Scenario planning has a long history. The RAND Corporation employed it heavily in planning for potential U.S. responses to nuclear war and 16^th century Spanish Jesuit theologians pointed to the idea as proof of free will. But in many respects this powerful set of methodological tools for managing complexity and uncertainty remains underused, especially beyond the defense, intelligence, and business communities.

Scenario planning systematically looks at existing and emerging trends and their plausible – though sometimes unlikely – combinations in order to reduce risk. It’s an exercise that does not produce single point predictions, but examines a range of possible situations to help prepare for the unexpected.

Failure to anticipate national security threats has caught the United States seriously off guard in the past. Japan’s first-strike capabilities before Pearl Harbor, the Soviet Union’s insertion into Cuba of offensive nuclear weapons, and India’s 1998 nuclear test were all improbable realities that just happened to come true. Scenario planning is not only about improbabilities, but probabilities as well, such as the implications of the tidal wave of migration sweeping across Europe today from Syria, Afghanistan, and parts of Africa. Such forward-thinking exercises have also been a darling of the business community, especially the oil industry. But scenario planning has only sparsely been used by the development community until just recently.

What’s Changing at USAID?

In 2011, the U.S. Agency of International Development (USAID) embarked on an ambitious set of improvements to its long-standing strategic planning and programming cycle. These “adaptive programming” reforms, in a nutshell, beefed up the use of evaluation, learning, and adaptation to enable in-country Missions – the more than 80 offices around the world that provide frontline aid assistance – to develop more realistic, logical, and accountable five-year strategic plans.

By articulating specific objectives and tying them to measurable results over a medium-term timescale, this greatly improved Missions’ abilities to think beyond the Federal budget cycle and produce lasting change.

At the same time, there has been a growing recognition that fixed strategic frameworks can quickly become stale and lose some of their relevance in the face of significant and/or ongoing change. They can be disrupted (positively or negatively) not only by events like natural disasters or disease outbreaks, but more subtle phenomena, such as unexpected weather patterns, rapid technological revolutions, and shifts in governance structures. Aid planners and programmers are encouraged to take a more iterative approach that allows for continuous fine tuning and reappraisal of their strategies as new data becomes available and is shared.

As a consequence of these progressive learning approaches, agency operational units are increasingly seeking ways to make their programs more adaptive. Mission directors and their senior leadership are often eager to pilot new approaches, challenge existing assumptions, and keep their pulse on emerging trends – and scenario planning helps them do that.

Another change in the policy environment at USAID is a growing focus on “exit pathways.” As worldwide efforts to reduce extreme poverty accelerate, it is natural to contemplate a day when USAID’s country-specific development assistance – the largest by dollar value in the world – will be reduced and ultimately come to an end. Will host countries’ institutional mechanisms be able to sustain and grow development gains? Can we do better at predicting drawdown trajectories? Will Congress continue to fund USAID at historical aid levels, cut back, or direct USAID to sharply re-order its priorities? There are no single definitive answers to these questions, but it is possible to examine a series of possibilities. A recent draft appropriations bill before Congress in fact asks that an exit plan be in place for every country receiving U.S. development aid.

Contrary to one report, futures analysis has not come to a halt at USAID, far from it. Improving USAID’s capacity for scenario planning in response to these changes is a major thrust of the Global Development Lab, an initiative established in 2014 on the premise that science, technology, innovation, and partnership can accelerate development impact faster, cheaper, and more sustainably. The lab continues the work of the Futures Analysis Program, begun initially in USAID’s Office of Science and Technology.

What’s Changing Elsewhere?

Beyond the new policy and planning environment, there are three trends in the external operating environment catapulting scenario planning to the forefront of development thinking right now.

Preparedness/Response Shortfalls – Natural and man-made disasters are on the rise in the developed and developing world, and the global response has often been tepid. Part of this, no doubt, is a combined “failure-to-imagine” and “failure-to-prepare” syndrome.

