Causal Texture

Causal Texture Theories of Turbulence & the Growth and Role of Scenario Practices 1

Rafael Ramírez2, University of Oxford John Selsky, University of South Florida Polytechnic Kees van der Heijden, University of Oxford

Presented in EURAM 2009 Liverpool, May 2009

1

This paper draws extensively on the authors’ ideas developed in their co-edited volume Business Planning for Turbulent Times (Earthscan, Times (Earthscan, London, 2008).

2

Contact author – [email protected]

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This paper is research-in-progress, and still under review. Please do not quote or cite without the permission of the authors.

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Causal Texture Theories of Turbulence & the Growth and Role of Scenario Practices

Abstract We relate the causal textures theory of organizational environments – in particular the ‘turbulent’ texture – to scenario practices. This affords a contingency perspective regarding when it is advisable to use scenarios. s cenarios. This perspective offers a first explanation as to why scenario use rose dramatically after 9/11, and comprises the first scholarly understanding of how scenarios help to address turbulent conditions. The paper is derived from a two-day event we designed, hosted, ran and docum ented in 2005, which sought to relate rigorous academic thinking to the reflective practices of s cenario workers. This material is now available in the public domain via www.oxfordfuturesforum.org.uk www.oxfordfuturesforum.org.uk and and in the book that resulted, Business Planning for Turbulent Times (2008). Times (2008).

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Developing an actionable and rigorous theory of scenario work Scenarios are descriptions of plausible future contexts in which managers, their organizations, and other social actors might find themselves. Scenarios are typically presented as stories about how the environment that surrounds us evolved into plausible futures. They are produced by carefully analyzing and structuring relevant and challenging possibilities. Van der Heijden (2005) offers a useful overview of scenario method.

Scenario thinking and practice have occurred in military circles and policy think tanks, as well as in companies for almost half a century. Recent data suggest strongly that the use of scenarios to address complex conditions has increased significantly, particularly since the events of September 11, 2001. Indications that scenario practice is spreading come from both academic publications (see figure 1) and practitioner surveys (see figure 2). Figure 1 shows how the number of scholarly articles on scenarios published in English in the social sciences has shot up. We believe this reflects the increasing interest in, and the importance of, scenario practice.

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Figure 1 Scenario planning in the management literature

Figure 2 was produced by Rigby & Bilodeau, working with the US-based consulting company Bain and published in Harvard Business Review (2007). It suggests that scenario use among the parties surveyed by the consultants has gone up, as has satisfaction with the approach – presumably a good proxy for relevance. Similar statistics are available from the Conference Board, a US-based association of big companies. However, the surveys have neither a consistent nor a constant definition of ‘scenario use’, so the figures can be taken only as rough indicators of contemporary practice.

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Figure 23

Peer reviewed articles in English on scenarios…. 1600 1400

Dec 2007

s 1200 e l c 1000 i t r a 800 f o . 600 o N 400

200 0 1970

1974

1978

1982

1986

1990

1994

1998

2002

2006

Years Source: EBSCO database using the key word ‘scenarios’ Jan 2008

The lack of a stable definition of scenario use is not surprising. The thinking behind and application of scenarios are characterized by a broad and confusing mix of methods and practices, with no consensus on ‘success’ and little explanation as to why and how they work. For example, the Dialogue section in a 2006 issue of Organization Studies contained an interesting debate between Richard Whittington and Gerard Hodgkinson & George Wright as to why a scenarios-based intervention by the two latter authors failed. They agree that the intervention was ‘premature’ (pp. 1898, 1905) in relation to the emerging turbulence in the client organization’s environment (p. 1898). However, they fail to venture any guidance as to when in the rising turbul ence it would have been advisable for scenarios to be deployed. Such dialogue is illustrative of the fact that scenarios work has been supported by practitioner publications, albeit of varying quality. Thus, in spite of its growing use, scenario work remains theoretically underdeveloped. In this paper our aim is to anchor

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One of the authors interviewed professionals at Bain and the Conference Board about the nature of this data and the rigour in its analyses by telephone in 2002. 6 / 38


scenario thinking more robustly in social science knowledge, with the aim of improving planning practice.

