In creating the scenarios we found that there were trends covering economics, technology and the information industry that were common to all three. These trends formed part of our input to Vision 2000

Shifts in Economic Power

All the scenarios predicted that GDP growth and growth/capital would be lower in Europe than the other two major blocks (North America, Asia) with the highest GDP growth and growth/capital projected for South East Asia, China and India in particular was foreseen.

The population growth in South East Asia, China, India was expected to cause an increase in the buying population and its capacity to spend. This compares with the forecast of no or low population growth in US/Japan/Europe – leaving out the effect of immigration. The increasing cost of caring for the old would be balanced by the decreasing cost of educating the youth in US/Japan/Europe in the timescale considered – though the swing in the nature of the expenditure would cause social disruptions.

With more direct effect on the IT industry, the other shift in economic power that we projected was the reduction and change in the role of IT departments. We foresaw that buying points for IT would move to the Board for large systems integration and facility management (FM), i.e. for large expenditures, to user departments for applications solutions and line of business needs, and to end users for PCs and shrink wrapped software packages.

Technology Push

The single most important factor affecting the industry in 1993 was the continuing applicability of Moore’s Law. This law says that the processing power on a chip doubles every 18 months – through competitive forces, adoption of new technology, and new fabrication plants. Moore’s law seemed to be likely to hold good for the period to year 2000.

Figure 4.1

Overall, Vision 2000 proved its worth in helping ICL to draw up a coherent picture of where the industry was moving. In January 1994 the company was reorganized into three main business streams: systems integration for project-based business, a services-based business specializing in outsourcing, and the technology/product divisions.

We integrated the trends analysis but not the variable part of the scenarios into the other strands of Vision 2000. Although we had experimented with scenario planning, it was other tools like competitive benchmarking and the SWOT analysis that laid the foundation for the changes in 1993. Our understanding of the trends proved important later. But for the time being we parked the scenarios because the importance of other factors like the changing structure of the industry exceeded the impact of the variability included in our scenarios.

Software 2000

During the Vision 2000 project we found it easy to find forward projections for hardware capability. This contrasted with a lack of projections for, or discussion of, what would be happening with software in the year 2000. There was belief that a set of discontinuities would be hitting software in terms of technology, techniques, skills, and applications in the next few years, but there did not appear to be any coherent external body of analysis or thought on these issues.

So, we brought together an international team from industry, academics, suppliers and users for two days in April 1994 for a workshop sponsored by ICL and Esprit (a research programme of the European Commission), to discuss these issues. There was a notable degree of unanimity that software was facing dramatic changes, for instance:

• Powerful and cheap processing, storage, networking, and software, have created the potential for the global information infrastructure and changed our definition of what software is, how it is delivered, who writes it and who uses it.
• The Internet was at that time still perceived primarily as an academic tool: Software 2000 predicted that it would “imminently” burst into the mainstream and would have a far-reaching impact on software.
• Software is now embedded in most environments such as cars, traffic systems, medical equipment and is mission-critical in many instances which means that the centre of gravity is shifting.
• It is likely we will see massive changes over the next few years, causing the initial PC revolution to pale into comparative insignificance.

two scenarios allowed two very distinct pictures (not necessarily “low” or “bad” vs “good” or “high”) to be developed.

This approach is very different from the “baseline, high, low” approach, in that it concentrates on creating credible, but different, worlds for each scenario.

Meanwhile, since 1993 we had established a better framework for our futures work. This was to participate in external collaborations and consortia, with the aim of extending the range of ideas accessible to us: and to use scenarios as one way of “packaging” the most important ideas in the best way to help managers and planners in ICL to think about the future (Figure 4.6.)

Figure 4.6.

We investigated a number of sources of inspiration and ideas and discussion of the forces on the world. Two organizations in particular proved very helpful in extending our vision:

Global Business Network (GBN). This is an organization that aims to provide senior people in industry with stimulus through unusual ways of looking at the world and the future. One of the services provided is the "Network" of remarkable people; another is a bi-monthly mailing of a book selection. GBN was extremely useful in helping us to think about the social and individual context of the future.

