«Strategic forecasting fails to predict any radical change either in political or economic domains. The advantage of scenario planning is that this method makes decision-makers better prepared for a new reality», – Roman Vakulchuk, a senior researcher at the Norwegian Institute of International Affairs (NUPI), former employee of the Shell Oil Company (Royal Dutch Shell), a trainer on scenario planning, said in the interview to CABAR.asia.Русский – Interview is translated from Russian language.
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Can we try to draw a scenario of future events, make a forecast for many years ahead and which methods are applied by state and private sector actors for this?
We all know it is very difficult to predict the future and we often fail to do so. However, there is a method that can help be better prepared for the future. There are two types of methods that look into the future.The first method that has been used for many years worldwide is the so-called strategic forecasting. It analyses events and trends of the past and projects trends into the future based on the events that took place in the past. However, this type of forecasting has a major weakness – it does not take into account unexpected factors that can intervene in the process and change the situation dramatically. In other words, strategic forecasting helps identify certain trends based on how the situation developed in the past and how it may look like in future. However, it fails to predict any drastic or radical change either in political or economic domains. In order to be better for the future, a British-Dutch oil company, Royal Dutch Shell, began utilizing a new method that is called scenario planning back in the early 1970s. The employees of Shell started thinking about the factors that could affect the oil market development and company’s activities. They were looking not only at the developments in the past, but also monitored new and emerging events and trends that could lead to profound changes in the future. This method differs from strategic forecasting by identifying, selecting and adding to the analysis new and unknown factors – that are likely to shape the future – through creative brainstorming and a systematic approach. The model can work well if applied to such unexpected events as, for example, the election of President Donald Trump in the United States. According to strategic forecasting, the victory of President Trump in the elections would be impossible to predict given the history of presidential terms in the United States and presidential candidates; we know from the history that US presidents had always represented the American [political] elites, while Trump represents the business elite. If we used strategic forecasting, we would have never come to the point of predicting this. In turn, the scenario planning method allows to include new and previously unknown political, social and cultural factors that can lead to profound changes with big consequences. How is the scenario planning method applied in Europe? Are there successful and failed examples of event forecasting in Europe for many years ahead? As to the European companies, I have already said it is the oil company Shell. Other oil companies also followed Shell. Representatives of other sectors for example, a German company DHL – express delivery services; General Electric and many other large companies have been using this method since the 1970s. Today this method is often used by governments of various countries. I would like to make a prominent example of the unpreparedness of some companies for the emergence of new players or products in a market. One of such examples is Kodak, which used to be one of the most successful companies in the world. It was one of the leaders in photography production. The company was successful, however, it failed to look beyond its success and was unprepared for a new reality, in particular, for the emergence of digital cameras. The company thought it was unlikely that the market would accept digital photos. However, the consumers shifted to digital photos and cameras. It led to the bankruptcy of the company several years after digital cameras took over. What is the scenario planning situation in Central Asian states? Have there been any attempts to take a look into the future? To answer this question, I should say that the scenario planning method is very complex. It is expensive in terms of financial and human resources and time-consuming. Not all countries have an opportunity to create conditions for running scenario planning regularly. Many developed countries, say, in Europe, have more opportunities for scenario planning and they use them for their benefit. In terms of international affairs, it is very important for small states to be able to plan their future, to carry out different scenarios and to better anticipate the actions of their neighbours.
This article was prepared as part of the Giving Voice, Driving Change – from the Borderland to the Steppes Project implemented with the financial support of the Foreign Ministry of Norway. The opinions expressed in the article do not reflect the position of the editorial or donor.