Spinning the future.

You can't predict the future. Nobody has a crystal ball.

So, how can you think about the future? How can you best prepare yourself? We have talked in these columns about the habits of mind that work best in rapidly-changing times. If you've been following along in your hymnal, you've begun to get the rhythm: It's all weather. Run for the roar. Seek out paradox. Look for the open space.

But what about thinking about the future itself? Is there a better way?

At the moment, I am writing a book on the future of China with Peter Schwartz and Jay Ogilvy of the Global Business Network, a think tank with international reach. Ogilvy and Schwartz were formerly researchers at SRI, and Schwartz was later head of global planning for Royal Dutch Shell. In the early 1980s, it was Schwartz and two colleagues who caused Shell's top management to ask themselves, "What if oil prices fell drastically?" When oil prices did fall by more than half in 1986, Shell was prepared, and fared far better than the other large oil companies.

Ogilvy and Schwartz do not attempt to tell the future. Instead, they tell stories about it. They spin scenarios.

One of the most singular successes of the scenarios process was the part it played in helping to dismantle apartheid. Pierre Wack, the man who brought Schwartz to Shell, retired in the early 1980s. In retirement, he joined a team helping AngloAmerican, South Africa's largest company, think about the future--of South Africa and apartheid. It turned out that one future that few white South Africans had even considered was one in which black South Africans came to dominate the government--but did not exile the white people, kill them, or confiscate their property. And it turned out that the various black South African cultures showed certain elements, especially a deep appreciation of the value of forgiveness, that made such a scenario plausible.

An AngloAmerican executive, Clem Sunter, gave a series of speeches around South Africa highlighting the study group's scenarios. The speeches became a book, which became a bestseller--which ultimately helped persuade President DeKlerk to release Nelson Mandela from prison and begin the process that would dismantle apartheid.

Spinning scenarios is a highly sophisticated, singularly useful, and imminently practical way to think about the future. Yet, it is simple enough that you can do it yourself. In fact, Schwartz tells how to do it in a book that you should read: The Art of the Long View (Currency Doubleday, 1996).

When you spin scenarios, you end up with an array of plausible futures--usually three to five possible stories of how the future will unfold for you, your organization, your community, or whatever you are focusing on. The idea is not to decide which of these tales is right. Rather, the idea is to create an array of plausible futures, and then: (1) examine how prepared you are (and how prepared you could be) for each of them, and (2) look for markers that will tell you which of them--or some other future you had not imagined--is unfolding. The point of scenario-spinning is to help us "suspend our disbelief" in all possible futures, so that we can see the possibilities with clear eyes.

It's a process that works best with other people, especially with other people who don't share your assumptions. Schwartz identifies eight steps in the process.

1. Isolate the decision

Rather than trying to explore the entire future, ask yourself, "What am I trying to decide?" In a health care system, for instance, the decision in question might be: "Should we merge with the guy across town?" Don't worry too much about whether this is exactly the right question. In the process of exploring whether you should merge with Our Lady of Perpetual Wellness, you will discover that you really should be asking whether to merge with Community Memorial or Mammoth Healthcare, Inc. But narrowing the original decision question gives you much sharper insights.

2. Identify the key forces in the local environment

Forces within your institution and your environment might include such things as the size of the market, and whether it is expanding; your level of debt, and that of your potential partner; your and your partners' reputations; the existence of unfilled niches (birthing, substance abuse, long-term care, home health, oncology, heart rehab), and what the market really wants.

3. Isolate the driving forces

Having researched a number of forces that could affect your decision, ask yourself and your team: What are the driving forces that are critical to this decision? Some driving forces effect everyone the same. Everyone in health care, for instance, is driven by the need to cut costs. But unless one of your potential partners is markedly better or worse than other people at doing this, it is not a difference that makes a difference.