In the 1960s a group of social scientists in the ambit of London’s Tavistock Institute were provoked by a growing need to better understand increasing environmental complexity, environmental uncertainty, and the indeterminate nature of such environments faced by managers in several industries. They came to theorize environmental complexity and uncertainty in terms of a classification of what they called ‘causal texture’ (Emery & Trist, 1965). They coined the term ‘turbulence’ to repres ent the Type IV environment, the most uncertain environmental texture (see Table 1 below).

Just as interest in scenarios has increased in recent years, so too has work on complex environments, and to a lesser extent, turbulence, as shown in figure 3. This makes revisiting the work of Emery and Trist, and particularl y their original 1965 article, highly relevant to contemporary organization and management studies.

Figure 3 Growth in the ‘turbulence’ and environmental complexity literature, 1970- 2007 (Source: Business Source Complete (EBSCO)) 400 350 300

s e l c 250 i t r a 200 f o 150 . o N100

Turbulence Environmental complexity

50 0 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006

Ye ar

Was it coincidence 40 years ago that while Emery and Trist were developing causal textures theory from 1965 on, Hermann Kahn, Pierre Wack and others took a leading role in developing the scenario method as an aid to strategic planning? Is it coincidence today that 7 / 38


both turbulence and scenarios have attracted recent academic and practitioner attention? These questions prompt our exploration of the conjuncture of these two fields.

The main argument is that causal textures theory provides a robust conceptual underpinning for how scenario practices help to address environmental complexity and turbulence. In broad outline there are two lines of argument, one epistemological, one methodological. First, scenarios help stakeholders develop a better systemic understanding of their surrounding environment and provide new insights in the turbulent environments they inhabit. A clearer awareness of pre-determined elements in the environment reduces the subjective experience of turbulence.

Second, scenarios help in building common ground among disparate stakeholders in a turbulent environment by focusing their collective attention on a set of alternative futures. Multiple futures provide space for surfacing tacit assumptions, which can then be discussed and understood. Understanding each other’s perspectives on how the field they hold in common may play out allows stakeholders to c ome together, then align and jointly strengthen their coping strategy.

In the next section we review the causal texture theory and in particular examine what is called the “turbulent” causal texture. We focus on Emery and Trist’s original formulation as well as subsequent developments up to the present. In the following section we review the nature and history of scenario practices. This offers a comparative rendition of how scenario practices developed on both sides of the Atlantic, again from the 1960s to the present. We then outline how scenario work and causal texture theory inform and enrich each other. We close by making observations on the conjuncture of the theoretical and practical strands of the argument, and point to paths of possible development in the future.

Our contribution is to demonstrate that and how causal textures theory can be applied to scenarios work systematically and concretely. This insight on scenario practice has not been drawn before. We also consider where scenarios would not be an appropriate or helpful method. We conclude that scenarios are not helpful in environments which have a 8 / 38


texture that is either more stable than a turbulent environment or even more uncertain and complex.

This linkage is for those people who wish to reflect on and address uncertainty and complexity in their environment in a creative manner, with a focus on the future. Insights from this work may be of interest to reflective practitioners (Schon 1983) engaged in scenario work: those who use scenarios in their managerial or consulting work, and who want to know more about why, when and how they can be made more effective. Attention by scenario practitioners to the implications of causal texture theory may improves the effectiveness and quality of scenario work. This work may also appeal to scholars who want to understand better how uncertainty and volatility im pacts managerial practice in businesses, governmental institutions and NGOs.

Emery and Trist’s theory of causal textures of the environment Emery and Trist’s ideas about how to engage with open systems and their environments provide rich conceptual insights on why scenarios have become a major part of strategic and policy making practices. In addition, their work offers important methodological insights that improve scenario practice.

