Wouldn’t it be great to know the future? I don’t know about this guy and his quatrains. But some people have the uncanny ability to prepare years in advance to be in the right place at the right time to capitalise on a trend.  The rest of us can use scenarios to fill in the blanks.

Scenarios are a way to look into the future

Here is someone who did it. This is Dan Spivey founder of the company ‘Spread Networks’. The only photo I could find on internet was from his LinkedIn page.

He had a clear view of the future. From his position in the Chicago Board Options Exchange he witnessed the trends, rooted in technology and legislation, towards trading without human intervention. He also recognised the significance of microseconds in line-speed in the world of high speed arbitrage between the futures being traded in Chicago and their underlying equities in New York.

Based on this insight, in 2007 he dug a ditch from Chicago to New Jersey.  It was the straightest possible ditch between the two centres.  And he laid an optic fibre cable.

The cable took 100 miles off the current shortest cable.  And this cut the response time on the cable by 3 milliseconds.  In the world of automated trading is a long long time.

The most direct road route is shown in in purple in the map below, along with the profile of the route. This is a story about seeing an opportunity in trends, in uncertain outcomes.

The success of this strategy forms the opening chapter in the book ‘Flashboys’ by author Michael Lewis.

He and his partner only began marketing their cable to traders a month before they went live.

Identifying trends is one of the six approaches for creating Blue Ocean Strategy. Therefore this is a worthwhile endeavour. But how can you engage with the trend? How can you embrace the uncertainty? How do you see the opportunities and pitfalls?

Well one good way is to create a spreadsheet. Define a cost benefit analysis with projections and assumptions. The numbers on your spreadsheet will illustrate performance. But how will you know the way? How will you engage your people? The spreadsheet may be part of the final picture but it is perhaps not the best way to begin. The best way from this approach would be focus on the assumptions. And here is a great way to get your arms around assumptions and how they play out.

Scenarios are stories
and don’t we just love a good story!

“Long, long ago…” We are wired to pay attention to what is said next. We love a story.  And our brains keep stories of the past and stories of the future in the same place. Therefore we are equally intrigued by “Long long ahead…” Mmm I am not sure if the antonym works, but you get the picture. “Far, far in the future” I suppose is more appropriate. Telling stories is powerful because:

• Stories engage our emotions.
• Stories clarify what has to be done, and by whom, without overbearing management.
• Stories allow us to try different approaches to the same uncertainties. We get to ‘play the movie forward’ without taking on the costs of expensive players and the risks of big decisions. We can tell different stories of the possible future.
• Stories engage the people who tell them. By involving more people in the process of story-telling you can stimulate change.
• Stories allow us to wander in the future, so that when we get there, some of what we find is already familiar to us.
• Telling the story of a positive future is exactly what Solutions Focussed Conversations are all about. Talking through the ideal future makes it happen.

There are many approaches to telling stories of the future. One of the most popular is describing scenarios. There are professionals who will take your input, do the research and create a long report on what may play out. But the most inclusive and energising approach is to draw a group of people around the creation of your own stories of the future.

There are also many ways to structure your story. South African author Clem Sunter developed an approach in the early nineties that has been refined and published with Chantell Illbury.

The heart of the approach is a framework created by identifying two trends or uncertainties. The most positive and most negative outcome of each uncertainty is defined and the uncertainties plotted one against the other to create a 2×2 matrix. Each block in the matrix becomes the initiating assumption for a particular story.

It really is quite simple. You define your trends or uncertainties, you create the quadrants and you describe what that world looks like in each quadrant. But the richness is in the dialogue to create the input. Here are some pointers to make your stories rich and enlightening:

• Do the research.  Read about the process of creating scenarios.  Read extensively around the history and current situation relating to the topic for which you will be creating scenarios. Scenarios are a good way to collate and understand the information but the relevance of the scenarios will depend on how well you have defined the trends or uncertainties.
• Know your environment. As you focus your organisation on what you have to do, you will pick up clues about what is happening around you. There are tools the issues you face. Michael Porters five forces, STEEPLE, expanding frames of reference are all very useful.
• Know the other players. Give yourself an opportunity to walk a while in the shoes of competitors, suppliers, policy makers and all of the other relevant players. Pick those with the most impact on your offer and voice their concerns, assumptions and experience.
• List the uncertainties. Engage with all the eventualities. Keep a list of these uncertainties and trends. Know how predictable they are and their impact.
• Know how the game is played. What norms are accepted in the field of business? What do you do well and what not so well? How are these norms played out up and down the value chain? Which of these norms or rules can you adjust to suit your strategy? What rules could you introduce into the game that would suit your organisation?
• Define the components of your story. As you gather all of the information from your dialogue on your environment, players and uncertainties, deep track of the components essential to rich stories.
• Pick one of the uncertainties for the framework over which you have some influence. Otherwise your stories may be disempowering.
• Draw in the people in your organisation, who feature in your stories, into writing the script. This is another opportunity for building commitment.

Once you have your stories, have created a Strategy Map  incorporating your insights and are consistently executing your strategy  it is imperative to continue to scan the strategic environment. The world of High Frequency trading has not stood still. Competition has arisen from providers using air-based, rather than fibre-optic based transmission and are offering to cut another 3 milliseconds off the Spread Networks offer.