Pictures of the future: How we can anticipate unforeseen crises – like Corona
As early as 2015, Bill Gates warned in his Ted-Talk that we are not prepared for a worldwide pandemic and that the probability of an outbreak increases significantly from year to year as globalization progresses. Even earlier, in 2013, the Robert Koch Institute published a similar assessment. Nevertheless, the society and economy have been taken by surprise by Corona. But why?
What Corona and the oil crises have in common
The answer is: people – but also companies – are bad at imagining what worst-case scenarios might look like and what factors they might cause. But we are even worse at taking contingencies seriously that are unlikely to occur. This is precisely what can pay off in times of a crisis.
Take the example of Shell in the 1970s. From the position at that time, an end to the perpetual flow of oil seemed unimaginable. Forecasts were linear extensions of increases. Different, Shell. At the peak of the oil boom, the company was thinking more deeply about the future, using a tool opening up potentials for imagination and thus makes the unthinkable conceivable: the scenario technique. Scenarios are a strictly methodical way of looking into many different futures – the pictures of the future – and deriving action plans that prepare for the worst, the best and the most probable.
The scenario technique
But what does that mean in concrete terms? Future-conscious companies are empowered through scenario technique to understand today what changes could have an impact on their business model tomorrow. This can be achieved by strategically addressing the future: by consistently analyzing and evaluating trends and developing scenarios. The procedures are well-proven and can be implemented in different ways and with different technologies. Of course, the aim is not to predict the future itself, but to anticipate it for a pre-defined period of time, taking into account alternatives. This period can range from a few months to 50 years or more. Here, it is important to use the full (temporal) potential of the scenario technique, be it the rapid analysis in the event of an acute crisis, which looks only a few weeks into the future – as during a shutdown due to a pandemic – or the strategic long-term analysis, which thinks decades ahead and anticipates the impact and interplay of megatrends.
In the specific implementation, completely different visions of the future for a structural and strategic reorientation are created in five steps:
Definition of influencing factors: In this context, factors are considered which either have an influence on the industry or the global environment of the company. In Shell's case, such a global factor would probably have been "geology" or today's "health". When the Berlin Wall came down in 1989, this was the collapse of the "state system" of socialism.
Identification of key factors: Such influencing factors, which have a great influence on others and at the same time are themselves strongly influenced, serve as key factors for the scenarios that are later developed. The number of factors is thus significantly reduced.
Creation of projections: Each of these key factors is considered in a third step into the future. Health could be shaped in such a way that (1) global health systems are stable enough to prevent pandemics, (2) there are strong regional differences in the way they are tackled, (3) global health systems are failing, or (4) prevention cannot be guaranteed but sickness coverage is largely assured.
Composition of scenarios: The developed projections of each key factor are now combined into coherent scenarios. For example, the global failure of health systems would match the factor "state" in the "weak institutions" category.
Strategic directions: In the last step, strategic thrusts are identified which offer future-proof solutions for all scenarios, but also action plans for individual scenarios are developed.
These scenarios can also include so-called wild cards. They sound so unlikely at first that you would prefer to lock them up in a drawer and never look at them again – after all, they do not happen "anyway" and just do extra work. The best-known example in recent history was the fall of the Berlin wall. Wild cards are events for which no one really prepares (although there are usually warnings in advance), but which, when they occur, trigger enormous upheavals – like the current Corona crisis. This is where innovative and future robust firms differ from other companies. They also think through the unlikely future and use the scenario technique to do so. Those who take the wild cards and sketch out a rough action plan have a clear advantage in the event of a crisis.
It does not have to be specific. Rather, it may be sufficient to take a closer look at the final state of the scenario. A shutdown such as the one we are currently experiencing can be caused by many influences – a virus, a state-imposed curfew out of concern for terrorism, or a natural disaster. The fact that many retailers and large companies are now opening digital distribution and communication channels spontaneously and in an unregulated manner could have been done in a structured way by means of scenario analyses – the preparation that arises from scenarios gives rise to alternative plans. In this way, the methodology can also ensure a certain degree of stability and business continuity in bad times through the anticipated measures.
During the crisis means before the crisis
The prevailing situation shows, even at this stage it still makes sense to deal with short to medium-term scenarios. The full consequences of the Corona crisis cannot yet be specified in concrete terms. It is precisely for this reason that it is necessary to go through various situations that may occur and to deal with the preparation of concrete action plans. Science has already dealt with various economic scenarios and prepared guidelines for political decisions.
This is exactly what companies should do now to recover as quickly as possible from this unprecedented situation, for which there can be no patent remedy per se. It is important to keep a clear head and proceed in a structured manner in order to only take measures that will strengthen the company in the medium and long term. The scenario technique proves its strength by offering both short-term solutions as well as repeatedly opening up the perspective of the far future.