Category: News

Are the ”wrong trousers” here again, but now enabling the war in Ukraine?

New geopolitical, bipolar structure seems to be speeding up. We build stronger alliances with those who share the same understanding of the world. The US secretary of treasury, Janet Yellen expressed that the US would now favour “the friend-shoring of supply chains to a large number of trusted countries” that share “a set of norms and values about how to operate in the global economy”.

Although such a development makes it easier to play in your own sandbox, it creates new risks as you do not understand what is happening in another sandbox. Our value systems might hinder us from correctly assess the dynamics in e.g. Asia and how China’s position is evolving.

Senior Advisors Mikael Paltschik and Heini Kaivola shares their reflections on the latest Capful blog post.

Capful offers scenario services to help make sense of the future amid coronavirus uncertainty.

The corona pandemic is without precedent in the modern era. Several billion people are under lockdown, and large parts of the economy have frozen. There is no old playbook to copy in this crisis. For organisations struggling to navigate the crisis and wondering what world will emerge from the shock, Capful has put together four alternative scenario packages that focus on different phases and aspects of the crisis. Our proprietary software tool, the Scenario Builder™, makes our scenario process highly effective and efficient. The four packages we offer are outlined below. Please have a look and contact us to find out more.

CRISIS SCENARIOS

• Alternative scenarios for the epidemic’s progression
• Duration and phases: case growth and other aspects
• Depth and severity of the twin crisis: health and economy
• Impact of scenarios on different sectors, response plans
• Organisation-specific impact analyses, need for change
• Time span: 4-18 months

OUT OF CRISIS SCENARIOS

• Alternative scenarios for how the complex pandemic-induced crisis will unfold
• When and how will we emerge from the crisis?
• New and old normal in the short term
• Implications on strategy, testing of strategies against scenarios
• Time span: 2-5 years

FROM CRISIS SCENARIOS TO GROWTH

• External shock as a source of innovation
• Scenarios as platform for new growth ideas and business opportunities
• Concretising growth ideas and testing against selected criteria
• Selected growth ideas in existing, adjacent and new markets
• Time span: 5-15 years
• External shock as a source of innovation
• Scenarios as platform for new growth ideas and business opportunities
• Concretising growth ideas and testing against selected criteria
• Selected growth ideas in existing, adjacent and new markets
• Time span: 5-15 years

AFTER CRISIS SCENARIOS

• Big picture after the pandemic
• From crisis to creative destruction, compounding effects of the pandemic
• Permanent effects or new normal in the long run
• Reversible effects, factors returning to old normal
• New vision and strategy emerging after the crisis
• Time span: 10-20 years

Contact us, we are glad to tell more about the scenarios.

Gasgrid Finland, a Finnish state-owned gas transmission system operator has prepared four scenarios concerning the future of gases to base its strategy work on. Scenario work seeks an in-depth understanding of changes in the operating environment that are to be utilized later in the strategy phase. In the scenario phase, Capful helped Gasgrid Finland to look far into the future and to see alternative developments in the industry, key forces for change in the operating environment and the associated uncertainty.

The preparation of the scenarios to form the basis of Gasgrid’s strategy started in February 2020. The scenario work has been a modern, open journey of exploration into possible visions of the future.

“In the course of the scenario work, the understanding that the Finnish gas sector has possibilities to have an impact on its future has strengthened, however it requires work. If we as a sector believe in our possibilities to create significant benefit for the society as it strives to become carbon-neutral, we must work in even stronger collaboration and relay this message – both in words and in actions,” summarizes Anni Sarvaranta, who leads strategy work at Gasgrid Finland.

The scenarios are presented in more detail on Gasgrid’s website at Gases as Part of the Energy System of the Future.

Further information:

Anni Sarvaranta, Senior Vice President, Strategy and Market Development, tel. +358 50 348 2071, anni.sarvaranta[at]gasgrid.fi.