SRI (Business in the Third Millennium). BIT3M is a programme planned to run over five years, to examine the effect of IT on business through its effect on consumers, government, and society. It has sponsors like ourselves in Europe, and also in the US and Asia, since one of the aspects we are interested in is the cultural differences in the use of IT. One of the useful early outputs was a report on the nature and timescale of the IT infrastructure – what will these networks look like and when? The programme is run by SRI.

Methodology

In planning our methodology we investigated several sources:

GBN – which also runs training courses, and holds workshops several times per year.
Battelle Institute – Which focuses around the health sciences/chemical industry axis, but has a general purpose methodology.
SRI – which has a well developed methodology and consulting practice.
IDON – which has a methodology oriented towards interactive, short timescale workshops, and a consulting practice.
Strategic Planning Society – which runs training workshops and conferences on topics including scenario planning.

The best overall guide to process that we found was the checklist in Peter Schwartz’s The Art of the Long View.

CHECKLIST FOR DEVELOPING SCENARIOS

Step One: Identify Focal Issue or Decision
Step Two: Key Forces in the Local Environment
Step Three: Driving Forces
Step Four: Rank by Importance and Uncertainty
Step Five: Selecting the Scenario Logics
Step Six: Fleshing out the Scenarios
Step Seven: Implications
Step Eight: Selection of Leading Indicators and Signposts

STARTING THE PROJECT

Scenarios for Information Markets in 2005

Why Information Markets? It had become clear to us that an information industry was being formed from the computer, telecoms, education and entertainment industries. We felt that the impact of this would revolutionize our markets over the next decade, as microprocessors have revolutionized the computer and electronic industries over the last decade

Why 2005? Our corporate planning period, the timescale over which the individual business plan, is three years. We plan at HQ over five years. What we wanted to do was to take a timescale that would not allow us to extrapolate forward, that was long enough to look afresh, but was not beyond imagination. In addition, to change the culture of a company of ICL’s size takes ten years. So we voted for 2005.

Who would use the Scenarios? The purpose of the project was to provide a framework for analysing the ICL portfolio, and for orienting it towards the areas in which our customers would be looking for help. This meant that one audience was the Managing Directors and headquarters staff concerned with strategic planning. However, we decided that we also wanted the output to be accessible to managers who make day to day decisions; in ICL these manage units of 30-100 people.

A crucial step was to decide just what questions we wanted to answer about the future to help us in this. But even before that we had to gather a group together to do the project. The process we planned to follow was as shown in Figure 4.7.

In some environments it might be more suitable for a senior management team, or management team of a business unit, to engage in the process. What we decided was best to meet our aims was pull together a group of staff from HQ who could work with the businesses to explain and exploit the scenarios once they had been created, if necessary modify or extend them, and explore the implications.

Figure 4.7

The group consisted of :

Gill Ringland: Group Executive with specialist expertise in software and the service industry.

Steve and Paul had done a short project (SIM 2020) earlier in the year to look at the changes in the telecom industry: this was part of our background database. In fact, networking and the changes associated with increased bandwidth and decreased cost had the same central technology push role in the 1995 project that the decreasing price of processing had in the 1993 project.

We wanted the group to encompass diversity but also be reasonably empathetic to the concerns of the company, so that the company’s assumptions and concerns were a central part of the scenario-building exercise. We decided to take the risk that having mainly ICL people might mean that important issues remained unidentified because of cultural blindness, since we wanted to explore the process, the methods, and crucially, how to use the scenarios with the two audiences, the HQ staff, and line managers.

The main project to build the scenarios ran over three months, with the group meeting twice a week for half a day, as well as carrying out research between meetings. No outside consultants were used, although we did discuss some of the outcomes during the project with Professor Gareth Price of the St. Andrews’ Institute of Management.

The scale of the project seems typical of those creating broad spectrum scenarios, and is qualitatively different from that needed for the workshops used to create common vision and vocabulary and for team building. And since we were concerned to link to corporate planning we focused on two “near in” scenarios, rather than more diverse scenarios.

DEFINING THE QUESTION

One of the scenario team, Jane Dowsett, carried out a round of interviews with some 50 senior staff, both old timers and those new to ICL. Some were carried out over the phone, other were face to face. They were normally timed at half an hour: some interviewees got interested and discussed a range of ideas for several hours, others lasted only twenty minutes.

