Insigths

Capful cooperates with Kemira in scenario work

Capful and Kemira have collaborated in scenario work with the aim to envision the future of water management by 2040.

What will the future of water management look like? Will citizens become more aware and activate around clean water topics? Will conflicts erupt because of water scarcity? Will megacities and global corporations take a more prominent role – also in water provision? How does digitalization impact the clean water value chain? What about regulation?

To understand what the future of water management might hold, an influential panel of water sector experts were invited to discuss different challenges, opportunities and possible paths ahead.

The “what if?” stories presented in this report can give food for thought for strategic discussions, inspire cooperation, technology development, and encourage new and innovative ways of thinking.

The decisions we make today about water access, quality, solutions for water treatment and water reuse impact the future living conditions of communities around the world. What will actually happen? No one knows. But it’s important to consider the possibilities.

Learn more about the “Water management 2040 -future scenarios” and download the report here.

Interested in scenario work?

Contact us!


Jari Puhakka
Senior Partner
040 562 2675
jari.puhakka(at)capful.fi

International Certified Future Strategist programme 2021

Save your spot in the International Certified Future Strategist programme 2021

Take part in an international course taught by business professionals from five European countries, with more than 20 years of experience each in the fields of future studies and strategy.

The programme:

The International Certified Future Strategist ICFS is targeted at companies and organisations wishing to build the necessary in-house expertise for developing futures perspectives and strategy, and at individuals who want to enhance and impact their career path by learning and developing these skills.

Individuals attending the course will learn the skills and knowledge needed to address the challenges facing their organisation, including: how to analyse change, how to create scenarios, how to develop strategy, and how to implement and communicate change.

”If you’re working in company or organisational development and interested in the future, then this course is really key.” Rikard Wallin, Sweden

“The learning-style is very hands-on and assignments quite challenging, so after getting the certification you’ll have a feeling of real accomplishment.” Jonas Kronlund, Finland

The ICFS programme duration is approximately five months, with five modules. Modules 1-4 consists of three days of teaching each and the last module one day of teaching. The 2021 course is held online. The course practitioners come from five European consultancy companies  who work in the fields of future studies, scenarios, visions, strategy, communication and organisational development with more than 20 years of experience. 

The schedule for 2021 is the following:

  • Module 1: Environmental analysis (20-22 January 2021)
  • Module 2: Scenarios (10-12 March 2021)
  • Module 3: Vision & strategy analysis (21-23 April 2021)
  • Module 4: Strategy & action (26-28 May 2021)
  • Module 5: Summing up and certification, online (2 September 2021)

The course is a tailored executive education programme with an emphasis on learning in an international environment. The course is best suited to individuals in management positions, who have a responsibility to shape and enhance strategic thinking within their company. At the end of the course, participants who have completed the required assignments and presentations are  able to get a formal certification which confirms their ability to proficiently use the techniques taught on the course.

For more information, visit the programme website.

How to apply:

For registration, please contact Jari Puhakka, Senior Partner of Capful (040 5622 675) or jari.puhakka@capful.fi. You can also arrange a personal demonstration by leaving us your contact information – we will be happy to tell you more about the program.

Scenario services to help understand the future amid coronavirus uncertainty


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 updates its strategy in cooperation with Capful


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.

Scenarios, strategic options and scent of roses

“The 2020 election doomsday scenarios are endless: Dozens of lawsuits challenging state results.”

“Wildlife expert says black bears hunting humans is an extreme scenario.”

“Worst-case global heating scenarios may need to be revised upwards in light of a better understanding of the role of clouds, scientists have said.”

US banks have again been evaluated against adverse scenarios in annual stress tests, and the Finnish Air Force has trained key personnel in tactically challenging scenarios. Different transmission scenarios have been explored during the coronavirus pandemic, and recently published scenarios have already been updated to reflect the pandemic’s impact. Scenarios are frequently featured in the news – in a wide variety of contexts – and at first glance, they seem synonymous with alternatives. In strategic conversation, scenarios often refer to an organisation’s strategic options but also to different types of forecasts, quantitative models, economic modelling or sensitivity analyses. What do we mean when we talk about scenarios – and why does it matter?

Scenarios and strategic options – different tools for different purposes

What do scenarios and strategic options have in common? Both deal with alternatives. So, does it matter if strategic options are called scenarios? I think it does. Scenarios relate to alternative developments in the external environment of an organisation, whilst strategic options address the organisation’s own development pathways.

Shell, a pioneer of scenario work, has been developing scenarios since the 1970s and defines them as “plausible and challenging descriptions of the future landscape”. It is in this future landscape – illuminated by scenarios – that companies and other organisations must navigate and steer their operations, with alternative routes and directions available to decision makers – in the form of strategic options.

Strategic options are linked to companies’ own choices and opportunities, for example when pursuing growth. What are the dimensions of market growth and what are the company’s options and enablers regarding growth? A creative and systematic process helps build strategic growth options, discuss them in a structured manner and assess them systematically from different angles to draw up a well-founded growth strategy for the company.

