Sixth Sense, The: Accelerating Organizational Learning with Scenarios




320 pages
18 JUL 2002


This book helps managers move beyond the idea that the future of business will resemble the past and allows them to use scenarios to imagine multiple perspectives. The concepts of organizational realities, experience, and beliefs are explored to encourage and embrace change in business organizations for a successful future.


ABOUT THE AUTHORS x INTRODUCTION 1 The Quest for a Clear Vision of the Future 1 Unknown Variables, Uncertain Future 1 The Significance of Scenario Thinking 2 Developing the Sixth Sense the Approach to Scenario Thinking 5 How this Book is Organized 6 1. PREPARING FOR THE FUTURE 11 Understanding Organizational Success 12 Success and Failure are Inevitable 12 Understanding success by understanding failure 13 Explaining the Sharpbenders Research: Why Organizations Fail 14 Maintaining Organizational Performance: Problems 19 Sustaining Competitive Advantage the Battle of Canon and Xerox 19 Yahoo! Competing in Fast-moving Markets 23 Building a Colourful New Future Brick by Brick the Story of Lego 26 Success Stories 28 Providing Customer Value the Rise of Tetra Pak 28 Entering New Markets and Maintaining Growth Nokia Answers the Call 32 Barriers to Strategic Success 34 Lessons Learned 34 Creating Value The Difference Between Success and Failure 36 Value is Created in a Domain of Scarcity 37 Summary: Understanding the Barriers to Scenario Planning 37 2. HOW MANAGERS THINK ABOUT THE FUTURE 41 Understanding Management Thinking 42 Routines in Management Thinking 43 Over-reliance on Routines: Success Formulas and Managerial Thinking 44 Biases in thinking 46 The Relevance of Framing Flaws 46 How a Failed Product Launch Actually Boosted Sales: the Sparkle of New Coke 47 Confirmation Bias 50 Hindsight Bias 51 The Problem of Overconfidence 52 The Limitations of Judgemental Forecasting 53 Decision Avoidance 54 Escalation of Commitment 54 Bolstering, Procrastination and Buck-Passing 57 Example of a Management Team Facing a Decision Dilemma 58 Thinking Flaws: A Synthesis 61 Overcoming Strategic Inertia: the Potential Benefits of Scenario Planning 63 A Scenario is not a Forecast of the Future 63 Scenarios Focus on Key Uncertainties and Certainties About the Future 63 Scenarios Help Identify Information to Anticipate How the Future will Unfold 64 Typical Outcomes of the Scenario Planning Process 65 Summary: Overcoming Thinking Flaws with Scenario Planning 65 Summary Checklist the Limits to Managerial Thinking 65 3. HOW ORGANIZATIONS THINK ABOUT THE FUTURE 69 Flaws in Organizational Thinking 70 Communication Difficulties 71 Group-think in Organizations 72 Fragmentation in Organizations 73 Limitations Imposed by Identity 75 Balancing Change and Constancy 75 Overcoming the Limits of Organizational Identity: the Example of IBM 77 Organizational Lock-in 78 Understanding Organizational Lock-in 78 The Consequences of Organizational Feedback Loops and Lock-in 79 Behavioural flaws 80 Learning and Action 80 An Organizational Dilemma 81 Management and Action 82 Overcoming the Pathologies of Organizational Life 84 Using Organizational Processes 84 The Benefits of Scenario Planning Interventions 85 Summary: How Organizations Think About the Future 85 4. THE IMPACT OF CULTURE AND CULTURAL ASSUMPTIONS ON STRATEGY 89 Understanding the Impact of Cultural Issues 90 The Significance to Strategy of Globalization and Cultural Issues 91 From Mickey Mouse to The Lion King: the Tale of Disney in France 92 Defining Culture for Pragmatic Purposes 96 Recognizing Differences in Others 96 The Value of Scenarios in Assessing the Impact of Cultural Factors 97 National Cultural Differences and the Role of Scenario Thinking 98 Global Organizations and Local Service Offerings: IKEA Shelve Their Universal Approach 98 How Can We Explore Differences in National Cultures? 100Differences in Organizational Cultures 103 A Clash of Personality: The Merger of Daimler-Benz and Chrysler 103 Organizational Culture and the External Environment 105 Differences in Professional Cultures Within Organizations 106 The Call of the Wild: How Varying Interpretations of Management Intent Divided Senior Executives in an ITC Business 106 Moving Beyond Cultural Preconceptions and Stereotypes 108 Understanding Cultures Across Boundaries 108 Language, Meaning and Overcoming Ambiguity 109 Increasing Diversity in a World of Similarity 109 The Starting Point for Cultural Appraisal 110 Developing Multiple Perspectives 110 The Application of Scenario Thinking to Cultural Understanding 111 Applying the Defining Factors of Organizational Culture to Your Organization 111 Developing a Scenario Culture 112 Key Questions 114 5. SHAPING THE FUTURE: THE EMERGENCE OF MODERN SCENARIO TECHNIQUES 117 Scenario Planning: the Human Dimension 118 Bringing the Future into the Present: The Story of Margareta Lonnberg 118 Memories of the Future: Scenarios Filter What We Perceive 119 Scenarios: A Cornerstone of Human Thought 120 Scenario