The two key foundations of causal textures theory are (1) open systems, and (2) active engagement. First, drawing from biology and social psychology, Emery and Trist treated social systems as ‘open’, that is, as fitting in, deriving form and sustenance from, and contributing to an environment around them. This perspective, which became known as ‘open systems thinking’ and was developed by many others, then influenced thinking in organizations, where strategic planners became increasingly interested in how the business environment set parameters for strategic decision making.

Second, Emery and Trist ascribed to Kurt Lewin’s (1952) insight that a social scientist needs to engage with the social world in order to understand it, and that the inevitable changes caused by the engagement help the scientist to explain the system better. This idea was the foundation of the method of action research. Emery and Trist adopted this 9 / 38


approach of ‘engaging with’ that which they studied in their various field researches. Open systems and engagement were decisive elements in how their work evolved, not only affecting what they researched but also defining the role they developed as researchers relating to clients or subjects.

Causal texture theory deals with systems trying to survive and thrive in their environments in a sustainable way. The inside –a system– and the outside –the environment of that system– “coevolve” in the sense that systems and their environments mutually influence each other, and they proceed into the future together (Selsky, Goes & Baburoglu, 2007). System and environment each have internal links between variables, as well as links with each other. Several interacting systems, their shared environments, and the links that connect them together are defined as a ‘field’.

The causal texture is an emergent property of the whole field and concerns the behaviour of all systems within it. The causal texture of a field sets conditions on how these systems and their shared environments transact (ibid. p74)

In their 1965 paper Emery and Trist identified four Weberian ‘ideal’ types of causal texture. The differences among the types depended on how systems in the field (systems they termed “1”) and their surrounding environment (which they termed “2”) are linked. They were particularly interested in links they called “law-like”, i.e. links driven by a logic that pertains over a period of time. Four possible links between system and environment exist: **L11 (read as “El one one”, not as “L eleven”) denotes links internal to a system; **L12 links the system to its environment –system outputs, related to the planning function; **L21 links the environment to the system –system inputs, related to the learning function; and **L22 denotes links between elements in the environment itself, and which occur “semiautonomously” (M. Emery, 1999) of the system.

Distinctions among the causal textures are m ost helpfully characterized by which of the L11, L12, L21, and L22 links are most salient in the situation studied, as shown in Table 1. That 10 / 38


is, Emery and Trist worked out the causal textures logically in terms of field structure, and the type of coping or response strategy that would enable a system to do well in that causal situation. The distinctive contribution was to articulate for the firs t time the nature and properties of the L22 environmental relationships.

Type of causal texture I: Placid Random

II: Placid Clustered

III: Disturbed Reactive

Structure of field

Most salient connections

Resources, goals, and noxiants are randomly distributed in the field. “Perfect market” conditions Resources, goals, and/or noxiants are located in advantageous (‘high ground’) positions Conditions of imperfect competition with market failure Oligopoly Similar organisations in head to head competition More L21, L12 exchanges than in types I & II

L11

IV: The whole common Turbulent shared ground is in motion. L22 becomes uncertain and changing, taking on a life of its own; distinctions between L12L21 and L22 begin to break down.

L11+L21

L11+L12+L21

L11+ L21+ L12+ L22; Distinctions between 1 and 2 begin to break down.

Characteristics of successful coping/response strategy in the type - Experience-based tactics - Local optimisation in the “here and now”

- Strategizing for securing or accessing “high ground” locations and identifying right placing of outputs. - Attending to distinctive competence and resources. - Centralising operations. - Game-based strategies, communicating with others to influence inputs. - Mounting operational “campaigns”. - Rapid decision-making “coming to terms” with the other sharing the same field No survival for systems acting alone. Collaborative strategies among dissimilar organisations in field.

