Hedgehogs occupy the fourth quadrant (control freaks) while foxes choose instead to borrow strengths from all of the quadrants (you can’t box a fox) and so the matrix needs to be modified as illustrated below.

In practice, we work through this matrix and draw scenarios every day of our lives.  Imagine that you are driving down a main road and there is a crossroad ahead.  You are on the main road and logic and law dictate that you have the right of way (i.e. 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 (i.e. a key uncertainty).

In the work environment, the matrix offers an ideal way to gather all the relevant information and use it to focus on the most realistic options available at any one time.  The final decision is more informed, but if it proves to be wrong, the decision maker can return to the matrix for another round.

The Rules of the Game

Without first establishing what you don’t control, you will not achieve a firm understanding of what you do control.  On the other hand, action programmes without rules of the game preceding them are merely “wish lists” where nothing ever gets done.  Often lack of money is the reason, because no one has worked out beforehand where it is going to come from.

It is not the rules of the game that applied in the past that you should be considering in the first quadrant of our matrix, it is the ones that will apply in the future.  Rules change (e.g. anti-smoking legislation).  Probable advances in technology also feature as a prime rule of the game.  A company’s future competitive position in relation to its rivals is very much a rule of the game.

Another (unwritten) rule of human behaviour to consider is a reluctance to tinker with the status quo.  The unknown and uncertain offers mixed chances of gain as well as loss, and the potential pleasure associated with a gain is outweighed by the risk of major pain associated with a loss.  In normal circumstances, the inclination is to do nothing and stay in familiar territory.  Scenarios are useful in that they offer a glimpse of the possible, which may act as the catalyst needed to achieve the leap of understanding necessary for movement.

Key Uncertainties

Key uncertainties are those variables most relevant to a particular situation and with the highest impact potential, either as an opportunity or a threat.  They therefore drive the design of possible scenarios.  When a scenario planning session raises many uncertainties, it is important that the number is whittled down to a few pivotal ones.

When faced with the prospect of being launching into a sea of uncertainty, the typical hedgehog reaction would be to curl itself up and hope that the problem would sort itself out.  However, the reaction of a fox would be to look for the main influencing factors, see how they could be used to advantage and begin to cope with the new situation.

There is a range between certainty and uncertainty, just as there is between factors inside and outside of our control.  By studying the uncertain, we may be able to break it down into elements of greater and lesser risk, of greater and lesser predictability.  In the same way, between absolute control and absence of control lies the middle ground of influence and persuasion.

Scenarios

Scenarios are stories about possible futures (not to be confused with a forecast or prediction of a single future.  Scenarios are multiple pathways into a future that is unknown, constrained by the rules of the game and driven by the key uncertainties.  Each scenario must have a simple, vivid theme which is logical, but differs materially from the other scenarios in the set.  The list of scenarios should be limited to about three.

 It is only by studying all of the scenarios simultaneously and looking at what you want to achieve as well as what you want to avoid that you get a feel for all the options.  Do not make the error of concentration only on the desired future.

Scenarios link the world of perception with the world of fact.

Options 

Opportunities only become options when they fall within your control.  The richer the scenarios, the more varied the options.  What makes options particularly important is that although they are derived from uncertainties outside our control, they are restricted to actions within our control.

Control is power.  But the true nature of power is having control in times of uncertainty.  That control comes in the form of options, so the person who can exercise more options in the face of uncertainty has more power. 

Keep your eyes of the rules of the game, if they change then the options can change too.  Options are only effective if they can be implemented, otherwise they are just “good ideas”.

Realistic and action-oriented strategic planning requires options.  Formulate as many options as possible and then look realistically at those that are achievable and can most effectively be implemented by you.  Remember that scenarios are not recommendations, just as scenarios are not forecasts.

Decisions

Our decisions are limited if we cut ourselves off from the experiences and opinions of others.  Scenario planning encourages the expanding of our constructs through dialogue with others around a broader range of possibilities.  This opens the way for decisions which are unthinkable when considered in isolation.

Even if the outcome of a decision were not the intended or expected one, experience and information would still be gained and fed into the matrix for the next decision.  Decisions and actual outcomes may be far apart, tracking the convergence of divergence between result and intention is as important as going through the matrix in the first place.  It tells you how much you have to adjust your original plan.  As Napoleon once remarked “the problem is always in the execution, not the idea”