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Challenge Network scenarios since 1995

Challenge Network scenarios since 1996

Early scenarios were generated at the Royal Institute for International Affairs, Chatham House, where they were produced by a public-private sector consortium called the Chatham House Forum. The 'for profit' arm of this was and is the Challenge Network, but the Chatham House aspect of the work was terminated in 2001.

The Challenge Network activity started by consulting a wide range of British and European interests. Those scenarios generated in 1995 reviewed the three major uncertainties which this uncovered: the relations between the US and Europe - and the possibility of a Japanese revival - the nature of the post-Cold War security vacuum, and the reality of the "E"-economy. Subsequent scenarios have generated from public consultation, in-house work and the consequences of conducting many hundreds of strategy process for client organisations. Whilst these remain confidential, the insight that they generate filters into the global scenario work.

Since 2000, the scenarios have been developed in the public space of the web, and have been published here on the Challenge Network Forum, the web site of the Challenge Network. Previous versions were published in book form by Chatham House, including one experimental version that included a CD ROM which when installed, delivered a huge network of linked Powerpoint presentations. The scenarios are published biennially, and during the Chatham House phase were supported by non-scenario reviews that were published in alternative years.

The table that is given below reviews the development of these formal scenario publications. Those published on the web are supported by further documentation, and links are provided within the table to these. You will see that the scenarios arranged in three columns. These can be read vertically, as there is considerable conceptual continuity between successive scenario rounds. They are of course organised horizontally by the year of their publication.

Readers may wonder at the vertical continuity. Are scenarios not supposed to astonish, to point to the new and reject established thinking? In truth, however, they are not: if you are astonished by your scenarios, it is likely that you will not have thought deeply about how the various agencies of the world interact. Our understanding of the detailed nature of these dynamics has shifted very considerably over the past 10-15 years, but the generic conclusions that we are able to draw from these has moved somewhat less. This is because many systems are affected by negative feedback - driving them to the centre, as with energy pricing and demand, for example - and others are relatively predetermined, as with demographics, human resource and the expansion of knowledge. How these interact is subject to more insight, but that they interact has not changed.

The vertical streams of thought can be parodied as follows. On the left, there is a path into the future that is defined be thoughtful insight into systems - economic, social, natural - in which there is a conscious attempt to manage within these. Respect for evidence and best practice can make these very restrictive, as evidence by Carrying the Torch, the most recent in the series.

The central column is, in effect, the default scenario: it relies on emergent systems of organisation, such as markets and political pragmatism. It is frequently disrupted by crises that stem from poor management of these externalities, but typically has higher economic growth than the more normative cases. Environmental and social problems are typically less addressed, and positive feedback systems - where success is rewarded by success, and failure is its own reward - tend to be commonplace. Extreme crises often generate the more system-related scenarios, and these flickerings of systems leadership tend to be dropped for populism when problems go away.

The right hand column contains the more extreme cases, with the centre column ceding priority to these on two occasions. Atlantic Storm foresaw friction between the EU and the US - happily shelved in favour of Middle East adventures. Blunted Edge was the consequence of Pushing the Edge too hard: frank international schism into a network of bilaterals and corridors ending in closed doors. The 20003/4 case was undertaken with Shell International to explore the more extreme possibilities around the conflict-laden atmosphere that followed the 2001 attack. (We had achieved momentary notoriety by talking about the use of passenger jets as cruise missiles as early as 1995.)

The most recent scenarios follow the same themes, much distilled and enriched. They have been used by many of the larger multinational companies and departments of state, and around 300,000 people access their pages monthly.