Strategic options are a useful but underexploited tool. Based on research by Capful and others, a large number of companies believe that strategic options should be used as part of strategy work and decision making. In practice, however, very few companies systematically use them when developing strategies – due to firmly entrenched decision-making processes, avoidance of conflict or lack of time, among other things.

In the midst of the coronavirus crisis, it’s useful to look at the large number of uncertainties in the external environment and make scenarios for what might lie ahead; anticipate how and when we’ll get out of the pandemic and what the post-crisis world will look like. It also makes sense to take full advantage of strategic options – identify, describe and evaluate them against different criteria and scenarios – to make informed choices. But in the context of strategy making, it’s also advisable to keep in mind that scenarios and strategic options are not the same: Scenario-based strategy work is different from strategy work based on strategic options. If they look and smell like strategic options, why call them scenarios when they in fact are strategic options.

Scenarios or forecasts – what’s the difference? 

From the outset, pioneers of scenario work – like Herman Kahn, Pierre Wack, Shell, SRI International and GBN – opted not to assign any probabilities to scenarios: all scenarios are treated equally possible. This may have been partly in response to companies being overly dependent on quantitative model-based projections in their strategic planning. Since the early 1970s, forecasting errors had become more frequent; they were at times dramatic and in some cases disturbingly large. What were the conclusions then, and what are the implications for scenario practice today?

  1. Scenarios should be used to identify plausible futures – not to predict probable futures.
  2. All scenarios presented should be taken as equally possible – for managers to thoroughly analyse the implications of each scenario and to compose backup plans for each scenario.
  3. Scenario work should reveal several possible futures – not to pinpoint the most credible future or the most likely one that is consistent with some underlying assumptions.

To spot genuine uncertainties and discontinuities or to anticipate radical structural changes and dramatic shocks in the external environment, we need a method that allows us to think the unthinkable and imagine the unimaginable – free from probabilities. It is not possible to foresee significant step changes using forecasts that are based on today’s and yesterday’s knowledge, frameworks, cause-effect relationships, continuities and trends.

Why is it important to emphasise the difference between scenarios and forecasts? Our thoughts and perceptions are – often unconsciously – controlled and guided by the desire to predict the future and the belief of past events repeating themselves. Scenarios are a tool, not only for dealing with uncertainty, but also for challenging decision-makers’ existing worldviews and mental models. To make this possible, we should avoid falling into the probability trap and steer clear of dominant thinking in scenario work.

The road from scenario thinking to the world of forecasting is paved with probabilities: when one starts talking about the likelihood of future developments, one shifts from scenarios to forecasts. Scenarios help you ask the right questions, whereas forecasts are used to find the right answers. Many strategic missteps stem from trying to find the right answers (problem solving), even though the right questions have not yet been asked (problem framing).

Forecasts and scenarios serve different purposes, and it’s prudent to keep these concepts and associated methods and practices separate in the strategy toolkit. A forecast is intrinsically uncertain, but this does not make it a scenario. If it looks and smells like a forecast, it’s a good idea to call it a forecast.

What are scenarios in strategy work – and what are they not?

The coronavirus crisis has revved up scenario projects. There’s an exceptionally high level of uncertainty regarding the future, and scenarios make it possible to address the uncertainty in a meaningful way. But in the thick of the action, it’s worth keeping the concepts of scenarios, strategic options and forecasts separate. Below is a brief summary of what scenarios are and what they are not in strategy work.

The economic, environmental, technological and other forces affecting organisations are increasingly complex and intertwined, and unexpected events like the Covid-19 pandemic can radically increase volatility in the external environment. But complexity and uncertainty need not prevent us from preparing for the future. Scenario-based strategic planning helps decisionmakers develop flexible strategies for an uncertain future, whilst new tools like Capful’s Scenario BuilderTM help make the process agile and effective.

When embarking on a scenario-based strategy project, it’s a good idea to make the rules of the game clear to all participants. The purpose of the process is not to prop up the ‘official’ future, determine a probable or preferable future, or seek support for existing management views. Quite the opposite, there’s now an opportunity to delve into issues and topics that call into question the official worldview or are otherwise ‘forbidden’ or ‘impossible’. To make the most of the project, it’s also necessary to clarify the concepts and help project participants distinguish the charming scent of scenarios from the equally wonderful smells of strategic options and forecasts.

Quotes from: CNNCBCThe Guardian


Arto Kaunonen
Founder, Senior Partner
+358 50 356 0717
arto.kaunonen(at)capful.fi

Making the strategic conversation a process

Managers tend to be rational decision makers. Their rationality is mostly bounded by the recognized options available. The preference for rationality is well supported by the corporate calculus machinery. Net present value, or metrics alike, is looked at when considering the next steps in the strategic dance around the competitive equilibrium. Actors are supposed to move in a predictable way. And, as long as predictability reigns, things are very well.

