detrimental to productivity, creativity, and job satisfaction, not to mention psychological and physical health. What’s more, stress can reach harmful levels long before people are aware of it. In some organizations, human resources departments try to monitor stress levels using surveys. But surveys don’t necessarily capture how employees actually feel, in part because people don’t always know when their stress levels are elevated. Having a tool that provides a quantifiable, objective measure of stress would be extremely helpful.

As with tools to improve decision-making and focus, numerous options are available, including smart watches and fitness trackers that detect stress by measuring changes in heart rate and sweat (through what’s known as electrodermal activity). These measures can identify small changes that users themselves don’t notice. And as with algorithms that monitor smartphone usage for boredom or cursor activity for distraction, stress-related information can also be drawn from the hardware that people are accustomed to using every day. For example, a study by MIT’s Affective Computing Lab found that computer users who were under stress pushed harder on keyboard keys and held the mouse more tightly. Other research has found that it’s possible to detect stress-related surges in heart rates by monitoring the changes in the light reflected off users’ faces with an ordinary webcam.

We have found that there can be important benefits to monitoring stress at both the individual level and across the organization. At the individual level, managers can learn when people are under sustained pressure (and therefore more susceptible to recklessness, burnout, or conflict with others) and take steps to help ameliorate such situations. At an organizational level, measuring physiology (for example, heart rate or electrodermal activity) can help managers identify stress “hot spots” among teams and functions. Using wristbands or webcams, for example, managers can pick up on problems relating to excessive workload or interpersonal conflict and respond to them, often before employees are aware they exist. Employees may be spinning their wheels on frustrating, unproductive activities (for example, arguing over who has responsibility for specific tasks). Having access to this data might allow managers to create a “heat map” indicating where the problem is concentrated.

Addressing the Barriers

As companies become interested in ESTs, they will need to address barriers related to cost, complexity, and issues of privacy. (See “Implementation Barriers for Emotion-Sensing Technologies.”)

The cost- and complexity-related barriers seem to be relatively straightforward — both have been declining, and numerous low-cost/low-complexity options are already available. Allaying the privacy concerns, however, will be trickier. Many employees are highly skeptical of monitoring technology and uneasy about how ESTs might be used. A fundamental issue is who will get to see the data and whether the data will be broken down individually or aggregated across groups. Such concerns are understandable given that much of the value will come from measuring and managing aspects of behavior that people are unable (or perhaps unwilling) to self-report. Even if all parties agree to common rules for consent, anonymity, and personal well-being, there are lingering issues. For example, what happens if ESTs uncover medical issues that individuals aren’t aware of or wish to keep private?

One can speculate that privacy concerns will become less problematic when the people being measured are the beneficiaries and when disclosure is voluntary. But even then, there are dicey issues, such as whether an employee interprets feedback in an unexpected way or overadjusts to correct behaviors. With that in mind, managers can attempt both to maintain oversight and to reduce employee concerns by doing the following:

  1. Be sensitive to employee concerns. Prepare your organization for using ESTs through education and transparency. Explain how the tools can benefit employees by reducing stress and risks of burnout. One potentially useful strategy, known as BYOD, involves inviting employees to bring their own devices to work. Under this scenario, individuals maintain a sense of ownership over the deployment of ESTs and the data they are gathering.
  2. Develop data governance agreements. Employees should have sole control over their personal emotional data and be able to stipulate what types of usage are permitted (for example, data can be used only on an aggregate level, and no one can drill down into individual data signatures).
  3. Similarly, assure employees in written agreements that emotional data will be used only for specific business goals. For technologies that rely on broad-stroke measures, such as webcam-based emotion detection, data gathering and analysis should be directed toward highly specific and well-defined outcomes.