Table 1 The four causal textures and key characteristics

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We acknowledge the work of Thomas (2008) in the construction of this table.

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In progressing from type I to type IV causal texture, increasing complexity of transactions in a field leads to an aggregate behaviour of that field that becomes less and less stable. The causal texture is a manifestation of this relative (in)s tability. From the point of view of any system in the environment (such as an organization) this means that its environment becomes less stable as the textures proceed. The increasing instability of the f ield manifests as a “relevant uncertainty” of the environment of individual systems or organizations.

In Emery and Trist’s terms the L22 links are relevant to all systems in a field. For any system in this field, these links are perceived as the wider context in which it finds itself. In contrast, each system develops it own L12 and L21 links with its particular environment. This is the source of the distinction between the transactional and contextual environments. Each system (organization) in the field has its own competitive and collaborative operations and relations with others, which are defined as the L21 and L12 links. This is the transactional environment, defined in aggregate by the actions of the actors in it. The contextual environment is defined by the releva nt L22 links, expressed not as agent actions but in terms of macro factors. If an individual actor can influence her situation, then she is operating in the transactional environment defined by L21 and L12 links. If an individual actor is facing macro-phenomena, such as demographic trends, which she cannot influence, then she is dealing with the contextual en vironment, defined by L22 links. In effect, the L22 links supply the boundary conditions for any one system’s transactional environment. How the nature of the L22 relationships shape these transactions was the key contribution in the original analysis (Trist, 1983: 172).

In the first two types of causal texture, the environment is recognized to be stable by the majority of the actors in it. In type III, with more inter-connections, the field becomes more dynamic, or “disturbed”, by competitive actions. In this causal texture, even if competition is severe and some organisations will perish, these events happen in a mutually acknowledged way. That is, the actors recognize that their shared “playing field” ( i.e., the conjoint transactional environment) is still relatively stable. Systems in this environmental

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texture operate according to, and support, a set of institutional rules of the game (van de Ven & Hargrave, 2004) that characterize the field they constitute and inhabit.

However, in the turbulent causal texture, the institutional arrangements governing the field as a whole start to break down, and the whole of the field, including the contextual environment (L22 links), becomes a source of instability. The (sudden) instability in the L22 relationships, signalling to actors they can no longer rely on it, makes the relevant uncertainty salient in a new way for decision makers in organizations trying to sur vive and thrive. Turbulence, even if it is felt to break out suddenly, can snowball and have quickly spreading contagion effects that are generally felt as negative and threatening; so a sense of need to withstand it, and defend onself against it arises.

Perrow (1984) illustrates how this might happen in his study of the set of conditions that led to the Three Mile Island nuclear power incident. He found that the nuclear reactor operators tacitly believed that what was happening had been predicted in advance and that ways to deal with it had been specified in their operating manuals. Yet, that belief was mistaken in the critical situation. So in doing what the manuals said shou ld be done, operators actually contributed to instigating the accident and made it worse. So too with turbulence – it may be caused by an aggregate of actors who are unaware that they are in fact co-producing the turbulent causal texture. For example, if actors or systems in a disturbed-reactive causal texture do not in aggregate attend to the externalities they produce in their normal competitive actions (including failure to attend to appropriate regulatory frameworks) they may unwittingly co-produce a turbulent causal texture (Selsky et al., 2007: 74).

