1 The Scenario Building Process and Scenarios for South Africa Making the impossible happen Making the impossible happen Dr. Llewellyn B. Lewis Dr. Llewellyn B. Lewis The Strategic Forum www.strategicforum.co.za BMI S tudium A d P rosperandum V oluntas in C onveniendum BUILDING RESEARCH STRATEG Y CO N SU LTIN G U N IT cc R eg.N o.2002/105109/23 • BMI S tudium A d P rosperandum V oluntas in C onveniendum BUILDING RESEARCH STRATEG Y CO N SU LTIN G U N IT cc • BMI • BMI • BMI • BMI S tudium A d P rosperandum V oluntas in C onveniendum BUILDING RESEARCH STRATEG Y CO N SU LTIN G U N IT cc R eg.N o.2002/105109/23 • BMI S tudium A d P rosperandum V oluntas in C onveniendum BUILDING RESEARCH STRATEG Y CO N SU LTIN G U N IT cc • BMI • BMI • BMI • BMI • BMI • BMI • THE STRATEGIC FORUM THE STRATEGIC FORUM A place of assembly for strategic conversations
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1. The Scenario Building Processand Scenarios for South Africa
Making the impossible happen Dr. Llewellyn B. Lewis The Strategic
Forum www.strategicforum.co.za
THE STRATEGIC FORUM
A place of assembly
for strategic conversations
2. CHANGE ENVIRONMENTALYDIRECTED REACTIVE CHANGE : THE RECOVERY
TROUGH SHOCK DENIAL BARGAINING ANGER SADNESS DEPRESSION ACCEPTABLE
PERFORMANCE PREDICTING THE FUTURE POSSIBLE RESULTS FIRST CURVE
SECOND CURVE CONTINUOUS IMPROVEMENT BENCHMARKING SURVIVAL
RESISTANCE TO CHANGE (Based on Handy : 1994)
3. CREATING THE FUTURE SELF-DIRECTED TRANSFORMATION CRITICAL
MESS ENVIRONMENTALCHANGE RISK RUDE AWAKENING CHAOS UNCERTAINTY
FIRST CURVE SECOND CURVE CREATING THE FUTURE IMPOSSIBLE RESULTS
EMERGING ORDER STRANGE ATTRACTORS (Based on Handy : 1994) THE
BUTTERFLY EFFECT THE EDGE OF CHAOS ZONE OF CREATIVITYAND
ADAPTABILITY
4. CREATING THE FUTURE CREATIVETENSION
SEEKS RESOLUTION : RESULTS IN ACTION
STRATEGIC ACTION PLANS
PERFORMANCE GUIDELINES
BUDGETS
DONEBY MANAGEMENT
STRATEGIESA LOGIC AND FIRST LEVELOF DETAIL, FOR HOWTHE VISION CAN
BE ACHIEVED DEVELOPEDBY LEADERSHIP CONTEMPORARY ANALYST 2020 2011
CURRENT REALITYINFORMED BY MEMORIES OFTHE PAST (HISTORY) HISTORIAN
VISIONINFORMED BY MEMORIES OF THE FUTURE (SCENARIOS) PROPHET
CONTEXT : ACOMPELLING PICTUREOF THE FUTURE WE WANT TO CREATE.
CREATEDBY LEADERSHIP
5.
STRATEGIC FORUM
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THE
SCENARIO BUILDING PROCESS
6.
A well- designed scenario process has great value the first
time it is used, but like a good wine, it improves with age. The
tool promotes mental agility by opening minds to multiple
possibilities.
- - - - - - - - - - - -, If you use scenarios, youll never read
the newspaper the same way again.(Charles M. Perrotet, in Learning
from the future : 1998 : 139)
Making sense of the future with Scenarios
7. FIRST QUESTION What percentage of your timeis spent
onEXTERNAL rather thanINTERNAL issues ??
8. SECOND QUESTION Of this time spent looking OUTWARD how much
of it is spent considering how the world could beDIFFERENT in five
or ten years???
9. THIRD QUESTION Of the time devoted to looking FORWARD and
OUTWARD how much of it is spent in CONSULTATION WITH COLLEAGUES
where the objective is to build a DEEPLY SHARED, WELL TESTED VIEW
OF THE FUTURE as opposed to a personal and idiosyncratic
view???
