A Time Traveller's Guide to Our Next Ten Years. Frans Cronje
within what time frame this is being done.
For example, if a corporation commissioned us to determine whether the ANC would still be in power after the 2014 elections, this would suggest a ‘clear enough’ or ‘alternate’ future, as a range of possible outcomes could be listed. These would include the ANC losing the election, being driven from power by popular protests, being eroded by internal conflict, and so on. The point is that it would be possible to list a short number of possible outcomes, and to be sure that one of these will come to pass.
However, as time frames lengthen, the emergent character (or butterfly effect) of South Africa’s political system will probably mean that the type of future will become the third or even the fourth variant where we would have to suggest a number of different plausible outcomes for the country and not just a single forecast of a single future.
The advent of scenario planning
There is, of course, a considerable difference between predicting a single future and developing a series of plausible ones. As I have shown, the method of forecasting – in seeking to identify a single most probable outcome – is a risky method for determining South Africa’s political future. The uncertainty inherent in the butterfly effect is simply too great for such a forecast to succeed other than by sheer luck.
Yet many institutions and other role players still demand or expect these sorts of forecasts. The continued use of this approach explains why political scientists and economists struggle to accurately predict the future of economies and countries. It therefore appears that a more effective method is required if we are to understand what South Africa’s future holds.
Pierre Wack, perhaps the world’s most respected scenario planner, and the forefather of much current futures research, made exactly this point almost 30 years ago when he wrote that, despite the obvious failures of forecasting, many corporations continue to do so ‘because no one has developed a better way of dealing with economic uncertainty’.[10] According to Wack the answer to poor forecasting is not to hire better forecasters. He argued that the future is too uncertain for any forecasting technique to be effective, and that it is necessary to develop new and better methods – namely scenario methods – for studying the future.
There is a fascinating history behind the scenario methods Wack was referring to, and understanding this history is essential to understanding exactly why these methods are so effective. A number of great books have been written on the subject but what follows is an abridged history.
The methodology of scenario planning developed in response to the great uncertainties presented by the advent of the Cold War when two superpowers – the Soviet Union and the United States – confronted each other in a binary nuclear standoff. Strategic planning failures in such an environment could obviously have had catastrophic consequences. Just think of the implications of either party developing an entirely inaccurate perception of the other’s intentions, while both have their finger on the nuclear button.
In this tense environment, the Rand Corporation was established in order to conduct research into new weapons systems, particularly for the United States Air Force.[11] A researcher at the Rand Corporation, Hermann Kahn, developed a new method for gaining insight into the future by developing descriptions of a series of alternative futures – written in the present tense, as if they had already come to pass.[12] He called them ‘scenarios’, the movie term for a detailed screenplay.[13] The Californian thrash metal band Megadeth takes its name from one of these scenarios, which describes how one million lives are lost in a nuclear blast.[14]
Kahn went on to found the Hudson Institute in the 1960s, which produced a number of Cold War scenarios, centred on alternative accounts of nuclear conflict.[15] The Hudson Institute began to attract sponsorship from large corporations such as General Motors, IBM, and Royal Dutch Shell,[16] which led to them being exposed to early scenario thinking. General Electric, for example, decided to include scenarios in its approach to strategic planning.
However, the role and status of scenario development as a tool for gaining greater insight into the future was only consolidated by a series of events that started in the planning department of Royal Dutch Shell in 1967, and culminated in the 1973 Yom Kippur War. By the mid-1960s, Royal Dutch Shell had realised that extreme long-term planning – beyond that provided by traditional planning and forecasting methods – was necessary in the oil industry. [17] As a result, it began to look ahead to the likely business environment in the year 2000.[18] According to Wack[19] – who led Shell’s planning efforts – and Gill Ringland,[20] this study indicated that ‘the predictable, surprise-free [oil industry] environment would not continue’, and identified the possibility of a major shift in the balance of power between oil companies and oil producers in favour of the latter that would significantly increase the price of oil. At the same time the Organisation of Petroleum Exporting Countries (OPEC) had begun to ‘[flex] its political muscles’.[21]
The conclusions of the Shell study were significant, as both oil prices and supply had seemed predictable since the mid-1940s.[22] In response to this newly identified uncertainty, Shell broke with traditional forecasting practice and produced two detailed scenarios of the global oil system.[23] One suggested that the oil price would remain stable, which was the globally accepted opinion at that time. The other suggested that the oil price would rise significantly. Shell realised that the Arab oil-producing countries could and would demand higher oil prices. The question that could not be answered was when this would happen.[24]
The oil industry is obviously a complex system. Scores of producer nations supply scores of consumer nations, who in turn supply billions of oil users and hundreds and thousands of businesses that depend directly and indirectly on the supply and price of oil. In the event, the impetus for the increase in the oil price was provided in 1973 by the Yom Kippur War between Israel and its Middle Eastern neighbours.[25] Arab nations resented Western support for Israel. Within weeks, ordinary motorists around the world faced steeply rising petrol prices.
This changed the balance of power between mainly Western oil companies and their mainly Middle Eastern suppliers just as Shell had suggested (and its directors had been alone in planning for).[26] This could not have been achieved through traditional methods of forecasting. As a result, it was better placed than other global oil companies to respond to the price increases, which allowed it to assume a leading role in the global oil business.[27]
Following the shock of events round the Yom Kippur War, and growing awareness of Shell’s pioneering approach, a significant number of Fortune 100 companies went on to adopt scenario-based planning.[28] A survey of 200 large corporations soon identified scenario-based planning as the most common strategic planning tool.[29]
A growing appreciation of the potential consequences of strategic errors in the Cold War context therefore forced some analysts to adopt a new approach to studying the future. This method caused them to dispense with the notion that there was one pre-ordained future, and that capable forecasters could accurately identify that future. Instead, they abandoned the certainty promised by traditional forecasting methods in favour of identifying a range of equally plausible futures for the same system or country. This is what later enabled Shell’s scenario planners to identify the possibility that Gorbachev could bring about major political and economic reforms in Russia.
Professor Duvenhage and I immediately understood that the strength, and later success, of this method could be ascribed to a single characteristic, namely its inherent ability to overcome the butterfly effect. For this reason scenario planning dovetailed very neatly with our work on complex systems and freed us from guessing at the future. In scenario planning we therefore found a methodology we could apply to our work on complex systems theory to determine the prospects for South Africa’s long-term stability. The final conclusions of that study are the focus of this book.
The failure of analysts and economists to anticipate events such as the Arab Spring and the global financial crisis therefore suggests two things. The first is that the butterfly effect means that the future of complex systems is plural rather than singular. The second is that scenario building is the only method that can overcome the consequences of the butterfly effect.
Therefore, in the case of South Africa, any serious attempt to gain greater insight