As long as organizations operate responsibly, we believe employees will gradually become comfortable with the gathering and analysis of physiological, behavioral, and emotional data. Although this won’t happen overnight, several trends suggest that trust can be built over time. Millions of individuals already use smart watches and fitness devices like Apple Watches and Fitbits, and many people share their workout and nutrition data openly on social media. Social media itself has conditioned us to accept and even embrace new levels of personal transparency. The challenge will be to introduce new devices and measures into workplaces in a way that empowers performance, mitigates privacy concerns, and generally reassures employees that the benefits are mutual.


MIT Sloan Management Review

Blockchain, AI And Wireless Technologies Will Reshape Digital Business In 2018

Blockchain, Machine Learning, Robotics, Artificial Intelligence And Wireless Technologies Will Reshape Digital Business In 2018

Blockchain, Machine Learning, Robotics, Artificial Intelligence And Wireless Technologies Will Reshape Digital Business In 2018

Dimension Data says Blockchain has immense potential to disrupt and transform the world of money, business, and society.

Blockchain, together with artificial intelligence, machine learning, robotics, and virtual and augmented reality, have the potential to deliver disruptive outcomes and reshape digital business in 2018.

And companies that have not started the digital investment cycle are at high risk of being disrupted.

This is according to the list of top IT predictions for 2018 published today by Dimension Data. But the top trend for the coming year is the adoption of Blockchain – the technology behind Bitcoin – and its immense potential to disrupt and transform the world of money, business, and society using a variety of applications.

Ettienne Reinecke, Dimension Data’s Group Chief Technology Officer, says Blockchain has gone from strength to strength. “Last year, when we looked at the top digital business trends for 2017, we predicted that centralised transaction models would come under attack. We were spot on. In the financial services sector, we’ve seen the US and European capital markets moving onto Blockchain platforms, and similar activity in markets such as Japan. Considering how conservative and compliance-focused this sector is, that’s quite remarkable.”

“It’s ironic that the cybercriminals who perpetrated the recent WannaCry ransomware attack could hold a federal government to ransom and demand to be paid in Bitcoin. Bitcoin might be a crypto-currency, but it’s based on Blockchain, and if cybercriminals are confident that Bitcoin provides a safe mechanism for the payment of ransoms, it indicates just how secure the distributed ledger approach is. I believe that Blockchain has the potential to totally re-engineer cybersecurity, but the industry has yet to come to terms with it.”

Reinecke predicts that Blockchain will also deliver on the promise of Internet of Things (IoT) in the year ahead.

“In the world of IoT you’re generating millions of small transactions that are being collected from a distributed set of sensors. It’s not feasible to operate these systems using a centralised transactional model: it’s too slow, expensive, and exclusive.”

“To extract the true value from IoT technology you have to be able to operate in real time. Once a sensor alert is received from a control system you must react to it, meter it, and bill for it instantly – all of which negates the viability of a centralised transactional authority. The cost of the transaction has to be near-zero or free, and the cost elements of a centralised model simply don’t support the potential business model in IoT,” he explains.

In 2018, some interesting applications of Blockchain and IoT in the area of cybersecurity will emerge. Significant attacks have recently been launched from low-cost IoT endpoints, and there’s very little incentive for manufacturers of these devices to incur the cost of a security stack, which leaves them extremely vulnerable. Blockchain can play a fundamental role in securing these environments.

Another exciting trend to look forward to is the boom in new wireless technologies that will enable IoT and bring us a step closer to the dream of pervasive connectivity. Some of these advancements will include 5G and Gbps Wi-Fi, new controls, virtual beacon technology, and low power, long distance radio frequency.

There’s also a “digital fight-back” coming on the part of certain incumbent players. Established businesses that have proactively transformed into digital businesses, modernised their architectures, and embedded high levels of automation into their operations have a window of opportunity to claw back market share in the year ahead. That’s because there’s been an increase in the number of cloud-born start-ups themselves starting to be disrupted in certain industries.

“I predict that a number of digitally transformed incumbents will successfully start reclaiming their markets because they have more credibility, longer histories, an established customer base, and assets that can stand the test of time,” says Reinecke.

The post Blockchain, AI And Wireless Technologies Will Reshape Digital Business In 2018 appeared first on IoT Business News.

