Scenario Planning of Apocalypse
On October 4th Peter Schwartz, a world renowned futurist and Honorary Professor of the HSE, spoke at a seminar organized by the HSE Institute for Statistical Studies and Economics of Knowledge.
His lecture, ‘The Art of Long-Term Planning in Large Organizations’, can be considered as an inauguration for Peter Schwartz at the HSE: the resolution awarding him the title of honorary professor was made at a session of the HSE Academic Council on September 30th. But Prof. Schwartz’s cooperation with the HSE started a long time before: in particular, he is a member of the international advisory council for the HSE Foresight Center.
'Peter Schwartz does not need a long introduction' Leonid Gokhberg, Vice Rector of the HSE and Director of the Institute for Statistical Studies and Economics of Knowledge said in his opening speech. ‘He is known as the author of the methodology of scenario analysis and many studies in strategic planning and management. His books have been translated into many languages and are well known in the professional community. He has been consultant for many governments.’
In addition to this, Peter Schwartz is founder and chairman of the Global Business Network (GBN), one of the leading consulting companies specializing in the development of long-term scenarios. In 2001 GBN joined the Monitor Group with whom the HSE is currently discussing the possibility of joint analytical work as well as the creation of a vocational training department and an analytical center at the HSE. According to Leonid Gokhberg, one of the areas of research for the HSE and the Monitor Group could be the development of the strategy for Moscow’s socio-economic development for the next decade.
Peter Schwartz thanked his HSE colleagues for the honour and said that during his lecture he wanted to unveil the ideas behind the work he has been carrying out and developing since 1972. ‘Most of our societies, be they Russian or American, most organizations, private or public, face huge challenges in the development of key decisions which relate to their future’ Peter Schwartz said. ‘We are in a situation of growing uncertainty. The scenario planning method is one of the best tools for understanding, managing and choosing correct decisions in this situation’.According to Peter Schwartz, several factors can be outlined which have exacerbated this situation of uncertainty in the current environment. Firstly, the global financial crisis. Secondly, insecurity in the North Africa and the Middle East. And finally the world is undergoing an epoch of ‘dramatic technology changes’ which, among other things, influence the speed, quality and volume of information transmitted.
This changing environment demands new approaches to long-term planning in comparison with those which have been used over in previous decades. ‘We make decisions not on the basis of objective data about the real world but on our notions about it’ Peter Schwartz emphasized. ‘And often the decision-makers of a company, organization or even a whole country, become victims of these outdated notions and try to ‘fit’ the real life into them’.
Scenario planning, according to Peter Schwartz, is possible only with a combination of two elements: deep analysis and imagination. A good scenario analysis involves building three interpretations of the future with a system of indicators which help to understand which of the scenarios is actually being implemented. An important part of scenario analysis is also a ‘rehearsal’ of the future – determination of the algorithm of actions for every scenario. For example, those airlines who used Peter Schwartz’s company for consultation managed to cope relatively calmly with the Eyjafjallajokull volcano eruption which paralyzed the European air space last spring. Of course, it was impossible to ‘plan’ volcano eruption as one of the scenarios, but the air carriers made use of an algorithm which was a ‘rehearsed’ for the case of a mass disease outbreak, since the consequences of the two events in terms of flight connection breaks were very alike.
In the end of his lecture Peter Schwartz spoke about a study which he has been involved with recently: the focus of his attention is the development of economic development scenarios for the next decade. Officially he will present the results of the work in November at the G20 summit in France, but three scenarios of the future can be outlined even today. Peter Schwartz emphasized that after WWII, interstate coalitions and alliances which had been forming the image of the world policy and economy were replaced by international institutions (UN, IMF, World Bank, WTO and others), but in times of growing uncertainty their future is also in doubt. Experts today are looking for answers to the following three questions. Will the world continue its development in the same direction as over the last half a century or it will again become fragmented? Will the different governments’ effort on economic recovery be effective? What will world economic growth be like – balanced and synchronized or multidirectional?
The optimistic scenario supposes that the world economy will overcome the crisis and economies of the USA, Europe, China and other developing countries will grow simultaneously. The second scenario describes a situation when the current problems in these economies stay or even worsen. Under such circumstances, the next round of global recession will be inevitable and it is very probable that the world is already on the threshold of this. According to the third and the gloomiest scenario, the world can sink into the darkness of contradiction and conflict, as happened a hundred years ago.
‘We can find ourselves in any of these worlds, even the darkest of them, since today’s situation is characterized by a huge variety of opportunities’ Peter Schwartz warned. ‘Politicians and businessmen – the people who make high-level decisions – should understand this. I am worried about where they are trying to take us today. I think that our professional community should be more creative and suggest different tools to help these people find the right route to the future through today’s uncertainty. Scenario analysis is not a panacea, but one such tool’.
Oleg Seregin, HSE News Service