Article: The unofficial future
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Scenario planning, forecasting, reading the runes of the future for businesses has two parents. Firstly, Herman Kahn who used “game theory” in developing possible scenarios for the U.S. Government post-World War Two, specifically in relation to the use of nuclear weapons during the Cold War.
Secondly there is Shell’s Pierre Wack, whose influence and impact on modern business strategy is incalculable. The Economist described Wack, the man who developed scenario planning at Shell, as “an unconventional French oil executive.”
According to the Economist, Wack’s scenario planning was so successful in the 1970s, “that the Anglo-Dutch oil giant was able to anticipate not just one Arab-induced oil shock during that decade, but two.”
Wack’s scenario planning is deep-rooted in the business culture of Shell. It does three things:
1. It serves a practical purpose for the company, informing decision-making.
2. Versions of the scenarios are made available online to the public, positioning Shell as a company with one foot in the future. They’re generally useful, but invaluable in the current climate when energy security and climate change are becoming more real to the general public.
3. Its scenarios are images of the future that lay out possible futures, and are rendered in direct idea-based information graphics. Shell attach immense importance to the visual expression of the scenarios, having employed designers such as the great Alan Fletcher (founder of Pentagram) and illustrator Peter Grundy, whose information design skills are in demand from major brands the world over.
“Scenarios are ultimately about creating a picture of a changing environment and seeing an opportunity to make things happen”
Stewart Brand uses the word “official future” – what’s top of mind for clients – the concerns but also the orthodoxies, the default thinking, the assumptions that protect corporations from the outside world
Visualizing the future is now key for every energy company, and Shell do it very effectively with words, pictures and graphics. Visually the major lesson is the use of graphic icons. Translated into photography this doesn’t mean using iconic in the sense of well known/celebrity images. It means images that function directly as the expression of an idea, that provide clear, very direct information.
In the interview below Adam Newton from Shell’s Scenarios Team highlights the importance of “context” in developing scenarios.
What are scenarios and what are their place within the company?
Adam Newton: Shell has been doing scenarios in-house as part of its strategic planning since the early 1970s. The first notable scenario practitioner in the organisation was Pierre Wack who undertook a series of well-publicised and high profile scenarios.
How unusual was scenario planning when it was introduced?
AN: The relative novelty at the time of a business organisation using alternative scenarios as a means to complement its existing strategy activities was seen as somewhat different. If you look at scenarios today in the organisation, we have a very long range.
The principal function is to support the business and try and help it understand the external factors that affect decisions around major projects and investments, which are required to be economically resolute for 30/40 years.
What we found over the course of using scenarios, is that applying some of the techniques in scenario planning alongside more traditional ways of forecasting, the external economic environment, considering shifts and changes in the energy market – whether that’s on the supply or demand side of energy – you can, with some degree of accuracy, create pictures about how the future may unfold. Those pictures used by the organisation test assumptions about the kind of business we aspire to be or the types of decisions we might take. Sometimes they are very focused on the specifics of the energy industry. Our last set of energy scenarios were published in 2008, and are available on the Shell website. View Shell Global Scenarios online
“One only has to look at the last three or four months of political issues and events in the Middle East to see how they are played out to recognise something significant afoot”
The scenarios began at a time of transition in the 1970s, and here we are as you describe at a moment of transition. This time the issues are Peak Oil, climate change, global financial instability…
AN: Anyone in the business will say you are always in a moment of transition it just depends how significant that transition, is at any given moment. We had relatively stable growth and relatively good policies and practices in the global economic system for about 20 years, which has come to an end. The signals that we see looking at the next 10 to 20 years suggest that we could be in for more significant instability, both in terms of the global economic system but also as a result of politics. One only has to look at the last three or four months of political issues and events in the Middle East to see how they are played out to recognise something significant afoot.
You look at the economic, cultural and political scenarios of change, but has people’s conception of energy changed over time?
AN: It’s fair to say that there are different lenses through which people consider energy issues. How the energy system is emerging and developing has changed and there is a whole host of reasons for that. When you look at scenario outputs from the 1990s you see a much stronger link to the emergence of environmental factors. If you fast-forward 10 years to the early 2000s events were much more dominated by global security issues, of course 9/11 being a major trigger point. So the scenarios worked from 2000 to 2008 dealt with issues pertaining to national security, which has implications on the choices that people make and the path that they follow in terms of their energy use.
What kind of inputs do you have in your scenarios? Would you read science fiction for example?
AN: I wouldn’t say that we use science fiction or any other fantasy realm, but certainly in the way that we seek to articulate a vision, we will often draw on different forms of narrative style to tell those stories. You see from the successive scenarios published that the way you tell that story is very important. The archetypes that you create in those stories are very important in terms of having the outside world understand the story, but also for the internal organisation which is often very focused on doing a technical job and driving a commercial imperative rather than being wholly focused on the outside world and changing the next forty years.
There has always been a strong design component to your scenarios, not least in the recent versions.
AN: If you look at the work done in 2008, two scenarios which look at possible energy futures called Scramble and Blueprint were both created in visual form – on the one hand, a very distinct scramble for resources in the pursuit of energy security, and on the other, pointing to a very different type of world in which coalitions are struck between nations, businesses and different actors in pursuit of a better and more sustainable energy future. The way in which you capture that in a visual form is very important and will continue to be.
“We are interested, for example, in the things that connect and inextricably bind energy towards water and food which is an area of huge concern for governments, populations and companies alike”
I think it’s one of the reasons why you get such a wide and varied audience, from chief executives of organisations like Shell buying into the content to people who have an interest and passion for the subject on a pure human level.
Have you got research scheduled to be published?
AN: We published a book called Signals and Signposts in early 2011 which did two things – it assessed what had changed and what hadn’t changed in the external environment since we published our other Blueprint scenarios. The work we are looking to publish next year or the year after is a focus in on a series of alternative impact implications and discontinuities. Without prejudging what that content will be, we are interested for example in the things that connect and inextricably bind energy towards water and food which is an area of huge concern for governments, populations and companies alike. There are a huge range of issues which overlap between those three systems, and with a growing global population from 6 to 9 billion people, the stresses that manifest in that nexus become greater over time.
That’s one area of interest and another is urbanisation, which is very close to my current day job and again, driven by a rising global population. The number of people living in cities will rise dramatically by 2050. About 80% of us will live in cities so that in itself presents a challenge for governments in terms of being able to make sure that those cities are developed in such a way that they don’t become sprawling slums. If you could manage via a combination of planning and technology, cities could become a major source of benefit to the ecological systems that are governing the planet. If you could focus on low carbon technology and integrating water, waste, energy and food supply again this could be a real benefit.
Shell has been a leader in developing the idea of future scenarios for its business. Set up by an unconventional executive in the 1970s, it was effective enough to predict two oil shocks. Their reports are fundamentally important to shaping business decisions for the company, but because a version of them is available to the general public online, they help shape perception of the brand as forward-looking, and innovative. Imagery is central to visualizing the essential information in these reports.
There is a public audience for forward-looking communications on issues that affect their everyday lives. Energy use by consumers is shaped by wider political and social concerns and visual communications need to reflect that mood. “Instability” is likely to be a key factor in the energy sector in the coming years and this will have to be factored into visual communications.