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Using Scenario Planning to Reshape Strategy

In recent years, organizations have been caught off guard by economic volatility, unexpected political events, natural disasters, and disruptive innovations. In response, we are seeing increased interest in scenario planning. Rather than tying their company’s future to a strategy geared to a single set of events, many senior executives are coming to the view that smart management benefits from a richer understanding of the present possibilities afforded from multiple views about possible futures.

Scenario planning came to prominence following World War II and gained recognition in the corporate world in the late 1960s and 1970s, around the time when Royal Dutch/Shell used it to help address the turbulence1 caused by the 1973 oil crisis. While several different approaches to scenario planning have emerged since then, this article focuses specifically on what we call the Oxford scenario planning approach.2 This approach is intended to be collaborative in order to get individuals and groups at all levels and functional backgrounds within an organization to examine an array of factors that contribute to the future and, in the process, to reframe their collective understanding of the present. (See “About the Research.”)

Unlike approaches to scenario planning that take a probabilistic stance (that is, making predictions in percentage terms or as best-case/worst-case scenarios3) or a normative stance (that is, envisioning what a future should look like), the Oxford scenario planning approach is based on plausibility. By recognizing the part of uncertainty that is unpredictable4 and by actively exploring the sources of the turbulence and uncertainty, the goal is to iteratively and interactively generate new knowledge and insights to help organizations reperceive their circumstances.5

During periods of turbulence, unpredictable uncertainty, novelty, and ambiguity (what the Oxford scenario planning approach refers to as TUNA conditions), organizations frequently experience serious challenges that threaten existing value chains, communities, and even whole fields of endeavor. Such conditions can be unsettling and destabilizing on many different levels. But they also present opportunities for organizations to reframe their strategies and innovate.6

A core feature in the Oxford approach is making a distinction between the immediate business environment an organization inhabits (where business transactions take place) and the broader environment, or context, in which it operates.7 In principle, our approach focuses on two layers. The first layer is the immediate business environment and includes a company’s suppliers, customers, competitors, partners, and other stakeholders. The second layer is made up of all the factors that are beyond the organization’s direct influence. Scenario planning is about exploring how the second layer might transform the first layer. (See “The Role of the Contextual Environment in Scenario Planning.”)

In recent years, the Oxford approach has been used to examine a variety of circumstances, including the future of retailing in India, the tourism industry in Mexico, the changing environment in global shipping,8 and the future role of the European Patent Office.9 Our experience shows that different organizations have gone about scenario planning in different ways — there is no cookie-cutter method. Nevertheless, we have found that there are a handful of best practices that the most effective scenario planning processes use. First, they draw on the knowledge and perspective of a broad cross-section of parties, both inside and outside the senior management team. Second, both the participants and the organization are willing to invest time and resources to gain insights.

And third, successful scenario planning processes are committed to examining and understanding plausible futures as opposed to probable futures. In turbulent and uncertain conditions, it is impossible to assign precise probabilities to possible scenarios.10 As a result, the Oxford scenario planning approach eschews assigning probabilities to scenarios and instead focuses on identifying and developing scenarios that the group finds plausible, challenging, and useful. Each scenario consists of a story that relates to possible changes in the larger contextual system in which an organization operates.11

In this article, we examine two cases in which the Oxford approach to scenario planning was used. The first case involves Rolls-Royce plc, a leading supplier of power systems for aircraft and the marine and energy markets; the second case looks at the Royal Society of Chemistry, a London, U.K.-based international organization involved in advancing the field of chemical sciences. In addition to showing how these organizations used scenario planning, we will discuss the challenges and opportunities of scenario planning more broadly. (See “Putting Scenario Planning to Work.”)

