scenarios for south africa

1. The Scenario Building Processand Scenarios for South Africa Making the impossible happen Dr. Llewellyn B. Lewis The Strategic Forum www.strategicforum.co.za

THE STRATEGIC FORUM

A place of assembly

for strategic conversations

2. CHANGE ENVIRONMENTALYDIRECTED REACTIVE CHANGE : THE RECOVERY TROUGH SHOCK DENIAL BARGAINING ANGER SADNESS DEPRESSION ACCEPTABLE PERFORMANCE PREDICTING THE FUTURE POSSIBLE RESULTS FIRST CURVE SECOND CURVE CONTINUOUS IMPROVEMENT BENCHMARKING SURVIVAL RESISTANCE TO CHANGE (Based on Handy : 1994)

3. CREATING THE FUTURE SELF-DIRECTED TRANSFORMATION CRITICAL MESS ENVIRONMENTALCHANGE RISK RUDE AWAKENING CHAOS UNCERTAINTY FIRST CURVE SECOND CURVE CREATING THE FUTURE IMPOSSIBLE RESULTS EMERGING ORDER STRANGE ATTRACTORS (Based on Handy : 1994) THE BUTTERFLY EFFECT THE EDGE OF CHAOS ZONE OF CREATIVITYAND ADAPTABILITY

4. CREATING THE FUTURE CREATIVETENSION

SEEKS RESOLUTION : RESULTS IN ACTION

STRATEGIC ACTION PLANS

PERFORMANCE GUIDELINES

BUDGETS

DONEBY MANAGEMENT

STRATEGIESA LOGIC AND FIRST LEVELOF DETAIL, FOR HOWTHE VISION CAN BE ACHIEVED DEVELOPEDBY LEADERSHIP CONTEMPORARY ANALYST 2020 2011 CURRENT REALITYINFORMED BY MEMORIES OFTHE PAST (HISTORY) HISTORIAN VISIONINFORMED BY MEMORIES OF THE FUTURE (SCENARIOS) PROPHET CONTEXT : ACOMPELLING PICTUREOF THE FUTURE WE WANT TO CREATE. CREATEDBY LEADERSHIP

5.

STRATEGIC FORUM

A place of assembly


THE

SCENARIO BUILDING PROCESS

6.

A well- designed scenario process has great value the first time it is used, but like a good wine, it improves with age. The tool promotes mental agility by opening minds to multiple possibilities.

- - - - - - - - - - - -, If you use scenarios, youll never read the newspaper the same way again.(Charles M. Perrotet, in Learning from the future : 1998 : 139)

Making sense of the future with Scenarios

7. FIRST QUESTION What percentage of your timeis spent onEXTERNAL rather thanINTERNAL issues ??

8. SECOND QUESTION Of this time spent looking OUTWARD how much of it is spent considering how the world could beDIFFERENT in five or ten years???

9. THIRD QUESTION Of the time devoted to looking FORWARD and OUTWARD how much of it is spent in CONSULTATION WITH COLLEAGUES where the objective is to build a DEEPLY SHARED, WELL TESTED VIEW OF THE FUTURE as opposed to a personal and idiosyncratic view???

10. THE 40 / 30 / 20 RULE Senior management devotes LESS than 3% [40% x 30% x 20% = 2,4%] of its energy in building a CORPORATE PERSPECTIVE OF THE FUTURE

11. THE 40 / 30 / 20 RULE Managing the Here and Now Managing the There and Then

12. SYSTEMS MODEL OF SCENARIO DEVELOPMENT www.strategicforum.co.za Scenario B Scenario Input Scenario Determinants Normative Scenarios Scenario C Scenario D Development Scenario A Stability Actors Actors Core drivers Actors Values Policies Strategies StrategicPosture

Strategic Issues

Key

Uncertainties

Critical Success

Factors

Critical Resources,

Key Capabilities

13. CREATING THE FUTURE WITH SCENARIOS KEY ACTORS STRATEGIC POSTURE SCENARIO LOGICS SCENARIO STORY LINES IMPACTS MONITORING CURRENT REALITYvsSCENARIOS STRATEGICINTERVENTIONS CRITICAL SUCCESS FACTORS SCENARIO VARIABLES DRIVING STRUCTURAL CHANGE FOCAL ISSUE STRATEGIC INTENT STRATEGIES STRATEGIC ISSUES KEY CERTAINTIES KEYCHALLENGES COREDRIVING FORCES KEYUNCERTAINTIES

14. CREATING THE FUTUREThere are always two parties, the party of the past and the party of the future; theestablish ment and themove ment(Ralph Waldo Emerson) The future never just happens;it is created (Will and Ariel Durant : The Lessons of History)

15. Making sense of the futureThe State of the Nation : 2010 -2020 The Reinvention Scenario logics CORE DRIVING FORCES EVENTS TRENDS AND PATTERNS The Virtuous Cycle The Vicious Cycle VARIABLE BEHAVIOUR CHANGING STRUCTURES Causal relationships SCENARIOS KEY STAKEHOLDERS STRATEGICPOSTURE The Iceberg STRATEGIC ISSUES; KEY UNCERTAINTIES; CRITICAL RESOURCES; KEY CAPABILITIES. Increasing ability to understand

16. TYPES OF CHANGE

Cyclical change :

Is temporary

Comes in fits and starts (can return to prior status)

Demands a tactical response

Structural change:

Is a fundamental transformation of some activity or institution from a previous state

Is irreversible

Demands permanent adjustment

Demands a strategic response

17. TYPES OF CHANGE

Cyclical :

Gold price

Inflation - interest rates

Violence

(Examples in South Africa today)

Structural:

Changing black/white population ratio

Urban black/white mix

Redistribution of wealth

Educational mix

Privatisation and deregulation

Trade union activity and power

18. SCENARIO PLANNING PROCESS

When crisis happens, managers know but dont take action timeously

Why dont management pick up signs before crisis ?

The mind cannot see what is has not experienced before

Older companies have good institutional memory, therefore a better chance for survival

Hypothesis : Bombarded with overload of information - the brain needs a filter

A memory of the future must becreated to provide this filter

Every incoming signal is tested against theAlternative Time Pathscreated.If the signal is relevant to an Alternative Time Path -it is heard.

19. FALL INTO THREE GROUPS

More of the same but better

Worse (decay and depression)

Different but better (fundamental change)

SCENARIOS - THE ART OF THE LONG VIEW

To reperceive

To question assumptions

To change the view of reality

To liberate peoples insights

20. SCENARIOS - THE ART OF THE LONG VIEW THREE POINTS OF VIEW Status Quo : Tomorrow will be more or less the same as today Cassandra : The world is always on the brink of disaster Dr Panglos : The world is the best it can be and can only get better !

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Group planning pioneered scenario planning- amethod for summarising alternative future trends

They concluded that :

The stable predictable oil world was about tochange

Europe, Japan, USA becoming more dependenton oil imports

Oil exporting countries Iran, Iraq, Libya,Venezuela becoming concernedabout falling reserves

Others, eg Saudi Arabia, were reaching the limitsof their ability to productively invest oil revenues

SHELL

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With the following impacts :

Historical smooth growth in oildemand and supply threatened

Likely to give way to chronicsupply shortfalls

Leading to excess demand

Thereby stimulating a sellersmarket controlled by the oil- exporting nations

SHELL

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Slow investment in refineries

Designed refineries that could adapt to whatever type of crude oil was available

They forecast energy demand at a lower level

They accelerated their development of oil fields outside OPEC countries

Decentralised controls because they believed different nations would adopt different pricing policies

SHELL

24.

Continued investment program

Slower reaction to what they saw as being more of a specific / temporary event

Persisted with overestimating demand

Responded at a slower pace

Reigned in controls to facilitate overview - became less maneuverable

OTHER OIL COMPANIES

25. 1970 : Weakest of 7 largest oilcompanies 1979 : Strongest of 7 largestoil companies SHELL

26.

STRATEGIC FORUM

A place of assembly


THE

STRATEGIC FORUM

SCENARIOS FOR

SOUTH AFRICA

2010 - 2020

27. The STRATEGIC FORUM Scenarios for South Africa Political transformation Economic transformation Ubuntu South Africa united Autocracy Liberalisedautocracy Democracy Long walk to Freedom South Africa unchanged 1994Election 1999Election Pretoria will provide South Africa entitled Social transformation Cry the beloved Country South Africa corrupted Limiteddemocracy

28. Political Transformation NOW,2Q 2010Muddling along as we are,or change . . .Government intervention, PPPs;Subsidies, InfrastructureSA Social Capitalism; Growth through Redistribution; The Golden Triangle. SA Social Democracy ; Redistribution withGrowth SA Communism;Redistribution with or without growthSA AThird World Country 1. Ubuntu Scenario 2. Long Walk to Freedom 3. Pretoria will Provide NO CONFIDENCELOWAVERAGEHIGHCONFIDENCE Risk AvoidanceRisk AversionRisk ToleranceRisk Taking Economic Transformation 4. Cry the Beloved Country Drivers of Change and the SA Scenario Map www.strategicforum.co.za (Based on Gerald Harris: The Art of Quantum Planning: 2009) Closed SystemOpen System Paradigm RegressionParadigm ParalysisParadigm ShiftParadigm Reinvention Racial conflictRacial tensionRacial toleranceRacial reconciliation (Ubuntu) GDP GROWTH > 5 % PA INFLATION 5 - 8 % PA EMPL GROWTH > 400 000 PA GDP GROWTH3 - 5 % PA INFLATION 8 - 10 % PA EMPL GROWTH 150 - 400 000 PA GDP GROWTH 2 - 3 % PA INFLATION 10 - 15 % PA EMPL GROWTH 50 - 150 000 PA GDP GROWTH < 0 % PA INFLATION 15 - 25 % PA EMPL GROWTH < 50 000 PA Social Transformation

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THESTRATEGIC FORUM SCENARIOS FOR SOUTH AFRICA : 2010-2020

Economic Transformation Political Transformation GDP GROWTH > 5 % PA INFLATION 5 - 8 % PA EMPL GROWTH > 400 000 PA GDP GROWTH3 - 5 % PA INFLATION 8 - 10 % PA EMPL GROWTH 150 - 400 000 PA GDP GROWTH 2 - 3 % PA INFLATION 10 - 15 % PA EMPL GROWTH 50 - 150 000 PA GDP GROWTH < 0 % PA INFLATION 15 - 25 % PA EMPL GROWTH < 50 000 PA NO CONFIDENCE /LOW /AVERAGE /HIGH CONFIDENCE Risk AvoidanceRisk AversionRisk ToleranceRisk Taking Closed SystemOpen System One Party StateMulti-Party Democracy Closed SystemOpen System Paradigm RegressionParadigm ParalysisParadigm ShiftParadigm Reinvention Racial conflictRacial tensionRacial toleranceRacial reconciliation April 1994 Elections ThePolitical Miracle The future of South Africa depends on progress along thethree axis ofPOLITICAL- ,ECONOMIC-, ANDSOCIAL TRANSFORMATION . The solution lies in an approach that inextricably links economic policy, social development and transformation. The UBUNTU scenario requires an entrenched democracy, a reconciled Nation, united behind a common vision, an open Economic system, the alleviation of poverty and social delivery of housing, health and education. UBUNTU South Africa unitedMedium to High growth Medium to Strong OppositionEntrenched Democracy Non Racist, Non Sexist, Reconciled Nation LONG WALK TO FREEDOM South Africa unchanged Average to Medium growth Weak to Medium Opposition Espoused Democracy Tolerant Nation PRETORIA WILL PROVIDE South Africa entitled Average to Weak growth Weak to non- existent Opposition Shaky Democracy Tense Nation CRY THE BELOVED COUNTRY South Africa corruptedWeak to Negative growth One Party State Ignored Democracy Divided Nation Social Transformation

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THE STRATEGIC FORUM SCENARIOS FOR SOUTH AFRICA : 2010-2015

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45. RACIAL CONFLICT CLOSED SYSTEM RECONCILIATION ANDNATION BUILDING OPEN SYSTEM High Road Ubuntu Scenario Low Road Cry the BelovedCountry Scenario Lower Middle Road Pretoria willProvide Scenario Upper MiddleRoad Long Walk toFreedom Scenario 10% 40% 30% 20%


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