The type IV causal texture reflects for a given observer conditions in the field that have been called ‘wicked’ problems (Rittel and Webber, 1973); ‘messes’, or systems of problems (Ackoff, 1979); and ‘meta-problems’ (Trist, 1979; Selsky & Parker, 2005). Turbulence must be understood as a distinctive field-based environmental texture, not only as an aspect of a particular organization’s environment. Selsky et al. (2007, p77) assert that “To construe turbulence as a property of a particular firm’s environment… is to conflate it with the commercial challenges routinely faced by every firm”. 13 / 38


Coping with turbulence How can anyone respond to a turbulent environment and escape from its negative or damaging effects? The answer in causal textures theory is in two parts. First, it is unlikely that any actor could do it alone. Systems in a field that is characterized by turbulent conditions would have to come together and jointly determine, identify, uncover, or even create a shared frame of reference for acting together, that is, “common ground”. In other words, in a field with a turbulent causal texture systems are advised to collaborate to identify a set of values they 2

can institutionalize to create common ground . This entails creating inter-organizational collaborative “island” arrangements that can keep turbulence outside, for example, Normann and Ramirez’s (1993) ‘value constellations’ create a co-productive field that ‘stabilises’ grounds that are extended to push back uncertainty. An example is the VISA system of payments, where banks, retailers, terminal makers, telecommunications companies, and consumers jointly co-produce a set of legal, commercial, technical, and institutional standards that decreases uncertainty regarding new payment technologies, trust of counterparts, costs of intermediation, fees, legal arrangements, cost of insurance, and so on (Ramirez & Wallin, 2000). More broadly, one could argue that this is what the process of civilization has successfully done throughout history.

Second, people’s experience of turbulence is moderated by the adaptive capacities they perceive they can mobilize, both individually (say inside a single system) and collectively (McCann & Selsky, 1984; Baburoglu, 1988). This contrasts with Emery and Trist’s stance in the 1965 paper that considered turbulence as an objective condition of a field – through which it became a distinctive texture. Instead, McCann and Selsky (1984) and Selsky et al. (2007) put the perceiver of turbulence explicitly into the picture, suggesting that a given field condition will be experienced differently by different actors, and therefore perceived differently. That is, some may consider they are operating in a turbulent causal texture, while others see themselves in a disturbed-reactive one. The reason why they experience and perceive their environments differently is that they perceive their adaptive capacities differently. Some may believe they can mobilize the necessary stocks of resources to confront the negative and/or challenging macro forces, whereas others may not believe they are able to do this. 14 / 38


In summary, Emery and Trist considered that to stop the snowballing effect that gives rise to, feeds, and is fed by turbulence the salienc e of the contextual L22 relationships would need to be reduced, by institutionalizing new values. The idea is that shared values in these institutions would create an environment of lesser uncertainty than the type IV causal texture, pushing turbulence back and re-constructing a more stable ground for decision making and investing in the future. However, at critical points in the life of a field creative and innovative individuals such as Ghandi, Mandela or Steve Jobs can play a key role; they show new ways out of the messy and wicked problems caused by turbulence (by perceiving adaptive capacity differently, or perceiving new sources of adaptive capacity). Scenarios are a key method to assist in this imaginative and creative process.

A key question is how turbulence is coped with, and by whom? Emery &Trist’s (1965, 1973) theory of causal textures of the environment is sometimes understood as a descriptive, high-level evolutionary theory (à la Toynbee, Darwin or Marx). However, for Emery and Trist and others (including the authors) with an action-research orientation to engaging with social systems, the possibility of turbulence offered important direct implications for practice in the world. An example of this is a planning method closely associated with causal textures theory called the search conference (Emery, M. 1976, 1999; Jimenez 2008).

We believe that reading causal textures solely in macro evolutionary terms diminishes the value and power of the theory for several reasons. First, causal textures theory ascribes to ‘strategic choice’ rather than determinism in social (including business) affairs. It ascribes a strong role for human agency. With its deep grounding in human practice, over time the theory has acquired a deliberately normative stance toward an “improved future” for humankind. Second, as a part of open-systems thinking, causal textures theory is underpinned by the notion that systems and their environments co-evolve, that is, actions by systems and their members can have the effect of changing the basic contours of environments; systems then adapt to those changed contours (M. Emery, 1999; Selsky et al., 2007). Finally, the ‘variant’ on the original causal textures theory originally advocated by McCann and Selsky (1984) and advanced here explicitly introduces the perceptions by 15 / 38


actors of their environment as a key contingency in adaptation. That in turn highlights the subtle link between the objective and the perc eived environment that scenario work helps to explore as part of developing and strengthening adaptive behaviour.