Scenario Planning at Rolls-Royce

Rolls-Royce was founded in 1906 to produce quality cars in the United Kingdom. Although Rolls-Royce Holdings plc is no longer in the auto business (that operation is owned by BMW AG), it is currently involved in the design, manufacturing, and distribution of power systems for aviation and other industries. With underlying revenue of £13.8 billion and about 50,000 employees,12 the company has 50% of the wide-body airliner propulsion market. Rather than selling the equipment outright, it generates much of its revenue by selling power services by the hour to aircraft operators.13

Rolls-Royce avoided the worst consequences of the 2008 financial crash, thanks to its substantial order book and the stability of its aftermarket service business, but in early 2014 the company ran into difficulties. These involved a cyclical decline in wide-body airliner orders, the slowdown in the growth rate of the Chinese economy, and the end of a commodities boom, which impacted the corporate jet business. Also, oil price declines affected both the marine and energy markets, and the company’s civil nuclear power business suffered in the wake of the accident at a nuclear power plant in Fukushima, Japan, in 2011. While these events were mostly unrelated, they affected every aspect of Rolls-Royce’s business. During 2014 and 2015, management issued five profit warnings, and the share price fell more than 50%. An activist investor bought just over 10% of the stock, and there were calls from some commentators to break up the company.

The arrival of a new CEO in July 2015 greatly intensified the company’s search for ways to improve its prospects. That summer, several dozen of the company’s top managers participated in an executive education course at Oxford University. One of the early sessions focused on scenario planning. Based on what the executives heard, some of them began to lobby internally within Rolls-Royce for a company-wide scenario planning process. The idea was to catalog significant factors that might affect Rolls-Royce by the year 204014 and to develop a set of strategic questions. Management agreed to pursue this course, and over the next few months, management, in conversation with board members, began working with some of the authors of this article to design and run a program for developing and reviewing a set of future scenarios.

Process

To kick off the process at Rolls-Royce, about 25 mid- and senior-level Rolls-Royce executives were selected from different business units, functions, and locations. In preparation for a three-day workshop slated for early 2016, this group was asked to begin studying a wide range of topics deemed to have relevance to the company’s future. Among the topics: the future of Moore’s law; tools for detecting counterfeit parts (and the distinctions between fake and real); and how transportation needs are likely to change in response to factors such as environmental concerns and migration patterns.

On the first day of the workshop, the participants were asked to present posters summarizing their research. Then the group was divided into four subgroups and given the task of creating scenarios for Rolls-Royce for 2040. According to the assignment, the scenarios had to be plausible and relevant to Rolls-Royce’s circumstances, and also had to challenge some of the assumptions underlying the company’s current strategies.

On the second day, the subgroups shared their draft scenarios with the larger group. Based on the feedback, participants began to coalesce behind three draft scenarios. The first scenario envisioned a world of high connectivity, where efficiency and collaboration would be the norm. The second one saw the emergence of a new world order, where India and China leverage technology to rival the United States, and other countries are forced to adjust accordingly. And the third scenario anticipated a highly divided (and unequal) digital future that some groups would be able to take full advantage of and others would not.

On the third day of the workshop, participants held a final meeting to review and critique the scenarios, and to consider four strategic questions.

  • What would digitization look like in the future? For example, in what ways would digital technology radically reshape society and the way business is conducted?
  • What factors would affect relations between employees and companies in 2040? For example, how might changing employee expectations about long-term employment affect how organizations are structured?
  • What conditions will determine the future of emerging markets? For example, to what extent would political factors and factors such as controls on immigration weaken the trend toward globalization?
  • How might technology pathways develop? For example, how will future technologies change the power systems market?

Outcomes

Following the three-day workshop, Rolls-Royce management endorsed the scenarios as a new basis for the 2016 strategic planning process and began sharing them with the wider strategy community and the company’s senior executives. In practice, this meant that any investment proposal had to take into account how it would be affected by each of the three scenarios and what, if anything, should be done to mitigate or exploit the scenarios; investments that didn’t meet this qualification were rejected. The scenarios therefore became a determining factor in the selection of the investment initiatives that emerged from the 2016 strategy process. Already, outlines of the scenario futures have begun to become apparent. There is little doubt, for example, that the unfolding digital future provides advantages to some groups and disadvantages to others. According to Rolls-Royce, the scenarios provided the backdrop for the company’s 2017 strategy development process.

