Hindsight is 20-20. Looking back, humans tie events together
to tell a story to make sense of it. Place yourself at the start of those
events and they often remain very difficult to forecast. Think to these few
· Very few anticipated the 2008 financial crisis
and, though we now feel that we understand the dynamics that caused it, we are
not able to predict the next downturn.
· The Keystone XL has been mired in delays far
longer than anyone would have ever envisioned when the project was first proposed.
· The dialogue around climate change dominates the
news feeds where it received only passing mention ten years ago.
After a significant change, it is human nature to accept the
resulting world as the stable new normal and use it to set our strategies going
forward. The price versus time plot below shows this. The historical data shows
a relatively steady price decline of about 80%. The forecast data in no way
predicts this to continue. The range of the forecasts, from high to low, is
particularly narrow, considering the trend that precedes them.
This is quite typical and, when we plot our past forecasts
against reality, we tend to project the same trends going forward, as shown
Placing yourself back at the start of the plot, how would
the forecasts in green help you to prepare your business for the upcoming price
Scenario Thinking expands your strategy conversation to
enlighten your management team to these blind spots. In it, we envision
different possible future worlds and use these to build a business strategy
that is more flexible and resilient to the uncertain future ahead. Scenarios
are possible stories about the future, not forecasts, and we use them to enrich
the strategy conversation.