Scenario practices Scenarios are used in many different ways in a variety of professions, such as the theatre and film, risk evaluation or surgery. As we understand and use the term, they are plausible and challenging future contexts in which one might find oneself in that help one to understand what is possible and how one might best act. They come in sets, as opposed to the singular manifestations of trends, forecasts, or reference projections. They seek to identify which elements in future contexts might be predetermined (Burt, 2008); and are valuated in terms of how they challenge existing assumptions and transform plausibility – not on accuracy as predictions and sensitivities tend to do. They enable strategic conversations (van der Heijden, 2005) and their effectiveness depends on how well their deployment fits the purpose of the intervention which they form a part of.

Scenarios have been used in companies for over four decades (Lesourne & Stoffaes, 2001; van der Heijden, 2005) and even longer by military planners and policy-makers. Multiple methodological versions now exist in the public domain depending on how they developed both conceptually and in practice. The early work in RAND that Herman Kahn (1962) made famous, along with the work at SRI, are considered pioneers in the Anglo-Saxon world. In the Francophone world, the school of “La Prospective” developed by Berger (1964) and furthered in the national planning work of the French planning ministry DATAR, the ‘futuribles’ movement and journal (from ‘futurs possibles’), the ‘comités de la prospective’ that were formed in public companies such as EDF and France Télecom (Lessourne & Stoffaes, 2001), and the work of Michel Godet and his colleagues shaped a whole community of practice.

An important milestone proved to be the introduction of scenarios at Royal Dutch Shell by Pierre Wack3 40 years ago. Wack was influenced more by Gurdjieff’s (1963) philosophy highlighting the essence of “seeing” anew rather than by the highly technical and quantified 16 / 38


methods of the French scenario school. Peter Schwartz, an author of early scenario books (see Hawken et al., 1982), succeeded Wack at Shell. The ‘Shell School’ became a private sector benchmark, not only because of the role of scenarios in helping the company to address the first oil shock (Schwartz 1991; van der Heijden, 2005), but also because it became an interwoven practice across the company that has not been replicated elsewhere to the same degree.

Because of the legacy of Pierre Wack and the Shell school, the core of non-military scenario work has moved from Herman Kahn’s famous dictum ‘to think the unthinkable’ (in the context of a possible nuclear war), to instead focus on seeing a new reality by identifying the driving forces in the contextual environment that determine plausible future transactional environments.

Van der Heijden (2005, p115) explains scenario work in ways that build on Emery and Trist’s delineation of transactional and contextual environments. Scenarios are considered to be methods to assess the causal texture by considering how forces in the contextual environment interact systemically to affect a set of possibilities in a transactional environment. This is the methodological function of scenario work that we discuss below.

As we noted above, the use of scenarios in corporate planning has increased substantially since the events of 11 September, 2001. The reason, we believe, is that decision maker s are increasingly seeing turbulence as part and parcel of the world they live in; they can no longer count on a stable foundation for their activities. A growing list of large and unanticipated events, crises, wars, and other disruptions conveys to decision makers the message that the fundamental problem has shifted: it is not so much a problem of insufficient analysis and/or research, or lack of data or information; instead, the problem is that the field itself has become turbulent and uncertain, requiring a fundamentally different response.

In a survey of the literature on scenarios covering 186 articles, books and chapters published between 1977 and mid 2007, Lang (2007) used a classification based on 17 / 38


Morgan’s (1986) eight-metaphor framework to identify social science research on organisations. She found that the pattern of scenario research follows roughly that of research on organisations as a whole. That is, a majority of the publications fall within the mechanistic and organism metaphors, reflecting concern with how to efficiently do scenario work and how to use the method to assist organisations addressing environmental uncertainty. None of this, however, helps in explaining the growth in scenario use, particularly the explosive growth following 9/11.