Thinking and War Games 121 Uncertainty and Crisis 121 War Game Preparations 122 A Natural Scenario Planner: Field Marshal Lord Alanbrooke 123 Crisis Management Training 124 The Era of Possibility: the Makeable Post-war World 124 The Age of Forecasting and Systems Engineering 124 The US Perspective 125 The Rand Corporation: the Emergence of Scenario Techniques 126 The Impact of Herman Kahn and the Hudson Institute 127 The French Perspective 128 Challenging Established Thinking: the Development of Scenarios in the 1970s 129 The Club of Rome 129 Royal Dutch/Shell and the Problem of Predictability 131 The Development of Scenarios and Strategy During the 1980s 134 Factors Affecting the Use of Scenario Techniques in Business 135 Scenarios Become Popular 135 Scenario Planning and Other Strategic Approaches 136 The 1990s: Scenario Planning and Organizational Learning 138 The Age of Complexity, the Limits of Certainty and the Rise of Scenario Planning 138 Organizational Learning 139 The World of Identity, Experience and Change 140 Summary: the Benefits of Scenario Planning 142 Enhanced Perception 142 Integration of Corporate Planning 142 Making People Think 143 A Structure for Dealing with Complexity 143 A Communications Tool 143 A Management Tool 144 Summary Checklist Building an Understanding of Scenario Thinking in Your Organization 144 6. DEVELOPING THE SKILLS FOR LONG-TERM SURVIVAL AND SUCCESS: PRINCIPLES OF THE SCENARIO PROCESS 147 The Need for a Scenario Process 148 Scenarios and Scenario-based Organizational Learning 150 Rationalistic Decision-making 150 Cause and Effect Thinking 153 Systems Thinking 154 Mental Models and their Limitations 158 The Strategic Conversation 161 How Scenarios Tackle the Problems of Organizational Thinking 162 Surfacing Mental Models 163 Eliciting the Agenda 164 Activating and Integrating Intuitive Knowledge 166 Analysing Driving Forces 169 Scenario Telling 170 Organizational Learning 171 The Process of Organizational Learning 172 Scenario Planning as a Way Towards Adaptive Organizational Learning 174 Memories of the Future Creating the Jolt 175 From Scenarios to Adaptive Behaviour 178 Making it Happen 180 Summary: Developing the Skills of Survival 184 7. SCENARIO PLANNING IN THE ORGANIZATIONAL CONTEXT 187 Introducing the Scenario Method 188 Scenarios for the Future of e-Government and the Impact of Information and Communications Technologies (ICT) 190 Background 190 The Story of the People s Kailyard 191 Stage 1: Structuring the Scenario Process 192 Identifying Knowledge Gaps 192 Building the Scenario Team 193 Timing for the Scenario Project 194 Stage 2: Exploring the Scenario Context 195 Interviewing Key Players and Widening the Conversation 195 Setting the Scenario Agenda 199 Setting the Scenario Agenda: the Northshire Example 200 The Role of the Remarkable Person 201 Stage 3: Developing the Scenarios 202 Determining the Driving Forces and Testing the Outcomes 202 Clustering the Driving Forces: the Northshire Example 204 Dealing with Impact and Uncertainty 206 Scoping the Scenarios 209 Setting the Limits of Possibility for Alternative Futures: the Northshire Example 210 Fleshing out the Storylines 213 Beyond the Kailyard 215 Stage 4: Stakeholder Analysis 216 Stage 5: Systems Thinking 219 Stage 6: Impacting Organizational Thinking and Action 220 Looking for the Organizational Jolt 220 Identifying the Early Indicators 220 Action Planning from the Future to the Present: the Northshire Example 221 Summary: Effective Scenario Planning 223 Summary Checklist Implementing a Scenario Planning Process 224 8. SCENARIO PLANNING: TAKING CHARGE OF THE FUTURE 229 The Energetic Problem Solver 230 Observation the Cornerstone of Strategic Success 231 Purposeful Scenario Work 232 Project 1: Making Sense of a Puzzling Situation 234 The Analytical Approach 234 The Limitations of Analysis 235 Purposeful Analysis and How Scenarios Steer Attention 236 Combining Intuition with Rational Analysis: the Iterative Scenario Approach 236 Facing the Important Questions 238 Project 2: Developing Strategy 239 Defining Strategy 239 The Stakeholder Game 239 Strategic Aims 240 The Business Idea 242 Friction Forces and Barriers to Entry 244 Developing Distinctiveness 246 The Role of the Business Idea in Strategy 247 Business Ideas and Scenarios 250 The Strategic Journey 252 Project 3: Improving Organizational Anticipation 255 Multiple World Views The Limits of the Rationalistic Approach 255 The Mont Fleur Story 258 The Role of Scenarios in Strategic Conversation 260 Creating the Scenario-based Strategic Conversation 264 Project 4: Building an Adaptive Learning Organization 266 Action and Experiential Learning 266 The Strategic Journey of Project 2 Revisited 266 What is Adaptive Organizational Learning? 268 Building a Scenario Culture 270 Team Empowerment 272 The Across-team Strategic Conversation 273 SUMMARY 276 Rethinking the Future the Value of Scenarios in Developing Competitive Advantage 276 Developing The Sixth Sense 277 GLOSSARY 279 REFERENCES 293 INDEX 299