Unfortunately, uncertainty has become the new norm. The options available become both vaguer, and more options might appear on the strategic radar screen. In the preface to the second edition to his seminal book on scenarios, Kees van der Heijden writes ‘Uncertainty has the effect of moving the key to organizational success from the “optimal strategy” to the “more skillful strategy process”’. The subtitle of the book is “The art of the strategic conversation”. Today, more than ever, when a lot of decision processes are highly influenced, not to say paralyzed, by the consequences of Covid-19, managers are well advised to move away from the sphere of illusionistic predictability and adopt another approach to cope with navigation and decision making.

Strategic conversations are about how to find a fit between plausible futures that might come at the organization, and what repertoire of activities the organization can mobilize.  Well designed they bring a multitude of perspectives making the conversation very rich. But the richness will turn into information chaos if there is no way to structure it. The scenario practice has proven to be a very powerful tool to cope with vast amounts of information and uncertainty. Scenarios not only bring structure, they engage in an inspiring way with plausible futures, allowing managers to make journeys into the future, and back. Decision making in the present is then informed by their “memories of the future”.

We see very notable examples how organizations use scenarios as a central ingredient in making the strategic conversation a process. A classical design is to have scenarios informing the strategy review at the beginning of an annual strategy process, and then evaluate the strategy proposal against the scenarios before decisions are taken. Another way to engage with scenarios is to have scenarios to inspire the generation of strategic options. Most scenarios are built on key uncertainties. Another use to stage the strategic conversation based on scenarios is to have a series of workshops, or alike, around the uncertainties, and perhaps, letting the learning not only inform the strategic conversation, but also the scenarios, potentially calling for revisions. We do also see how business intelligence systems are used to track and inform on signals connected to the uncertainties encapsulated in the scenarios.

The turbulence managerial decision makers must cope with, will probably not diminish. To live in a world of predictability is to call for trouble. To design a proper process for the strategic conversation, supported by e.g. scenario thinking, is a way to increase the probability of making intelligent choices in an uncertain world, and sleep well at night.


Mikael Paltschik
Senior Advisor
050 344 6953
mikael.paltschik(at)capful.fi

The fruitful interplay between strategy execution and scenarios

We very often hear that engaging with scenario work while being simultaneously tasked with delivering the company’s present strategy is a particularly hard undertaking for executives. A good set of scenarios casts new light on many of the assumptions the strategy is built on, and perhaps calls for reconsideration of the present strategy, making life for the executive more difficult. The easy solution is to stick to the strategy and hope that the future will fit the chosen strategy.

The executive dilemma comes from mixing two different conceptual worlds. Richard Normann, who was one of the leading thinkers in management and strategy, distinguished between two conceptual worlds: The World of Management and the World of Business. In the former, executives are focused on making the existing strategy a success, working with the total repertoire of managerial tools. Budgets are set, and they are to be met. Rewards are linked to the agreed goals. As an executive, you tend to limit yourself to the transactional environment while making sure the whole organization is progressing in the same, agreed direction. Thus, no ambiguity about goals and direction exists when you start work in the morning.

The mental model in the World of Business is a different one. You focus on the context of your present business and try to get your head around how that context might change, and how those potential changes might impact and change the transactional environment in which you are executing on your present strategy. This includes a multitude of issues that you cannot control, but the outcomes of which will certainly impact the conditions for your business. Trends and uncertainties occupy your mind. Somebody might even look for a black swan or spot a pink elephant. All in all, this is where scenarios can be helpful. A proper engagement with scenario thinking can help to perceive futures coming at you, carrying with them new opportunities, but also threats. Having spent time in the future, you make the journey back to the present, but with scenarios, the stories of plausible futures, you have the potential to institutionalize memories of the future.

The World of Business meets the World of Management when trying to understand the fit or misfit between future conditions, as described by the scenarios, and the dominating ideas manifest in present strategy. Sometimes you can sleep well, when the future, as understood by you, appears as your current strategy should expect, but more often the need for rethinking the strategy is apparent. The fit/misfit analysis between your strategy and scenarios is not only to be taken as a burden making your life harder, since it may also disclose new opportunities to be exploited or reveal risks that are mounting up. All these impactful steps are taken in the World of Management.

The strategic conversation that brings success to the organization should include a proper, well-structured interplay between the dominating ideas underlined in the present strategy, and the memories of the future, manifest in scenarios. The ability to handle both worlds, Business and Management, as separate logics, and staging the interaction between the two is the key to success.


Mikael Paltschik
Senior Advisor
050 344 6953
mikael.paltschik(at)capful.fi

Covid – 19 – a terrible enemy, but not a wicked problem. Wait for the real surprising challenge. 

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. 


Mikael Paltschik
Senior Advisor
050 344 6953
mikael.paltschik(at)capful.fi