III. Scenario Analysis

modeling-behavior-dark-gray-scenario.jpgWhat is Scenario Analysis?modeling-behavior-evolution-gray-to-red.jpg

Scenario analysis began as a method for imagining possible stories to explain the future, but its potential is far more powerful: it can be transformed into a method of rigorously mapping out possible pathways into the future. Approaches to scenario analysis differ; my approach starts with state-of-the-art structured techniques and then extends them with innovative steps that enhance the method’s rigor by incorporating dynamics and scenario evolution. The underlying dynamics are the forces that cause the surface behavior and thus are essential to understanding what is happening. Scenario evolution is critical because in the real world, scenarios do not just happen and then stop; on the contrary, reality jumps around, first heading in one direction and then another. Scenarios are no more than snapshots or, if you prefer, signposts of a possible situation. Reality is constantly evolving, so to make scenario analysis a practical analytical tool, the focus should be on understanding the underlying dynamics that cause behavior to evolve, first in the direction of one scenario and then in the direction of another.

Steps for effective scenario analysis:

  • Step 1 — List driving forces

  • Step 2 — Categorize driving forces

  • Step 3 — Select the 2-3 most important classes

  • Step 4 — Define axes & make diagram

  • Step 5 — Create scenarios

  • Step 6 — Define milestones

  • Step 7 — Plot milestones on diagram

  • Step 8 –- Plot events in temporal sequence on scenario diagram [SEE Scenario Evolution page]

  • Step 9 — For each driving force, plot events where they occur on the continuum

  • Step 10 — Identify dynamics

  • Step 11 — Plot dynamics

  • Step 12 – Consider system complexity

The above steps are intended not as directions but as an outline; e.g., note the simplicity of the endlessly complex Step 12. These 12 steps are, first, designed to send the message that “scenario analysis” per se is but the introduction to future analysis, a step designed only to provoke creative thinking, about as precise as the famous advice “Go West, young man.” Once such thinking seems to be occurring, it is time to transition to more rigorous methods. The second purpose of the above steps is to suggest that such a transition will require systems thinking, entailing both consideration of underlying dynamics and, even more challenging, complexity. Exactly how to do that for the future of the global political system remains a research issue.

Two ways forward for developing the scenario analysis methodology are via the integration of graphics and models. Graphics constitute an important tool for rigorous scenario analysis because scenario analysis rapidly becomes cumbersome as the array of story lines expands exponentially. The joke misuse of scenario analysis by politicians who offer a standard “disaster scenario, rosy scenario, and ‘the scenario I favored all along'” is all too close to an accurate depiction of how the technique is exploited by those pretending to have an open mind. Serious scenario analysis, in words, tends to produce book-length analysis that can be highly thought-provoking but hard to apply to the real world. Graphics can aid in presenting clear summaries of how the proliferation of scenarios relate and for showing how an actual case might evolve. Three-dimensional models, for example, facilitate the presentation of eight, rather than four, alternative scenarios resulting from three, rather than two factors, as well as emphasizing how any particular scenario exists in a small portion of a large space of possible outcomes, thus guarding against one of the great dangers of scenario analysis in the real world–becoming enamored of your preferred scenario and forgetting how easily the situation could shift.

 

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Scenario analysis readings:

Paul D. Raskin, “World Lines: A Framework for Exploring Global Pathways