PRACTICAL TIPS ON THE INTERVIEW PROCESS

Consider carefully the number of interviews We aimed to get a range of views from different parts of the business, different countries, a mixture of senior board members and identified high flyers. The volume of information generated from these interviews made the analysis very time consuming: allow at least 2 hours per interview. Plan how best to feed back the “internal” issues Much of the information concerns internal organization and culture. This needs to be packaged and fed into the relevant areas in the company, so that interviewees know that these ideas are not lost. But we decided to exclude these from the scenarios. Confidentiality To get the best ideas and thoughts from people it is advisable to stress that individual comments will not be attributed. Some people were nervous about the fact that we taped the interviews, and asked for assurances on the security of storage of the tapes and the control of identification of the sources of each script. Setting the scene Ideally it is best to get people away from their desk and in a different environment, so they can think creatively. In practice, the interview will be slotted into a busy senior manager's schedule. In order to get people in the mood to think about the future and express their ideas, the interview needs to be relaxed and enjoyable. Most people find they jump around from one topic to another. It is best to try and encourage them rather than make the interview seem like a set of questions with right or wrong answers.

The interviews had two objectives: to get management buy-in for the project and to understand what was the burning question for the organization.

In the other words, sitting in 2005, what would we have liked to have known about in terms of political, economic, societal, environmental, technological and lifestyle trends ten years earlier? What was the “if only we had known that…” fact?

To unlock the answers, a set of seven questions was used. These questions were suggested by Gareth Price at a training session on scenario planning run by the Strategic Planning Society. The questions are those used by Shell. We amended question 7 slightly to ask:

“Imagine you are currently in 2005 and looking back on 1995:

a) What three things would you like know?
b) What would you like to have done if all the constraints had been removed?”

We also added a question: “How do you see ICL in the future?”

The reason for adding the ICL question was that many of the topics raised in pilot interviews concerned internal issues. Having an understanding of the person’s view as to the type of company ICL would be in 10 years time made analysing the internal issues easier.

SEVEN QUESTIONS FOR THE FUTURE

Most people have an understanding of how their world works, but often it is not voiced or shared. This questioning technique works on the basis that people know a great deal, but do not always know what they know. These questions are to trigger thinking – the key is to understand the person’s perceptions and unlock their strategic thinking. The technique could be used on an organization, a company, an industry or even a country. It should be done for a specific area of interest and over a relevant time scale. The Vital Issues (the Oracle) 1. Would you identify what you see as the critical issue for the future? (When the conversation slows, continue with the comment) Suppose I had full fore-knowledge of the outcome as a genuine clairvoyant, what else would you wish to know? A favourable outcome 2. If things went well, being optimistic but realistic, talk about what you would see as a desirable outcome. An unfavourable outcome 3. As the converse, if things went wrong, what factors would you worry about? Where culture will need to change 4. Looking at internal systems, how might these need to be changed to help bring about the desired outcome? Lessons from past successes and failures 5. Looking back, what would you identify as the significant events which have produced the current situation? Decisions which have to be faced 6. Looking forward, what would you see as the priority actions which should be carried out soon? If you were responsible 7. If all constraints were removed and you could direct what is done, what more would you wish to include? (The ‘Epitaph’ question.) [Source: Gareth Price, St. Andrews’ Institute of Management]

The interview process referred to many external trends and other areas where staff were uncertain. Many of these could have come from a search of the literature. However by asking ICL senior management we were able to ensure they had covered what they considered as the key uncertainties for ICL. The resultant scenarios would then be relevant and challenging but not “shocking” enough to get in the way of their use.

We reviewed the interview scripts and created a list of 60 factors. When we analysed them we found that one-third of the interviewees explicitly raised, as a critical concern, what will be ICL’s source of added value? And the question was implicit in the answers of another third of the interviewees.

We thus decided that in terms of the scenarios, we should focus on the question: What added value will we provide to our customers in 2005?

We added the hypothesis that one source of added value would be working with our customers to “innovate to improve their business”. The “opposite” to this would be to “minimize their risk”.

SOURCES OF EXTERNAL DATA – THE DRIVERS

We found that the main problem was identifying the relevant data from the mass available. In the Vision 2000 and Software 2000 projects we had identified good sources for a wide range of IT industry data, telecoms research, and on technology in general. For economic data, the Economist Intelligence Unit and the OECD provided good background.