Scenario Planning at the Royal Society of Chemistry

In contrast to Rolls-Royce, where the objective of the scenario planning process was to envision future directions for one organization, the goal at the Royal Society of Chemistry (RSC) was broader: to understand how the chemical sciences might evolve over the next 10 to 20 years, and how the changes might impact industry, academia, and society at large.

Scientific, social, and technological trends are rapidly changing the way people live and work, and these changes have affected the nature and practice of chemistry as well as the roles of chemists. While chemistry is a mature discipline and forms the basis of our fundamental understanding of what happens at the atomic and molecular levels, it is also concerned with the creation of new matter and interacts with disciplines such as biology and astronomy. What’s more, it plays a key role in solving practical problems such as curing disease; developing sustainable energy, food, and water; and creating new industries.15 As chemistry faces new opportunities and obligations, the fundamental question was: How should people think about the future of chemistry?16

The mission of the RSC is to advance excellence in the chemical sciences for the benefit of science and humanity. Its roots go back to the 1840s, when a group of 77 scientists, who included doctors, academics, manufacturers, and entrepreneurs, founded the Chemical Society of London. Today, the RSC has more than 55,000 members worldwide and a reputation as an influential champion for the chemical sciences.

In December 2014, the RSC launched a long-range planning initiative with a broad set of goals. Although the initiative did not refer to scenario planning per se, its aim was to identify possible future directions for the chemical sciences and to anticipate, plan, and prepare for how the field might unfold over the next 10 to 15 years.

The RSC began by identifying some of the big questions its leadership wanted to consider: How might the identity of chemistry change? Could chemistry be facing a future in which academic chemistry departments disappear altogether? If public funding is not available to support the type of blue-skies research that has traditionally produced the next major advances, how will future research be funded? And how will increasingly sophisticated technology and computational techniques change the way new hypotheses are analyzed and tested?17

Process

The RSC convened a one-day workshop for the leadership team and selected senior managers to consider a wide range of factors. The workshop helped focus senior staff members from throughout the organization on the importance of taking a broad look at how the field was changing, and it set the stage for defining the new role the RSC could play.

What followed was the development of a multiphase scenario planning program. In phase one, which ran for three months, approximately 50 stakeholders from industry, government, and academia who had been selected by the RSC leadership team, were interviewed by phone to identify possible trends.

Next, there were a series of follow-up in-person interviews with some of the stakeholders in order to understand controversial viewpoints or, in some cases, to secure buy-in from key chemical industry leaders. During this process, several themes emerged. Some of the themes had a direct bearing on the chemical sciences (for example, new opportunities for funding research). Others raised questions about how technology might influence the chemical industry, and the effect of changes on intellectual property, the market, and social factors.

Based on the themes, the RSC ran three one-day scenario-planning workshops (two in London and one in Boston) as a vehicle for identifying weak signals that might emerge as important catalysts of future change. The goal was to spark conversations about the future in order to help executives, academics, and policy-makers make more proactive decisions. Each workshop was attended by about 10 people.

In an effort to challenge the assumptions of leaders in the chemical sciences, the RSC developed four scenarios.

  • The first scenario focused on the benefits chemistry brings to the world — its ability to provide answers to global challenges, such as climate change, water shortages, natural resources scarcity, and providing health care for an aging population.
  • The second scenario focused on changes in the way chemistry is done and how it is organized, envisioning a world where the chemical sciences are increasingly automated and decentralized.
  • The third scenario spoke to the growing separation of chemistry into subdisciplines and how that might negatively impact the pipeline of future chemists.
  • And the fourth scenario explored the impact of reduced public funding for the chemical sciences.

