The most important aspect of the newly constituted matrix follows Sherlock Holmes’s line of thinking: first eliminate the impossible before concentrating on the possible. To put it slightly differently, if you want to be truly in charge of your destiny, you first require to know your limitations and be humbler than you think. Hence, the lower layer of the matrix which many people ignore lays a solid foundation for effective thinking in the upper part.
The first quadrant now represents the rules of the game – things that are certain and over which we have no control. The second quadrant has two components: key uncertainties over which we also have no control; and plausible and relevant scenarios derived from these uncertainties, though the scenarios must be vivid and different enough to take us out of the comfort zone. The third quadrant is now identified with the options presented by the scenarios. The formulation of options is crucial and allows us to operate with more control in an uncertain environment. The fourth quadrant is the area where decisions are made based on the preferred scenario and linked to the preferred option. It is also the quadrant where strategic plans and programmes of action should be located, as these are really decision paths formulated in advance. The term “scenario planning” normally denotes the processes one goes through in the first two quadrants. “Rules of the game” are sometimes called “predetermined elements” and “key uncertainties” are “driving forces”. Otherwise, nothing is different in terms of the methodology.
Instead of the more restrictive, cognitive model used by hedgehogs that operates solely on the right-hand side of the matrix, this model goes beyond such linear thinking. Handling uncertainty in a systematic and realistic manner provides a real competitive advantage to companies that want to be imaginative; it paves the way for a strategic conversation about the future without reams of paperwork and computer runs being required in advance; it serves up strategic insights without getting mired down in too much detail and it is comprehensive without being pretentious.
Our matrix, in essence, represents the mind of the fox. The model also partially answers the question why scenario planning has failed to catch on in the corporate world in the same way that strategic planning has. CEOs abhor uncertainty. They can’t stand ambiguity and ambivalence. Their attitude is encapsulated in that famous phrase “give me a one-armed economist that doesn’t say ‘on the one hand and on the other’”. However, the fault also lies with the scenario planners themselves who sometimes come across as intellectuals in an ivory tower, using precious language which is out of touch with the shop floor.
The model may sound complicated with plenty of bells and whistles: but it’s not. In practice, we work through the matrix and draw scenarios every day of our lives. Imagine the following situation: you are driving down a main road and there is a crossroads ahead. You are on the main road, and logic and law dictate that you have the right of way. This can be referred to as the rule of the game. However, on the minor road travelling at right angles to you and towards the intersection is another vehicle that, theoretically, should stop. This action is out of your control, cannot be guaranteed and is, therefore, uncertain. This is a key uncertainty. In your mind you play out different scenarios:
1.The driver of the other car sees you and slows to a halt, allowing you to travel through safely.
2.The driver of the other car doesn’t see you, drives straight through the intersection, and you have a near miss.
3.The driver of the other car doesn’t see you, drives straight through the intersection and you crash.
Based on the scenarios, you have a number of options:
1.Maintain your speed on the assumption that the driver is eventually going to see you.
2.Slow down because you worry that the driver is not going to see you.
3.Speed up in the hope that you may get through the intersection before the other car arrives.
Options 1 and 3 may result in a crash, whereas option 2 won’t. These options will influence your decision. In a matter of seconds, you have just worked through the matrix. If you have a cautious temperament, you’ll choose option 2. If you don’t, you’ll go for 1 or 3.
Another situation we have all been in when we were young, and when the matrix is definitely used, is the telephone call asking someone out on a first date. The rules of the game are simple: you have no chance at all if you don’t talk to your intended date; if you come on too strong, you may put him/her off; but if you act too casual, you may not get the message across. The key uncertainty is simple: you don’t know how the person on the other end of the phone is going to react to anything you say. The scenarios are infinite because the conversation can go in any direction. The options are to take the leap and ask up front; or start cautiously, see how the land lies and possibly pop the question of a date later on. And then you decide, intellectually or impulsively, what to do. It brings to mind rose-petal scenarios of the type “she loves me, she loves me not” as a young lover pulls each petal off the flower!
Further down the line, the matrix is an excellent way of judging whether you want to enter into matrimony with the lady or gentleman in question. The rules of the game can be summed up in the wedding vow you make to your partner “to have and to hold from this day forward, for better for worse, for richer for poorer, in sickness and in health, to love and to cherish, till death do us part”. The key uncertainty is whether you do indeed continue to love each other or grow estranged. In the first case, you don’t have to consider options for you will stay together. In the second case, the options are clear: stick together and make the marriage work or part company with possible repercussions on the kids if any. Couples in the second category have to decide for themselves which course of action is right. And they often reverse their decisions.
Memories of the future
Because scenarios are stories that unfold in a sequentially organised manner, they can be viewed as multiple pathways into the future. Each path denotes a hypothetical condition of the environment to which an option for action can be attached: if the future turns out this way, I will do that. According to David Ingvar, the head of the Neurobiology Department at the University of Lund in Sweden, these paths are stored in the prefrontal lobes of our brain. The more we walk down them in our minds, the more we remember them. In other words, we are continually forming a “memory of the future” in our imagination and revisiting it time and again.
In his research, David Ingvar addresses the question as to what function this “memory of the future” might serve and why it would have evolved. Apart from giving us a filter to help us deal with the mass of information that we encounter, it prepares us for action once one of the visited futures materialises. In other words, it gives us the best possible leverage in advance to deal with a wide range of future developments and outcomes. A good example of where this theory is applied in practice is the use of simulators to train pilots to fly aircraft. By the time they pass the final exam, it must be second nature to them what to do. In all situations but especially emergency ones. In the latter case, they won’t have time to scroll through an instruction manual like the one they have for landing. The rules of the game for flying, the key uncertainties during flight, the range of scenarios that you may have to face as a pilot, the options open to you to respond and the selection of the correct option must be ingrained. It’s a pity that CEOs don’t go through simulator training before they fly their businesses into the future. Of the largest 100 companies in the world in the 1950s, 70 have disappeared without a trace. Imagine taking a flight where there was only a 30 per cent probability of landing safely!
Few things are certain in this life, but especially in business. In many ways uncertainty, the natural field of operations of the fox, offers a real challenge for business, but it also opens up the doors for development. It is sad, therefore, that big business today is a century behind the physicists who in 1900 embraced uncertainty in that most “certain” branch of science – physics. The study of elementary particles has given rise to the exciting field of quantum physics that takes the deterministic picture of the universe offered by Isaac Newton and blows