The key to relevance is having a mental model of the factors which will be important, and populating the model with values for these. In our case, we understood that our future would be in a restructured information industry. So data relating to consumer electronics, telecoms, publishing, media and professional services were important, in addition to the traditional computer industry. We also knew that, although the business is global, being based in Europe is different from being based in the US. So data relating to the development of Europe, and its social model, was key to our scenarios.

Thus, populating the model with data should be straightforward. But, the problem is spotting which factors change radically when a paradigm changes, and which new dimensions or concerns may turn out to dominate a scenario. For instance, when do the changes in behaviour of individuals as the Information Society takes shape change the value chain for our customers? Are there other new developments which could change the rules?

The areas we found difficult were those relating to the wider information industry and to new developments like digital cash. For these consumer related sectors, we found that often the financial analysts were the best source of both data and opinion. [You have reached about the mid-point of this document.]

SCOPING THE DATA

We found that it was easy to get carried away in researching interesting trends, and following up ideas from futurists and newspaper or journal articles. We needed a discipline to constrain this: but we felt that to confine ourselves to issues explicitly identified in the interviews would have run the risk of missing major forces for change. So we decided to range fairly wide in our searches but, in developing the storyline of the scenarios, use examples which our target audience would recognize. Two examples: We read Huntingdon’s “The Clash of Civilizations and the Remarking of World Order”, with its argument that, following the end of the Cold War, the balance of power will change to one in which cultural communities are replacing the Cold War blocs, and the fault lines and conflicts are becoming those between civilizations rather than national states. The implication of this for our scenarios was expressed in terms like “The US and China continue trade hostilities over Chinese non-recognition of IPR, and the denial of US markets to China”, and “On the other hand the distinction between countries is blurred, with many sharing similar employment and inflation indicators. Fragmentation of regions along ethnic and cultural boundaries has been a feature." We could see changes in social attitudes arising from the changing role of women and the disappearance of much traditional “heavy” man’s work. We expressed the effect of this in the scenarios in ways which were directly relevant to ICL’s markets, e.g., “Low economic growth has increased the gap between the unemployed and those in Mac jobs, and those in long term employment. Unemployment, especially among the young, who may be third generation unemployed, is increasingly a problem for governments, both as a financial burden and in terms of social unrest” and “The level of economic growth and pace of change has eventually created a more mobile work force. More people are working but often less hours and in more flexible, less secure jobs. In some industries such as retailing and increasingly in financial services the majority of the workforce is made up of contract staff with no guaranteed income. The bottom 10% of the population who are unskilled have found it increasingly difficult to get out of the poverty trap, and the social security safety net is weak”. On the other hand we tried to include in full the topics raised in the interviews, and to expand on them.

Figure 4.8

Developing the list of relevant factors

We added to the 60 factors that the interviewees had identified a number from our researches, e.g. the effect of 2 billion teenagers. We categorized the factors as either trends or uncertainties.

A view of the trends is derived from the best available sources, and from wide agreement. “Uncertainties” in the jargon, are “factors over which there are major question marks”. So, for instance, the continuing increase in processing power at a given price is a trend. However, it is uncertain whether consumers will switch from TV to PCs as a result.

The trends were collated from a number of sources and reflected “best educated guesses” about directions. These would be common to all the scenarios. A judgement was taken on which trends were already incorporated in ICL’s thinking and processes. For instance, the decreasing role of national governments in Europe and the increasing reliability of hardware are all significant, but perhaps no longer needed spelling out.

Even with a well-understood trend, there could be surprises in the pace at which the trends would develop. So that forecasting, even based on trends, is a fraught exercise.

Figure 4.9

THE TRENDS

Trends are more likely to be seen in two areas: those related to demographics and those related to technology. While surprises can occur – for instance between censuses in the US, the size and pattern of Catholic immigrant families changed the predicted demographic balance significantly – these are rarer than in the political or social arenas.

Economic/Geographic Trends

1. Increasingly sophisticated and demanding customers.
More and more educated consumers ask for up-to-date, high performance and competitive products. The mass market will be fragmented into many niches. Competition will be fierce and based on price and quality of service.