Outcomes

These scenarios helped to develop the RSC’s long-term strategy and to nudge leaders in the chemical sciences to move beyond conventional thinking and plan for the future. The RSC’s original long-range planning team continues to play a role in encouraging the chemical community to reflect on opportunities and challenges. The findings from the scenario planning process were issued in a 2016 report18 aimed at broadening engagement with RSC communities. The organization’s leadership team has said it wants to initiate new activities based on the scenarios, including launching new programs to advance the future of chemistry education and scholarly communication consistent with developments in open-access publishing and the trends in open science; bringing the RSC “futures thinking” conversation to a wider audience (including the organization’s general assembly and meetings with international partners around the world); and preparing for the different possible futures through internal strategic conversations with senior management and the RSC’s external governing body.

Each element of the RSC’s new strategy, which the governing board is slated to approve in July 2017, has been tested against the opportunities and challenges identified by the scenario planning work. The next priority will be to amplify the voice of the chemistry community. This will involve the RSC management sharing success stories from the chemical sciences community not only with other companies but also with governments, funders of research, and society at large. In addition, the RSC has set a goal of improving how it listens to the broader community.

Reframing Strategy

As the Rolls-Royce and RSC cases show, scenario planning can help strategists look beyond their current circumstances — and with longer time horizons — to test existing strategies, make sense of the causes and effects of turbulent, uncertain, or ambiguous conditions; invent new options; open up or enhance the quality of strategic conversations; and pave the way for collaborative strategies.

So, what does this mean for strategists or policy-makers at companies and nonprofit organizations that want to consider future directions? Based on our experience, we have four recommendations.

1. Invest time and effort in preparing participants. First, it’s important to identify who the intended participants in the scenario planning process should be and how these participants learn. Typically, because the board’s role is to question and prod the executive team, scenario planning is easier to align with the board than with the executive team. But in cases where strategies have run into trouble or there is a new management team, senior leaders may welcome the opportunity to engage in scenario planning. We have found scenario planning generates the most value when it’s clear who the intended learners are and what they wish to learn. Indeed, as a rule of thumb, organizations should expect to spend twice as much time setting expectations and defining the intent and usability of their scenarios as they do producing the scenarios themselves. It pays to invest time and effort throughout the process — both in preparing the participants and setting expectations at the outset, as well as in using the scenarios in strategy development. Otherwise, the scenario planning exercise may become a waste of time.

2. Help participants identify the assumptions about the future that underpin their current strategy. You should be prepared to help the learners articulate their sense of the future and the set of assumptions they are using in their current strategy. In our experience, this part of the process depends heavily on gathering information and developing insights gained from internal and external interviews. Scenario planning that explores a limited number of scenarios (usually between two and four) helps to develop an alternative to the existing framing.

3. Be prepared to invest significant amounts of time and resources in the scenario planning process. Although every situation is different, the amount of time and resources required will depend on what the organization is trying to achieve and its goal. Scenarios that will be presented broadly or publicly tend to require much more detail and peer review (and, as a result, more time and budget) than less formal scenarios involving small teams who are used to working together.

4. Remember that scenario planning is an iterative process. In our experience, this point cannot be overemphasized. It’s important to recognize that the initial set of scenarios that organizations develop may not be sufficient. Often, additional insights are gathered in a second iteration. Rolls-Royce, for example, began with a total of 12 scenarios before multiple iterations led it to focus on three.

Organizations need to have criteria for assessing whether the scenarios they develop are plausible. (By plausible, we mean that they should be neither too improbable nor too familiar.) At the same time, executives and board members need to ask themselves whether the scenarios are sufficiently challenging, easy to communicate, and capable of being adopted.

As we have worked with organizations, we have noticed that considerable value can be extracted from reconsidering and reperceiving the immediate business environment that each of the different scenarios implies. In reconsidering how the roles of one actor change from one scenario to another, managers can gain new perspectives and see how new actors begin to emerge. The scenario planning approach we have described helps organizations assess the kinds of threats and opportunities that might occur in turbulent, unpredictable, and ambiguous settings. By freeing the mind from the current framing, strategists can use the process to envision and begin to implement a new set of options.


MIT Sloan Management Review