1995/6 Unsettled Times: three stony paths to 2015
Post-Industrial Revolution Faster Faster Rough Neighbours
An evolution towards a more 'systems' view of the world, triggered by incidents of global impact such as the failure of human system - for example, finance - or clear environmental imperatives. Active policy initiatives to force economic development in poor nations, particularly around institutional soundness, openness to trade and ideas, civil liberties. The market approach to the world accelerates without cease. Technology drives very rapid change, from which it is impossible to stand aside and still remain a 'player' in the international economy. Social divisions intensify, both within and between nations. Friction is contained until the later part of the scenario period, where irresolvable differences begin toexpress themselves in violence. The Faster Faster case proceeds with particular rapidity. In the wealthy world, the narrowness of the economic base generates crime, with the wealthy increasingly segregated into safe havens. Intense change triggers international disorder, particularly amongst those who embrace and reject the 'official future'. The blocks that form owe more to ideas and social practice than to traditional trading blocks. Low intensity conflict is widespread.
1997/8 Open Horizons: CD ROM publication
Wise Counsels Market Quickstep Atlantic Storm

An evolution of Post-Industrial Revolution. When the systems of Market Quickstep allow almost anything to be done, deciding what to de becomes crucial in a world of very diverse options. Success is identifiable with good governance.

Central government is multi-layered and tightly integrated, acting across layers from the tightly local to the transnational. Increasing emphasis on sustainable development.

 

 

An evolution of Faster Faster. Extremely fast technological and industrial change, conducted on a global canvas. Government remains local as this is a risky, alarming world, and transnational issues are poorly handled.

Competitiveness enforces differentiation - playing to local strengths - at a sub-national level, further weakening national government. Environmental issues are not much addressed, and security issues become diffuse, low-intensity and aimed at ideas rather than concrete enemies.

Capital market instabilities are increasingly pronounced, against a background similar to Market Quickstep. Traditional strong economies such as the US see capital asset inflation. Ageing and the fear of social and economic change create a powerful rejectionist movement, aimed to slow both 'globalisation' and technological change. These forces are particularly strong in Europe.

The US follows a unilateral version of Market Quickstep. Both blocks impose more or less subtle trade barriers. NATO is abandoned, and by 2020 global security consists of a network of US clients, and various heartlands such as EU, China and Japan.

1999/00 The first web-published scenarios
Renewed Foundations Pushing the Edge  
Very fast competition erodes the economic position of the old, wealthy world. New technologies - such as the Internet - deliver extraordinary results - but seem to generate limited profit. Welfare demands push the public sector faster than the economies can deliver. The elderly - a growing cadre - become alarmed at change, eroding savings, costs - and their political weight limits regeneration.

A global cadre of knowledge workers find a distinctive way to operate: the active pursuit of insight and understanding, a 'micro-democracy' about ways and means. This style is 'portable' to the public sphere. Some nations adopt this and show excellence, whilst others see the style as a part of what they are rejecting, and thwart it. In these, What was once difficult, becomes knotted into tangled thickets of the impossible.

Science and technology deliver extraordinary potential, but insight that is also capable of being turned into wealth. The US, in particular, creates a powerhouse that is based on both science and the selective use of skilled low wage economies to turn ideas into products. Europe, by contrast, is slower to reach for the potential implicit the rest of the world - and indeed protectionist of local jobs - and less inclined to invest in or be excited by technology. There is a vocal cadre who are appalled by some aspects of science and commercial practice and attempt to block this.

Nations such as China and India are, however, firmly committed to growth and those who withdraw from global competition lose their relative position thereby. International institutions are hampered by the political dissent between the great economic powers, and little it done to underpin the international arena. Much of the world becomes dangerous, a home to the theft of intellectual property, criminality and the use of dangerous technologies.

These scenarios are described in more detail here
2001/03 Scenarios for 2025
New Deal   Blunted Edge
One or more stock market bubbles affect global markets, creating the conditions for the new form of stagflation: high debt, low capital asset performance. States are forced into chronic deficit by populist pressures that are applied within the innate weakness of the political system, in which the part system is seen to be dead but nothing comes to replace it. Hobby activism and a plethora of vocal objections paralyse large initiatives. A wide variety of political experiments are tried out.

Renewal comes through a complex set of relationships that develop as a result of the many large-scale social 'experiments' that were run during the difficult period to 2015-20. There is a natural 'trajectory' that nations are seen to follow, and the poor, industrialising, rejectionist and post-industrial nations have their positions on it, with clear steps defined for them to follow if they so choose.