2. Growth is South East Asia/India/China, with an expanding middle class.
In 2010, the middle class in South East Asia (about 700 million) will be larger than that of Europe (about 300 million) and the Americas (about 200 million) combined.

3. Two billion teenagers.
In 2001, there will be two billion teenagers world-wide, most of them in Asia and Latin America. That is fifty times the number of teenagers in America in the peak years of the baby boom. Many of them will be in constant contact with each other through technology.

4. Increase in the older population in industrial countries.
Medical advances and better life conditions leads to the ageing of the population, mainly in developed countries where the birth rates are low. The demographic shift to an ageing population will require adjustment in many service industries like healthcare, leisure and travel. As the costs of the elderly, particularly with health, increases, service industries and government will look for areas of productivity through IT.

5. Continuous restructuring of corporations.
The restructuring of corporations will be dominated by the following trends: globalization of markets, outsourcing of non-strategic jobs, and investments directed to the regions which offer the best profit potential. An increasing number of small companies will be linked through networks. Competition for customers will be intense and delocalized

6. Outsourcing of IT is used by half of all Fortune 500 companies.
This trend will change the structure of the IT industry: there will be large potential growth for outsourcing and technology used as a support of outsourcing businesses.

7. Increasing environmental concerns.
More environmental concerns force companies on occasion to do business differently. It has positive implications in the sense of more business and some negative ones with possible increases in production costs to conform to environmental pressures.

Technology-Related Trends

1. Bandwidth explosion and development of the Internet.
Large infrastructure investments to increase cable and wireless networks. Both the volume of traffic increase due to price decreases, and the opportunities for exploiting high bandwidth networking. The Internet continues to grow.

2. Processing power increases and processing becomes pervasive.
Moore’s law of the power of processing on a chip doubling every 18 months continues to apply for products shipped over the next decade. New generation of more powerful microprocessors emerge. However, the costs of developing those new chips are high. Processing will be used in more mission-critical applications. There will be an increasing use of embedded systems, and more IT devices will be available.

3. Ease of use.
Computers and electronic devices will be more and more friendly.

4. Digitalization of content and growth of multimedia.
Information is held digitally, whether context is text, video or audio. Games, videos, media will be delivered either on electronic storage as and alternative to paper, or increasingly through on-line services.

5. Changes in sources of value added in the IT industry.
As the industry matures, IT will be increasingly embedded in products. New sources of value added relate to ease of use, access, information security etc.

6. Litigation in IT increases.
The risk of IT providers of being sued for misperformance or non-performance increases.

7. Semiconductor content of electronics increases.
The content of electronics devices changes from 7% semiconductor to 27% semiconductor over 15 years to 2000. This changes the power and added value in the information industry.

DEALING WITH UNCERTAINTIES

Scenarios are constructed from a number of trends – as above – and a number of uncertainties. For instance, while the change in processing power or bandwidth is clearly a trend, the question of whether a consumer market will open up can be treated as an uncertainty: we need to think about the effects if it does, or if it does not.

Figure 4.10 represents this difference, using as an example our core uncertainty – will customers want to take advantage of the technically feasible innovations or will there be a backlash? Figure 4.11 shows the factors that we regarded as uncertain, and how we grouped them.

Some of the factors that we had initially identified were seen to be important to us, but with an unpredictable outcome in ten years’ time. For each of these uncertain factors we built a correlation matrix looking to see how they related to each other. For example, did one increase, decrease, or remain unaffected by another?

Figure 4.10

The intellectual activity to correlate these was one of the hardest of the project. For each factor, we determined whether it was positively correlated against every other (on a scale 1 to 3), negatively, or not at all (0). Then the factors were sorted, giving the list below in Figure 4.11.

Some of the factors were inherently unknowable and not causally linked to any of the others – for instance, the occurrence of a major earthquake in the USA was not caused by any of the other factors – though it could contribute to a factor like “more terrorist actions”. The factors which were not linked were called “wild cards”. We found that the best way of treating these was to identify where in the organization the policy for dealing with these should rest, and discussing them, exploring the processes and responsibilities, and getting policies established, rather than building them into the scenarios.

We then saw a pattern, in which four themes emerged.