Causal texture theory, turbulence, and scenario work That the nature of L22 relationships in the contextual environment shapes transactions in the transactional environment is an important insight for our purposes, as it clarifies how and why scenarios help decision makers - specifically in turbulent causal textures. In the first three types of causal texture, actors in aggregate maintain a degree of control over the field. But in the turbulent causal texture the L21 and L12 trans actions among systems become affected by highly uncertain L22 macro relationships due to uncertain causality. It is because in turbulent causal textures the source of uncertainty stops being predictable that scenarios become highly relevant methods. We discuss the implications of this later.

In turbulent causal textures the decision maker’s attention must shift from understanding the competitive games in the transactional environment to understanding how the forces from the contextual environment (L22) may shape the transactional environment, not only in the present but, more importantly, in the future. This is precisely what scenarios do: They compel the decision maker to attend to and work through plausible possibilities in the contextual environment, and the consequences for his/her transactional environment.

But prior to constituting these inter-organizational constellations, decision makers need to appreciate the nature of the turbulent causal texture and the new kinds of behaviours it requires. To do so in the multiple – in a set of scenarios – rather than the singular – in a forecast or reference projection – helps managers to recognize the extent to which their contextual environment is beyond their control or direct influence (Smith, 1983). This

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recognition is a necessary precursor for coming together and co-creating an island of collaboration that can shut out turbulence for all of them.

This process is not entirely unproblematic. Creating newly institutionalized rules and regulations may be a temporary stage that leads one back into head-to-head competition in the type III, “disturbed reactive” causal texture, instead of creating sustainable common grounds such as value constellations or wider ‘domains’ such as VISA’s payment system, or the tax system in developed countries that most people adhere to. Domain creation through successful inter-organizational value constellation arrangements such as VISA, Xeroxing, or UHT long-lasting milk (Ramirez & Wallin, 2000) requires a m ode of conversation in which such multiple perspectives are acknowledged as a legitimate and helpful heuristic. Scenarios do that in a strategic conversation (van der Heijden, 2005). In a strategic conversation, when collaboration surmounts competition then scenarios are effective; when competition wins then scenarios fail.

In short, our core argument is that when fields take on the characteristics of a turbulent causal texture, use of methods such as scenarios will rise, as decision makers seek ways to address turbulence. We argue that scenario methods would not be relevant in causal textures less complex than type IV conditions because the contextual complexity described by the L22 relationships is not salient, rendering scenarios unnecessary.

We have identified two main ways whereby scenario methods help in coping with turbulence: First, they help stakeholders develop a better systemic understanding of the causal texture of the contextual environment and the salient L22 relationships. With scenarios decision makers gain new insights and clearer understanding of these relationships, leading to an awareness of pre-determined elements, reduced uncertainty and better insights on how the remaining uncertainties may play out. Scenarios here play an epistemological role in the L21 link – that of enabling the individual in the field to learn. Second, scenario methods help in building common ground among disparate stakeholders of a field, because they provide space for multiple interpretations of the situation and insights about new possible linkages and role constellations – a player which was 19 / 38


considered a client may become a partner; one that was considered a supplier, a competitor. This makes it easier for the stakeholders to understand each other’s perspective on how the field they hold in common may play out under different plausible conditions. This in turn helps to create the common ground needed for innovative collaborative actions that can shut turbulence out. The methodological function of scenarios here concerns the L12 link in the form of planning and the articulation of interactive strategy designs (Normann & Ramirez, 1993, 1994; Ramirez & van der Heijden 2007). Van der Heijden (2008) has explored how this worked in redesigning Indian agriculture; Ramirez, van der Heijden, Wilkinson and Selsky are currently exploring how it works in the unfolding financial crisis.