The mistakes before and after Hurricane Katrina (2005) – one of the most deadly (1,836 killed) and costly ($108 billion in damages) storms in U.S. history – have been rehashed as we mark its 10-year anniversary. The Global Financial Crisis (2008), considered by most economists as the worst since the Great Depression, cost trillions of dollars worldwide. The Fukushima nuclear disaster (2011), a result of the combined effects of a major earthquake, a resulting tsunami, and poor reactor back-up design plans, created the largest-ever unplanned release of radioactive materials. Even when response plans are in place, execution is often another story. These significant disaster-induced calamities were largely unanticipated, the consequence of not examining low probability but high impact scenarios. Even when high probability outcomes are pointed out well in advance, like the earthquake threat in Nepal, the capacity to respond often lags. The admittedly feeble initial response to the Ebola crisis is another example of myriad institutional capacity breakdowns.

Rise in Uncertainty – Nobody likes being taken completely by surprise and development professionals are no exception. Much of the development landscape has become less certain in the Middle East and parts of Africa. Development planners are taking their cues from the intelligence and defense communities and focusing more on studying and revising basic assumptions, staying abreast of emerging trends, and exploring “what-if” possibilities. Scenario planning provides a structured framework for planners and knowledge-based experts to explore weak signals of impending change that might place development portfolios at unnecessarily high risk.

Growing Complexity – The development space has become more complex. Well-trodden patterns that once formed effective templates for programs and projects are no longer accurate predictors of future outcomes. Cause-and-effect relationships once held solemn are becoming more difficult to establish, less stable when they occur, more difficult to replicate in neighboring countries, and more challenging to expand. While some trends are easier to project in the short to medium term than others, like demography, their development consequences are less well understood.

An argument can been made that complexity isn’t really growing so much as we have better tools to uncover the complexity that has always been there. Either way, scenario planning and related techniques, like trend analysis and systems dynamics modeling, help practitioners begin to break away from single-sector “siloed” thinking in order to untangle the web of modern development relationships.

How Much Is Too Much?

Of course there is such a thing as too much information and too many scenarios. It is likely that more scenarios can be generated than is desirable for decision-making, contingency planning, and portfolio risk assessment. The sweet spot seems to be in the range of five to seven scenarios for each assessment. With that in mind, the Global Development Lab has developed a short-list of evaluative criteria:

• Plausible – Is the scenario and its underlying pathways possible, based on current knowledge?
• Consistent – Are the pathways leading to the future outcome logical and not mutually incongruous or conflicting?
• Comprehensible – Can the scenario be easily understood and sufficiently detailed while not being overly complex?
• Distinct – Is the scenario clearly discernible from others with little or no overlap in understanding?
• Transparent – How well does the scenario fit together when all the assumptions and decisions are made available to someone not part of the original formulation?
• Visual/Narrative – How well does the scenario lend itself to “seeing a picture,” moving beyond just manipulating data to creating a distinct scenario label?

These criteria can help winnow down the number of scenarios to something that’s useful and implentable. Together they allow decision-makers to better grasp an abstract concept or comprehend a distant and ambiguous set of development consequences.

A First Guide for Scenario Planning

To date, nearly a dozen USAID Missions have requested scenario planning support from Washington or undertaken modest scenario planning on their own, including the Democratic Republic of the Congo, Zimbabwe, and Colombia. The Uganda Mission is working with the University of Denver in a similar effort to use trend data to examine alternative future outcomes.

Providing one-on-one support can only be an interim solution, however. To strengthen institutional capacity, the Global Development Lab is developing USAID’s first-ever compendium of underlying principles and precepts that make for successful scenario planning. We also plan to hold a workshop and webinar on scenario planning fundamentals that can reach a much wider agency audience. This effort will require a much better understanding of Mission capacities, incentives, and capabilities to conduct scenario planning, so we are still in the early discovery phase. But the demand signal for scenario planning is clear.

Whether one calls them failed, fragile, or politically unstable states, the list of donor-supported countries falling into this group over the last decade has expanded rapidly. In such environments, it can be difficult if not impossible to tell what’s around the corner – doubly so if we don’t try. Scenario planning is a major step forward.