1. The degree of influences/power exerted by governments.

Will government be able to control cross-border information flows and electronic commerce?

Figure 4.11

2. Social values.

open cultures and trading/closed cultures and restricted world trade

GROUPING IDEAS

Grouping ideas into connected themes is an important precursor to building a storyline. One technique which is widely used has been developed by IDON (see “IDON Scenario Thinking: How to navigate the Uncertainties of Unknown Futures” by Miriam Galt et al 1997). IDON uses coloured, magnetic hexagons, on which topics can be written.. The hexagons can then be moved around on a whiteboard until the team are happy with the groupings and can name the themes. This turns out be a very effective way of morphing a shape for the eventual scenarios. As Arie de Geus explains in the book’s foreword, “Scenarios are internally consistent stories of possible futures – they are the scenery into which the actors walk. The walk is initiated by the meeting addressing the question ‘What would we do if this scenario came about?’ The many answers to that question become the options that are open to the company under a variety of futures. Those options are expressed by the meeting in words – they create a language for them. Henceforth they can talk about these options in quite precise terms and they will remember the words-they have created a memory of their future! This memory will be extremely useful when the future comes – as it invariably does. The company knows what to look out for and it is better prepared for action. Talking and creating language in a meeting of corporate individuals is not as easy as it sounds. Many things can go wrong, and do go wrong. People talk but do not listen. Power positions are abused. Emotions take over. This is where hexagons/idons have a proven track record. They help people calibrate the way they are thinking about the present. They help the group to see relationship and dynamics that are essential to understand the options that are open to them. With attention focused toward the whiteboard, on the idons and not on individual people, thinking is convergent – language becomes concise. Hexagons are powerful tools to help develop the language in which the institutional learning is embodied and which will form the institutional memory. A well-developed memory of the future is a pre-condition for the company to be pro-active rather than reactive – to make its own future rather than submit to it.”

BUILDING A STORYLINE

These grouping helped us to begin to build up the storyline of how the world might look in two different scenarios. We linked open cultures and trading, deregulation/less government, individual values, and innovation, because of their correlations, and build up scenarios of two different worlds, shown as inner and outer circles in Figure 4.12.

Figure 4.12

While having reached a set of themes helped us, it would not have been enough to communicate either to headquarters staff or to management. To provide hooks for engagement we adopted two illumination aids:

offering early warning signs or indicators of each scenario.

So for instance a pair of alternative answers to an uncertainty about the style of marketing, either “consumer marketing dominates” vs “business to business marketing” (see Figure 4.22) became in the scenarios:

“Consumer style marketing techniques dominate, smaller boutique style companies are successful. Added value through innovation and marketing as seen by the customer.

Products and operational services – e.g. help desks, maintenance – are marketed to those who will use them. Purchasing decisions will be made by the individuals for themselves or possibly on behalf of a small group, whether for business or leisure use. This applies for smaller new systems too, driven by cost factors. Only for large infrastructure projects, and complex roll-outs, are business-to-business marketing techniques used.

Innovation in products and marketing are mostly introduced by small companies and quickly copied or bought out by the global players. Innovation in marketing and distribution is as important as innovations in technology. Small boutique style companies specialize – may be globally – in detailed knowledge of an area, and establish presence through electronic marketing and word of mouth.

Advertising over the network subsidises payment for content.

Outsourcing of information systems is booming as many organizations find that managing information system is a management distraction. Start-ups using facilities in Asia dominate this market through their front men in North America.”

The “business to business” polarity became:

“Business to business marketing style across the information industry.

Long term customer-supplier relationships are cemented through frame agreements and loyalty schemes.

The big full-range vendors dominate the Fortune 1000 and government, using direct and indirect channels.

Outsourcing is concentrated in these organizations, and profit margins are vanishingly thin, with the full range vendors taking their profits on hardware and software supply

Smaller companies are served by small value added resellers who supply hardware and software primarily based on price criteria.

Individual consumers find that vendors regard them as poor relations”.

We discuss the early indicators below.

All in the name

We believe that one reason that this project worked better than our 1993 project was that we came up with names for the scenarios, which described the essence of what they were about. The names had to act as metaphors so that when we were talking about a scenario we could use the name as an evocative shortcut, to give people an instant and intuitive picture of each scenario, thus providing a framework into which detail could be added.