The scenarios, the background papers and other related work is available here. These include an expansion on ideas such as the natural trajectory that was opposite.

There is a 1.7 MB PDF file of the 2003 scenario presentation avaliable here. This is reduced from the 40 MB original Powerpoint file, so there is some loss of quality and, of course, no animation.

The first decade of the period see widespread changes in how in particular Japan and Europe respond to economic challenges from the industrialising nations. The US, somewhat chastened by its Middle East adventures and by stock market instabilities tends to align itself with these movements. The result is a hegemony that cannot be opposed and which sets the sociopolitical agenda for a decade.

By 2010, therefore, seven billion people lived in a very different world from that of 2000. The old, rich world remained extremely powerful but was becoming a degree arthritic. Its writ, its paradigm and its insights continued to set the agenda for much of the world.

The scene was set for a reactive phase. Over-extension in the industrial world served to trip many of the middle income states, each over-extended as a result of high commodity and energy prices, growing internal demand and over-borrowing. Sprawling systems of outsourcing failed. A stock market readjustment - overdue after the boom of the late 2000s - exposed significant corporate irregularities, and an estimated 15% of gross book value evaporated off world bourses in the course of two months.

2003/04 Global security extremes, in conjunction with Shell International
Negotiated Settlements Tactical Interventionism Unilateral interventions
Please see the executive summary, here.

The new cadre of several billion educated middle class people around the world are supplemented by an even large group who are aware of the modern market economy and who sincerely wish to become rich. Governments that had been dominated by elites, or which were repressive of their people, undergo powerful 'bottom up' pressure for change. Over two decades, this amounts to an unstoppable force which the old, wealthy nations are happy to assist.

This tide of libertarian sentiment does not lack its enemies, but the tide transforms the world to an extent completely unforeseen in the views of military planners at the turn of the millennium.

Using the global carrot and stick on a grand scale to force sociopolitical change.

This case flows the more enlightened aspects of neo-conservative thought: that nine billion people, differing ideologies, scarce resources and nuclear weapons are compatible only in a world which is on a firm path to individual self-actualisation, liberty under transparent law and full access to working institutions. The major powers are able to agree upon goals, deploy a thoughtful toolkit that used all modes available to project power.

These scenarios are available in more detail here.

This case is driven chiefly by the United States, which has through the 'Fast Forward' doctrine and enormous expenditure, developed capacities in both conventional and unconventional power projection. For example, it is possible to identify and 'type' individuals in such a way that individual motivation can be addressed, tilting the social framework so that "all the marbles roll to our side".

Other countries will be ambivalent about the new reality in global affairs. The 'softly softly' approach to achieve a peaceful future for mankind will, however, be seen as naïve and irresponsible and most will at least accept massive power projection and the reduction of civil liberties - specifically, privacy and immunity - that this generates.

2005/06 Scenarios for 2030
Carrying the Torch   The Age of Anxiety
The US is subject to a major market shock. Europe separately loses its momentum, with a sense of handing on the torch to a new generation, of there being a calm before a transition to a different way of operating.

The shape of this new way is slow to emerge. It arrives from a myriad of examples, copied and improved, and a sense that there is no alternative to change but rapid decline.

This is a gradual process. It builds out from a core of nations and social groups. By 2020, however, an ethos of self-help and self-betterment, of graceful emulation and of agile awareness of what is happening elsewhere is commonplace.

By 2030, the agencies of the world spread themselves out along a continuum. At one end, nations, firms and individuals are caught up in an approach which is provably successful in delivering economic prosperity, social balance and sustainability. At the other, nations and social groups are not prepared or able to adapt themselves to this regime. They may reject modernity altogether, or they may be unable to make the leap to the extremely expert and complex forms of operation that have caught on in the advanced nations.

Nations and organisations which have adopted the governing style are caught up in what seems an unambiguous current flowing into the future. Not only does there seem to be no alternative, one can prove that there is no alternative. Social science has come of age: government and the economy, commerce and social policy are all tractable to analysis and policy fine tuning. The state is directive, for if there is a demonstrable "best way", then why follow any other path? The implications for those unable to meet these high standards is that the state intrudes into every aspect of life where this inadequacy presents itself - child rearing and health, commercial practice and personal liability. It is a safe, normative, divided world.

There is much more material concerning these scenarios here. A menu tree offers papers on topics such as energy, China and other matters importantto how the future may develop. The model of success in Carrying the Torch does not properly emerge. In part, people are not prepared to accept that the answers that it offers are the whole story. The rejectionists and obfuscators are deeply embedded in the old rich nations, and firmly in control elsewhere in the world. In part, too, it is because extremely unstable economic conditions in the early part of the period led to painful consequences for too many who were excluded from it.

One important factor in the development of this case is the mismanagement of the emergence of China. National success leads to a degree of triumphalism and interference in regional politics, and the narrative that Western politicians tell themselves about China begins to shift. From being a source of cheap and high quality goods, it becomes a menace to the social order, to international stability. People begin to talk of 'disciplining China'. The erection of barriers and other constraints to trade, against China in particular and its peers in general, is seen as increasingly mandated by the need for social tranquility.

The consequence of all of this is that the international environment rapidly becomes one that is not at all conducive to collaboration. Powerful nations tend to form bilateral agreements with client states, and attempt to tie in scarce resources. The primary aim of trade is increasingly non-economic in character.

In such an environment, issues such as the environment receive scant practical attention. The temperature begins to fall as China undergoes its own particular demographic shift, but by then many issues associated with transition into a world of 9 bn people have not been addressed, there is no consensus as to the values and criteria against which solutions should be set, and a suspicion of politicised science, notably social science and economics.

 

In summary.

We got a number of important things right. We were sceptical about both Asia and the about the short term commercial implications of the internet. Our position on defence has been reinforced by events. The continued weakness of political leadership is evident, and the compensatory, growing role of the politicised NGO has been supported by events.

We got some things wrong. We were overly sensitive to US-EU differences. We had not counted on the Euro's weakness, or seen the US as the essentially unique long term haven for capital which it has become. We thought that the US stock market realignment would happen sooner and more aggressively, based on historical GNP:stockmarket valuations.

One of the most interesting scenarios that we developed is Market Quickstep. This considered the declining role of the nation state as a unit of economic activity, and the growing role of local clusters and networks. Most US sectors have shown considerable geographical concentration in the past decade, whilst simultaneously spinning out much of their activity to a web of subcontractors. Clusters have evident economies of scale and appear to be both important policy variables and significant considerations for commerce. Location, location, location indeed.

The key consideration in this scenario was what happened if these geographical clusters applied the basic tools of corporate strategy. That is to say, accelerated competition drove them to concentrate on their strengths. Pleasing rustic areas would focus on holiday and retirement home provision, industrial areas on the supply of trained labour, excellent regulation, low cost transport, specialised infrastructure and the like. Plainly, if taken to its logical conclusion, this could lead to a major clash with central government; yet this is, in effect, theessence of European 'subsidiarity' and US state policy. Our assessment of the processes and consultation structures which would be necessary in order to make this work in a co-ordinated manner pointed directly to the key features of Renewed Foundations. Rightly or no, we felt that whilst extreme market conditions drove the need for this positioning, it was unlikely that market forces alone would generate the institutional structures that were needed to make this work. The overhead to the state of doing this was huge, but so too were the potential rewards for getting it right. Government coiuld largely stop 'doing' and focus on causing the right thing to be done, in the right place at the right time. Cohesion of processes and balances would replace a standardised national template to which all had to conform.

This concern about balances within and between desirable things is the essence of much of the art of management. It seems that there is no one single right answer to many policy balances and, even if there were, we would not be sure of this for decades. W have to persevere with what works, and what seems right to us. That is, Sweden, the US and Canada can achieve roughly comparable returns on assets and economic growth, whilst using substantially different mixtures of policy. What matters is that policy makers:

(a) know and understand the balances that they have been striking
(b) have de facto agreement from their stakeholders about this,
(c) stick to their course when things become difficult,
(d) are open to evidence and new views, and
(e) recognise that no one element in a portfolio of measures is dominant.

An additional stylistic approach which we have adopted owes much to political science, to biology and to complexity theory. Essentially, it is the theory of agency, whereby a large number of similar but not identical agents both create a system by their actions and whilst also probing it for its weaknesses and potential. That is, a group of many suppliers of goods and many customers for those goods make prices, but also brand relationships, fashions and so forth. None of these things - prices, brand values - have any existence outside of the system that creates them. The system is continually trying to beter or reinvent itself through the striving of its individual agents and the information which they create.

Such structures tend to be highly resilient and 'inventive', and rapidly find an equilibrium when external events change. Unlike the idealised firm or nation state, there is no single governing intelligence. Balances are struck as a result of each each agent gathering information and seeking to get closer to their notion of the best. When such agents operate in a complicated, many dimensional space - as already discussed - then this implies that no unique optimum is being sought, but a general trend to betterment. The system never gets stuck in local optima, or in structures implicit in a too-narrow selection of information. There is almost always an agent going counter-trend. There are sceptics and commentators. Instead of a governing intelligence, there is a collective - what should we call it? entity? intelligence? system? - which forms concepts and passes these around, acts on them and makes new things.

Such structures seem to be the core of knowledge based activities, of marketplaces and of functioning tacit systems such as neighbourhoods and clubs. They have a great deal to do with the processes which sociologists call 'discourse', by which new things are brought into the web of society. Mobile telephones, for example, play a role which is far removed from - and far more complex than - the initial thoughts of their inventors. Where such inventors fail to note these changes and extrapolate from their original analysis, then they lose their shirts.

Strategy and policy is now best formed through discourse within a stakeholder group. This is the only way in which resident knowledge can be extracted, for tacit knowledge and opinion is seldom tuned to address the issue at hand, particularly in the pat, 'logical' way that early knowledge managers and market researchers had assumed. However, a failure to take into account latent opinion, potential possibilities or new ways of talking about the problem dooms one to repeat the model that worked in the past, to do exactly what everyone else who shares that model is doing and and to miss the possibilities of the future. It is through engagement with these formless yet self-guiding assemblies of people and organisations that truly useful insight is often derived, and always derived where the issues are complex, 'social' and concerned with the fusion of very different ways of seeing the world. We believe that this distributed intelligence is the only way in which large organisations - whether in the private or the public sector - can react quickly to the complexity of today's operating environment. Organisations (and nations) which learn to harness these skills will be better fitted to cope in the truly tumultuous world that we face.

The new scenario process.

A new scenario round is begins in early 2009, looking forward to 2040. The following text is clipped from the briefing note that was provided for the core team:

"The predetermined elements make the future very different from the past. Even if we were able to continue with the previous chapter unchanged, these would make 2040 as different from today as we are from the early Twentieth century. Here are a few of them, a list to which it is easy to add more:

These factors propel us into a world in which, at the very least, many toes will be trodden upon. Values, activities, social institutions that were hitherto not connected will link up and so place constraints on each other. Complexity will increase, and with this the need to manage in ways that avoid complete paralysis; or worse.

It seems true, therefore, that a deeply important element of the 'new chapter' is connected with people: their values, their management, their tendency to associate, where they will feel loyalty and solidarity and where they will not. It is not clear why, in this time frame, it will remain implicit that mutual support should primarily revolve around chunks of geography. At the minimum, we will see the realisation of some networked version of subsidiarity, with really quite small areas of geography maintaining complex patterns of obligation with larger aggregates that enclose it geographically or trade with it. To survive in the intense and fast moving competition of the predetermined world, quite small chunks of geography will have to differentiate themselves in order to play to their strengths: Mayfair is not the City of London, however heterogeneous both may be. Miami is not Denver, Southern England is not the Isle de France. Each will have to find what it is god at, and what it can do for the entities which it contains – and the entities with which contain it, and with which it trades."

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