10. THE 40 / 30 / 20 RULE Senior management devotes LESS than
3% [40% x 30% x 20% = 2,4%] of its energy in building a CORPORATE
PERSPECTIVE OF THE FUTURE
11. THE 40 / 30 / 20 RULE Managing the Here and Now Managing
the There and Then
12. SYSTEMS MODEL OF SCENARIO DEVELOPMENT
www.strategicforum.co.za Scenario B Scenario Input Scenario
Determinants Normative Scenarios Scenario C Scenario D Development
Scenario A Stability Actors Actors Core drivers Actors Values
Policies Strategies StrategicPosture
14. CREATING THE FUTUREThere are always two parties, the party
of the past and the party of the future; theestablish ment and
themove ment(Ralph Waldo Emerson) The future never just happens;it
is created (Will and Ariel Durant : The Lessons of History)
15. Making sense of the futureThe State of the Nation : 2010
-2020 The Reinvention Scenario logics CORE DRIVING FORCES EVENTS
TRENDS AND PATTERNS The Virtuous Cycle The Vicious Cycle VARIABLE
BEHAVIOUR CHANGING STRUCTURES Causal relationships SCENARIOS KEY
STAKEHOLDERS STRATEGICPOSTURE The Iceberg STRATEGIC ISSUES; KEY
UNCERTAINTIES; CRITICAL RESOURCES; KEY CAPABILITIES. Increasing
ability to understand
16. TYPES OF CHANGE
Cyclical change :
Is temporary
Comes in fits and starts (can return to prior status)
Demands a tactical response
Structural change:
Is a fundamental transformation of some activity or institution
from a previous state
Is irreversible
Demands permanent adjustment
Demands a strategic response
17. TYPES OF CHANGE
Cyclical :
Gold price
Inflation - interest rates
Violence
(Examples in South Africa today)
Structural:
Changing black/white population ratio
Urban black/white mix
Redistribution of wealth
Educational mix
Privatisation and deregulation
Trade union activity and power
18. SCENARIO PLANNING PROCESS
When crisis happens, managers know but dont take action
timeously
Why dont management pick up signs before crisis ?
The mind cannot see what is has not experienced before
Older companies have good institutional memory, therefore a
better chance for survival
Hypothesis : Bombarded with overload of information - the brain
needs a filter
A memory of the future must becreated to provide this
filter
Every incoming signal is tested against theAlternative Time
Pathscreated.If the signal is relevant to an Alternative Time Path
-it is heard.
19. FALL INTO THREE GROUPS
More of the same but better
Worse (decay and depression)
Different but better (fundamental change)
SCENARIOS - THE ART OF THE LONG VIEW
To reperceive
To question assumptions
To change the view of reality
To liberate peoples insights
20. SCENARIOS - THE ART OF THE LONG VIEW THREE POINTS OF VIEW
Status Quo : Tomorrow will be more or less the same as today
Cassandra : The world is always on the brink of disaster Dr Panglos
: The world is the best it can be and can only get better !
21.
Group planning pioneered scenario planning- amethod for
summarising alternative future trends
They concluded that :
The stable predictable oil world was about tochange
Europe, Japan, USA becoming more dependenton oil imports
Oil exporting countries Iran, Iraq, Libya,Venezuela becoming
concernedabout falling reserves
Others, eg Saudi Arabia, were reaching the limitsof their
ability to productively invest oil revenues
SHELL
22.
With the following impacts :
Historical smooth growth in oildemand and supply
threatened
Likely to give way to chronicsupply shortfalls
Leading to excess demand
Thereby stimulating a sellersmarket controlled by the oil-
exporting nations
SHELL
23.
Slow investment in refineries
Designed refineries that could adapt to whatever type of crude
oil was available
They forecast energy demand at a lower level
They accelerated their development of oil fields outside OPEC
countries
Decentralised controls because they believed different nations
would adopt different pricing policies
SHELL
24.