At first we toyed with names like “Chinese meals” versus “Hungarian Hot Pot”. The Hungarian Hot Pot was stodgy and could describe the scenario without much innovation, while the Chinese meal could apply to the more short-lived scenario.

However, these were not really satisfactory and after much discussion and brainstorming the names emerged: Coral Reef and Deep Sea.

Figure 4.13

They seemed to fit well because of the intuitive behaviour which each describes. The Coral Reef world is very diverse, with much visible activity and complex food chains. There are many small fish. The Deep Sea world is less diverse, with fewer species of mainly larger fish. It is a simpler world in many ways. And for people who have reflexes formed on land, both the Coral Reef and Deep Sea can be dangerous places unless the reflexes are retrained: for instance, the natural response to danger under the water is to hold the breath and come to the surface. But if you have been breathing from a scuba tank, this is a way to die painlessly with an ascent of even less than 10 feet.

The moral is: training for the new environment is what scenarios are about, i.e. trying out for a possible future environment.


INFORMATION MARKETS IN 2005

In creating the scenarios we developed separate storylines for each. This took as much effort as the step to correlate the factors: and it needed a divergent style of thinking rather than pure analysis. The storylines and early indicators proved to be the second major tools for communication and engagement, after the names of the scenarios. Figure 4.15 is a summary of the characteristics of the Coral Reef, and Figure 4.14 of the Deep Sea world.

Figure : 4.14

Figure : 4.15

We then applied these scenarios to the Information Industry.

Coral Reef

Under the Coral Reef scenario the demanding and sophisticated customer outsources or purchases systems integration because of the potential for IT to change the business and is interested in new technology. Coral Reef is largely deregulated or self-regulated, while Deep Sea is regulated. Coral Reef exploits energy and innovation, with growth from Asia and new businesses in new areas.

An example of the differences is how information would be supplied to customers over networks. In Coral Reef, a multiplicity of devices would connect to a number of competing services, with price wars and confusion (see Figure 4.16).

Figure 4.16

We thought that early indicators of a world behaving like the Coral Reef could include:

1. Bill deregulating US markets passed in 1995, European countries meeting their deadlines, and Japan deregulating in 1999.
2. AT&T sells NCR, or Siemens sells SNI, or Olivetti sells the PC business.
3. Spin-offs increase relative to mergers in the media business.
4. Digital sells its semiconductor business to Texas Investments (TI), and TI sells its software business to computer Automation.
5. Semiconductor market share (for companies with HQs) in Asia Pacific (including Japan) exceeds that of Europe and North America in 1996.
6. Fabrication capacity in Asia (excluding Japan) exceeds that in Japan, Europe and North America combined by 2000.
7. US and China establish a trade treaty in 1996.
8. Microsoft and Intel have been constrained by anti-trust legislation.

Deep Sea

In this scenario, we see Europe and the US reacting somewhat negatively to changes in world balance. Under Deep Sea, the demanding and sophisticated customers outsource or purchase systems integration because it is not their core business. They are interested in a full range supplier talking the risk and reducing cost.

What the consumer might see in the Deep Sea world is shown in Figure 4.17. Here the range of offering smaller, with a lower bandwidth offering as the norm – so less possibility of movies on –line. The devices would be packaged with the network, and only work with one service provider.

Early indicators of Deep Sea could include:

1. The early indicators of Coral Reef are not seen, e.g. the number of mergers increases relative to the number of spin-offs.
2. UK, Spain, & Denmark isolated at the 1996 Maastricht conference. US imposes punitive tax on a very visible Japanese export.
3. Successful lobbying of European governments to introduce tough new penalties to combat crime.
4. Windows 95 fails to meet expected shipments in Europe, compared to its take up in the US.

But of course, neither scenario is a forecast, and so neither will happen. There will be elements of both scenarios in the actual outcome, while they may also co-exist in different segments and geographies, For example, the US may be more like Coral Reef while Europe may be more Deep Sea-like.

Figure 4.17

COMMUNICATING THE SCENARIOS

In communicating the scenarios, we have already discussed the importance of a name which convey the right picture and associations for the scenarios. Additionally, we prepared and circulated back to the group of managers that we had interviewed: