advise – scenarios

Scenarios for plausibility

If only we could extrapolate the future from the present; if only small causes had small effects and large causes large effects; if only forecasts proved accurate. Although we know for a fact that only in very limited cases do forecasts have accuracy, we persist in making them even when they do not. Take the Black Scholes formula for pricing options in the financial markets – which depended on the critical assumption that past turbulence would be equal to future turbulence. This is but one far reaching example of over-confidence in our ability to have knowledge about the future.

Of course we can predict simple things, but most problems of real interest are too interconnected, too complex to bow to predictions. From this insight, scenarios were developed as alternative tool to drive ourselves to consider the full breadth of the potential of the future, including being open to things we don’t even know about. Scenarios describe plausible futures, and enable a better quality of strategic dialogue about the choices we face today. As such they are not so much about the future, as about dealing more adequately with the influence of the future in the present.