4. Rank the driving forces by importance and uncertainty

Some forces are more important than others. Whether the market will grow may not be as important as whether new players enter the market. And some forces are far more certain than others. Local housing and population patterns usually change fairly slowly. The aging of the U.S. population is fairly predictable over the coming decades--and will have a similar effect in any scenario. On the other hand, other questions (such as: "Will we continue to have effective antibiotics? Will pharmaceutical research produce new effective therapeutics soon enough to replace the ones we are losing?") are highly uncertain. The most critical driving forces will be those that are both very important and highly uncertain. Select the scenario logics.

5. Generate scenarios from questions

This is probably the most important step. The feeling is one of playing with the issues, reshaping and reframing them, drawing out their hidden factors, until you begin to come to a consensus about which are the two or three most important underlying questions that will make a difference in your decision. One way to generate scenarios from such questions is to cross them, in a two-axis matrix, or a three-axis volume.

Suppose, for instance, that you and your study team decide that the two most important questions for your local health care market are: (1) Is it possible, through health promotion and community work, to actually change people's behavior and significantly improve the health of the population? (2) Which will predominate in the market--a concern for low cost no matter what, or a willingness to pay for demonstrated quality?

Crossing these two in a matrix gives four possible scenarios:

1. "Cut to the bone:" People are unwilling to pay one dime more than necessary for health care, but they're equally unwilling to respond to any attempts to improve their health--so all you can do is cut costs mercilessly to try to compete with the other guy.

2. "Big doc:" People won't change the way they live to improve their health, but they will pay what is necessary for prime health care--so you can compete on quality.

3. "Health tech:" People become very health-conscious, willing to do what they can to be as fit as possible, and willing to pay the extra dollar for good health care--so you can compete both by offering the highest quality and by working to raise the health of your customers.

4. "Health on a shoestring:" People aren't willing to pay, but they will take care of themselves if you show them how--so you pour money, time, and attention into improving people's health, while keeping a tight rein on costs inside the institution.

6. Flesh out the scenarios

Now go back to all the driving forces and trends that you considered in steps two and three, and see how they affect your scenarios. For instance, your degree of risk: being at risk for a majority of your contracts becomes a major plus in "health tech" and "health on a shoestring" and a minus in the other two. Access to capital for information management is important in all four scenarios, but in different ways--in some, only to control costs, in others to increase quality and extend funtionality, or even to bring health information to your customers. Weave all the trends and driving forces into the basic logics that you have built, and see how they affect the story.

7. Play out the implications

Return to your original question and examine it in the light of the scenarios that you have built. Does the idea of merging with Our Lady of Perpetual Wellness seem strong in all the scenarios? Suppose OLPW is a high-quality provider that has not yet shown a great ability to cut costs--the decision looks pretty dicey under the "cut to the bone" and "health on a shoestring" scenarios. You would be betting the farm on the hope that people will pay a bit more for quality. If it only looks good in some scenarios, and in others it seems to lead to crash-and-burn, classify the decision as a gamble. Remember, you built the scenarios out of factors that were highly important, highly uncertain, and beyond your control.

8. Search for markers

Finally, look for the leading indicators that would tell you which of the scenarios--or which combination of scenarios--is actually taking place. How would you know? The questions buyers ask in contract negotiations? Customer response in questionnaires and focus groups?

Having the right questions in hand and having given thought to how you will know the answers when they show up will put you a step ahead of the next guy.

According to Schwartz, "You can tell that you have good scenarios when they are both plausible and surprising; when they have the power to break old stereotypes; and when the makers assume ownership of them and put them to work. Scenario-making is intensely participatory, or it fails."

Joe Flower is Principal of The Change Project, in Larkspur, California. He has written about change in health care for over a decade. Author of hundreds of articles, he is a Contributing Editor for the Healthcare Forum Journal and New Scientist, a system host of The Well Computer Conference, and a faculty member of HealthOnline. If any of the ideas presented in this column resonate with your experience, drop Joe a line at The Physician Executive, or at [e-mail] on the Internet.

If you can't find The Art of the Long View by Peter Schwartz in the bookstore, you can order it from the Global Business Network: Box 8395, Emeryville, CA 94662, or call 510/547-6822, fax [phone].