Volume 4, Number 2 – May 2007

The Power of Scenario Building: The Future of Futurism

If you’ve ever read or created an economic development strategy, the basic template is pretty straightforward.  Assess your region’s strengths, weaknesses, opportunities, and threats (SWOT), align this analysis with your desired vision for the community’s future, and design a work plan for getting there.  This basic barebones approach remains popular because it works.  It helps a community think through its current situation and identify ways to improve upon it. 

Because it works so well, we should expect the classic economic development strategy process to remain the norm.  But, we’re also beginning to see some regions consider alternative ways to envision their economic futures.   Scenario building—using our imaginations to envision alternative economic futures—is among the most interesting and promising of these new methods. 

Scenario building is not rocket science.  It’s really just a slightly more sophisticated way of asking “What If?”    Scenarios aren’t used to predict the future.  Instead, they serve as a vehicle for scoping various pathways to the future.   Typically, scenario-building exercises build a series of future scenarios (generally looking out 20-30 years into the future) that build upon some existing trends that seem likely to affect future economic patterns.   In his classic book on scenario building, The Art of the Long View, Peter Schwartz depicts how Royal Dutch/Shell used various scenarios to better understand future energy supply options.

Economic developers can fruitfully use the same tools to think about their region’s future.  The first step involves assessing key trends and then extrapolating from these patterns.  Depending on one’s location, you can build future economic scenarios around a variety of pressing economic trends:  continued youth out-migration, continued influx of new immigrants, the impact of global warming, and so on.   At this point, you can let your imagination run a little wild.  However, effective scenario building should be based on plausible scenarios.  For example, you might study the impact of declining water supplies on Las Vegas’ economy. You might rethink assessing the impact of an alien invasion there.

If you’re interested in learning more, two recent initiatives are worth examining.  In the Great Plains, Fargo’s Northern Great Plains Inc. has created and led the Meadowlark Project (www.meadowlarkproject.com).  This initiative presents four scenarios for the future (in 2050) of the Great Plains region.  They are:

• There’s No Place Like Home:  Climate change sparks an economic collapse and subsequent rebirth of the region.
• The Good Lands:  Thanks to far-sighted leadership, the region becomes a global leader in renewable energy and sustainable communities.
• The Big Empty:  Thanks to industry consolidation and other factors, the region continues on a path of depopulation and brain drain.
• A Tech-No-Color World:  Technology plays a greater role in driving economic decisions. Some parts of the region become global technology leaders.  Other communities remain focused on preserving traditional rural amenities and lifestyles.

These scenarios are designed to stimulate new thinking about the region’s future, but, more importantly, to help encourage new approaches to that can help stimulate systemic change.   Through public forums, blogs, and other discussions, the Project leaders hope to “start a conversation” and get people thinking differently about their hopes and dreams for their communities. 

The New England Futures Project (www.newenglandfutures.org) uses a somewhat different approach to its scenario building exercise.   The project has a clear objective of promoting regional cooperation among the six New England states.  As they put it, will New England be “six teams – or one?” Instead of presenting alternative scenarios—as in the Meadowlark Project—the New England Futures Projects examines how the region can collaboratively address pressing challenges (e.g. rising energy costs, sprawl) by reviewing the potential impact of various alternative futures such as “a perilously warm New England.”   Again, this method seeks to stimulate thought and force the region’s citizens to recognize that maintaining the status quo is not an option. 

These scenario-building tools will likely become common methods in the near future.   They enjoy the advantage of spurring people to think big and to think systemically.  Today, economic development requires a systems based approach that taps a range of players and interests—from business to education to non-profits to average citizens.  This is a complex and messy process without easy answers or solutions.  Scenario building is one effective means to model this complexity and to help chart a path for dealing with it in the real world.

Miscellaneous Plugs: Understanding Open Innovation

Open Innovation” is a hot topic in business and management circles nowadays.  What is open innovation?  Exact definitions often vary by author, and some authors use different terms to depict a similar process.  Generally, open innovation refers to a process that seeks to tap into the new world of multiple knowledge streams.  In this paradigm, companies, organizations, and even individuals can no longer count only on their own know-how to move ahead.  Instead, they must embrace a more open process where a variety of players—customers, partners, and outsiders of all stripes—can engage in the innovation process.  Embracing open innovation has worked well for big corporate players like Procter & Gamble, but it’s can also be an effective approach for all kinds of organizations seeking to do things differently and better.   If you’d like to learn more, here’s a few books that might intrigue you:

• Ori Brafman and Rod Beckstrom, The Starfish and the Spider:  The Unstoppable Power of Leaderless Organizations, (Portfolio Hardcover 2006).    The authors’ primary argument is that decentralized organizations are more likely to survive and prosper in today’s economy.  Decentralization confers two main advantages: it allows organizations to tap multiple sources of expertise and ideas, and it also makes it difficult for competitors to control or defeat them.  This perspective can help explain the persistence of organizations as diverse as eBay, al Qaeda, and Alcoholics Anonymous.

• Henry Chesbrough,  Open Business Models:  How to Thrive in the New Innovation Landscape, (Harvard Business School Press 2006).  Chesbrough is widely cited for coining the term “Open Innovation” in his eponymous 2005 book.  This follow-up is focused on how major corporations are embracing open innovation.  Chesbrough describes how managers can develop a business model that embraces open innovation and creates a marketplace of new ideas that they can tap.
• Don Tapscott and Anthony Williams,  Wikinomics:  How Mass Collaboration Changes Everything, (Portfolio Hardcover 2006).  Inspired by the success of Wikipedia and the Open Source movement, Tapscott and Williams examine how companies and organizations can build global collaborative alliances to develop new products, services, and technologies.   The book is a little heavy on the consultant’s jargon, but it’s still a good introduction.  If it piques your interest, you might also check out the website (www.wikinomics.com) which includes the Wikinomics Playbook, a summary of how to apply many principles from the book.  This new book chapter is a wiki itself, so you can add your own ideas too. 

What’s New at EntreWorks Consulting?

NEW TO THE ENTREWORKS LIBRARY:   “Navigating Business Services in North Carolina,” This February 2007 report was developed on behalf of the North Carolina Business Resource Alliance as means to make it easier for North Carolinians to get help in starting or growing new businesses.   If you’re looking to start a business in

• North Carolina, this one is a “must read.”  If you live in our other 49 states (or Washington DC), you might still be interested in this guide as a sample of a easily readable and user-friendly guide to business services. 
   
• Erik Pages of EntreWorks Consulting has been appointed to the Editorial Board of Applied Research in Economic Development (ARED).  ARED is hungry for interesting articles that combine real-life experience with analytical rigor.  If you’re interested in submitting articles for consideration in future issues of ARED, you can find out more here:  http://www.c2er.org/downloads/publications/journal/AREDguidelines.pdf