Gasgrid Finland Oy is a Finnish state-owned gas transmission system operator with system responsibility. Gasgrid Finland ensures safe, cost-efficient and reliable gas transmission for the customers and society.

The preparation of the scenarios to form the basis of Gasgrid’s strategy started in February 2020. The scenario work has been a modern, open journey of exploration into possible visions of the future.

Every life lost to Covid-19 is a tragedy.  Physical and mental sufferings are carving deep wounds. Individual, corporate and national economies are in a free fall. And this will go on for some time, with different pace in different parts of the world. But, unfortunately, this is an easy problem, and still we are suffering too much. 

Few surprises 

Covid-19 has caused a pandemic which has very few surprising elements, if one does not count some political leaders’ statements. Epidemiologists, who are supposed to be on top of things, do not seem to be surprised. When calibrating the parameters of their models, the virus seems to behave as expected. There is a good fit between model estimates and empirical facts. Scientists are also very confident to have a vaccine available later in the year. They know perfectly well how to proceed. During long nights, the lights are on in many laboratories.  

Economists make predictions of the effects of lockdowns, and opening measures, stimulus packages, national debt etc. Although the outcomes of the work do not paint any bright picture, the professionals seem to be sure that they know what they are doing. And in the welfare sector, professionals are very clear about the negative consequences the pandemic, and all the restrictions superimposed on citizens will result in. From the kids in nurseries to the elderly in care homes, all will have wounds. Few seems to run into any bigger challenge understanding how this works.  

A wicked problem? 

Wicked problems are hard to solve as we mostly lack understanding of the complexity of the issue, knowledge can be incomplete or available information is contradictory. Many stakeholders and interconnected socio-economic systems are regular qualities of wicked problems. Solutions are never easy to find. But the corona epidemic, as indicated above, is not really a wicked problem. Policy makers know how to tackle it and know the price. If costs are too high, policies are fine-tuned and one accepts some more casualties, if moral and ethics allow for that. So, by the end of the day, it is an optimization problem, how cruel it ever may sound. Optimization of bad outcomes. Or less bluntly, it is about solving dilemmas. 

Why are we in this situation? 

How could we end up in this horrible situation if the problem is solvable? Instead of participating in the popular blame game, one has to understand how we perceive things happening around us, how we make judgement, what kind of heuristics is applied, what designs the option space we are applying looking for solutions. Think about the leaders that are responsible for our societies. Decision makers like good news. Our minds are geared to the positive. The seminal works of Kahneman and Tversky clearly show our bias towards the more positive outcomes in decision making. We do not properly perceive and interpret signals of unwanted developments. We discarded facts about Covid-19, interpreted the threat as a flue that will go over very quickly. Initial responses are often based on an automated judgement for fixing the known, although the problem has many unknown elements to the decision maker. Those who allow their system 2, in the Kahneman terminology, to help to understand the complexity, and all consequences of available options, might come to other decisions, than those how to handle a flu.  

A journey to the future, and back. 

Decision makers dealing with covid-19 have probably a very limited set of “memories of the future” applicable to what is happening now. They have had very few reasons to make the journey into alternative plausible futures shaped by different responses to and developments of pandemics. Accordingly, their judgment system is under severe stress to interpret signals and information, sort out conflicting views and align all the issues with their value system. Having been on a trip to the future, would probably make decision making less painful. 

For decades scenario planners have included pandemics in different scenarios. A proper use of scenarios also includes preparing for scenarios that are not welcome developments. It is a no-brainer to build up reserves of e.g. PPE. When we prepared the population for the nuclear war, everybody knew how to store supplies and find shelter. Now frontline personnel in many countries feel the consequences of decision makers not paying proper attention to pandemic scenarios. 

Covid-19 does cause tragedies. The number of too early fatalities will be too big. And every single death makes us feel sorrow. But, now we are fighting a virus which we know how to conquer. Wait until we will face a new threat, with properties that we do not understand. Before this wicked problem hits us, let’s engage in building scenario narratives that gets traction with decision makers.