Continued investment program
Slower reaction to what they saw as being more of a specific /
temporary event
Persisted with overestimating demand
Responded at a slower pace
Reigned in controls to facilitate overview - became less
maneuverable
OTHER OIL COMPANIES
25. 1970 : Weakest of 7 largest oilcompanies 1979 : Strongest
of 7 largestoil companies SHELL
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STRATEGIC FORUM
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THE
STRATEGIC FORUM
SCENARIOS FOR
SOUTH AFRICA
2010 - 2020
27. The STRATEGIC FORUM Scenarios for South Africa Political
transformation Economic transformation Ubuntu South Africa united
Autocracy Liberalisedautocracy Democracy Long walk to Freedom South
Africa unchanged 1994Election 1999Election Pretoria will provide
South Africa entitled Social transformation Cry the beloved Country
South Africa corrupted Limiteddemocracy
28. Political Transformation NOW,2Q 2010Muddling along as we
are,or change . . .Government intervention, PPPs;Subsidies,
InfrastructureSA Social Capitalism; Growth through Redistribution;
The Golden Triangle. SA Social Democracy ; Redistribution
withGrowth SA Communism;Redistribution with or without growthSA
AThird World Country 1. Ubuntu Scenario 2. Long Walk to Freedom 3.
Pretoria will Provide NO CONFIDENCELOWAVERAGEHIGHCONFIDENCE Risk
AvoidanceRisk AversionRisk ToleranceRisk Taking Economic
Transformation 4. Cry the Beloved Country Drivers of Change and the
SA Scenario Map www.strategicforum.co.za (Based on Gerald Harris:
The Art of Quantum Planning: 2009) Closed SystemOpen System
Paradigm RegressionParadigm ParalysisParadigm ShiftParadigm
Reinvention Racial conflictRacial tensionRacial toleranceRacial
reconciliation (Ubuntu) GDP GROWTH > 5 % PA INFLATION 5 - 8 % PA
EMPL GROWTH > 400 000 PA GDP GROWTH3 - 5 % PA INFLATION 8 - 10 %
PA EMPL GROWTH 150 - 400 000 PA GDP GROWTH 2 - 3 % PA INFLATION 10
- 15 % PA EMPL GROWTH 50 - 150 000 PA GDP GROWTH < 0 % PA
INFLATION 15 - 25 % PA EMPL GROWTH < 50 000 PA Social
Transformation
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THESTRATEGIC FORUM SCENARIOS FOR SOUTH AFRICA : 2010-2020
Economic Transformation Political Transformation GDP GROWTH > 5
% PA INFLATION 5 - 8 % PA EMPL GROWTH > 400 000 PA GDP GROWTH3 -
5 % PA INFLATION 8 - 10 % PA EMPL GROWTH 150 - 400 000 PA GDP
GROWTH 2 - 3 % PA INFLATION 10 - 15 % PA EMPL GROWTH 50 - 150 000
PA GDP GROWTH < 0 % PA INFLATION 15 - 25 % PA EMPL GROWTH <
50 000 PA NO CONFIDENCE /LOW /AVERAGE /HIGH CONFIDENCE Risk
AvoidanceRisk AversionRisk ToleranceRisk Taking Closed SystemOpen
System One Party StateMulti-Party Democracy Closed SystemOpen
System Paradigm RegressionParadigm ParalysisParadigm ShiftParadigm
Reinvention Racial conflictRacial tensionRacial toleranceRacial
reconciliation April 1994 Elections ThePolitical Miracle The future
of South Africa depends on progress along thethree axis
ofPOLITICAL- ,ECONOMIC-, ANDSOCIAL TRANSFORMATION . The solution
lies in an approach that inextricably links economic policy, social
development and transformation. The UBUNTU scenario requires an
entrenched democracy, a reconciled Nation, united behind a common
vision, an open Economic system, the alleviation of poverty and
social delivery of housing, health and education. UBUNTU South
Africa unitedMedium to High growth Medium to Strong
OppositionEntrenched Democracy Non Racist, Non Sexist, Reconciled
Nation LONG WALK TO FREEDOM South Africa unchanged Average to
Medium growth Weak to Medium Opposition Espoused Democracy Tolerant
Nation PRETORIA WILL PROVIDE South Africa entitled Average to Weak
growth Weak to non- existent Opposition Shaky Democracy Tense
Nation CRY THE BELOVED COUNTRY South Africa corruptedWeak to
Negative growth One Party State Ignored Democracy Divided Nation
Social Transformation
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45. RACIAL CONFLICT CLOSED SYSTEM RECONCILIATION ANDNATION
BUILDING OPEN SYSTEM High Road Ubuntu Scenario Low Road Cry the
BelovedCountry Scenario Lower Middle Road Pretoria willProvide
Scenario Upper MiddleRoad Long Walk toFreedom Scenario 10% 40% 30%
20%
THE STRATEGIC FORUM SCENARIOS FOR SOUTH AFRICA : 2010-2015