Discussion While our focus concerns using causal textures theory to better understand the method of scenario work, our confronting scenario work with that theory raised three key issues: the methodological and epistemological status of scenarios; the nature of the turbulent causal texture; and the epistemological status of causal textures theory. We discuss each in turn.

The epistemological status of scenario methods Several people have attempted to identify the theoretical underpinnings of scenario work before – for example by linking it to Belbin’s role models in teams (Islei et al., 1999) and attending to how they relate to decision making (Schoemaker, 1993 ) or theories about iterative learning (van der Heijden, 2005). The m ethodological aspect that we have explored concerns not only how scenarios are to be produced but also whether and when to deploy scenario methods. That is, we have explored in which type of situations (turbulent causal textures) scenario work is pertinent, and why scenarios serve explicitly defined and useful purposes in a process of guided inquiry and engagement in those conditions. We suggest that knowing the role of the method used in scenario work in a particular engagement or inquiry is a requirement to its being effective. Not paying enough attention to purpose and the concomitant methodological aspects in a project appears to contribute to failure (see the Whittington – Hodgkinson/Wright dialogue mentioned early in this paper). Our contribution

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is to focus on causal textures theory in order to clarify the type of situations in which scenarios are an appropriate and effective method.

Scenario work, when the process used is rendered explicit, can be considered a method with which to engage some aspect of reality. Like other practitioners’ crafts, scenario methods were developed outside the ambit of science, and the scientific treatment of these practices followed their invention, elaboration, and application, rather than preceding them. One influential practitioner has suggested scenario work is an art (Schwartz, 1991). The production of knowledge in the arts proceeds inductively from specific cases to general regularities – the opposite of deductive scientific method. In the arts each situation is idiosyncratic, with a unique configuration of actors interacting in novel, creative and unexpected ways. Nonetheless, in scenario method some procedural and process-related regularities are discernable. Over the years the community of scenario practitioners has gained some understanding of techniques, tricks, norms, principles and heuristics that do and don’t work in facilitating scenario projects , and the combinations of these have been assembled as asset of methods.

Scenarios in this methodological respect can be deployed as part of a consulting intervention and/or as a central aspect of research work, in some circumstances becoming the method itself. When intervention and research are combined, scenarios are thus one form of action research (see Van der Heijden, 2008) or action science; where scenarios engage with current realities and explore ho w the context of those realities might develop into the future - see Reason & Bradbury (2006) for a recent compilation. Yet scenario work is not inherently action research, which entails a deep engagement between a social scientist and a client, the outcomes of which explicitly seek to contribute both to the world of practice and to the world of social science.

Our research suggests that thus far, engagements using scenarios that have documented histories in the public domain concern policy, strategy or consulting engagements much more than scholarly contributions. Various efforts have been made to systematize the procedures involved, for replicability (e.g., Schwartz, 1991) and in some cases, verifiability 21 / 38


(Schoemaker, 1993; van der Heijden, 2005). That many consultants and executives have taken up scenarios as an ‘artful’ consulting or planning tool has accounted for its growth, but we believe it is now time to reflect on what makes scenario work intellectually rigorous and ‘scientific’.

At the beginning of this paper we noted that the theoretical grounding of scenario work has been weak up to now, and we have sought to redress this. As an ‘artful method’ scenarios have a dual character: they are both prospective – scenario projects help participants ‘discover’ or re-perceive ‘new’ futures – and retrospective – accounts of their success are written up for others to benefit from, as in van der Heijden (2005).

The retrospective-prospective combination are also inherent aspects in action-research. Van der Heijden’s (2008) work illustrates this dual character, where he revisits scenarios work he did in the Indian agriculture sec tor in 2005 and makes sense of what was done with the help of causal textures theory. The theor y renders explicit why the method he use d (and describes) worked well. He relates the method and the four scenarios it produced to the turbulent situation in which it was applied. In scientific terms, an immediate question that arises is: Could that project be replicated? Arguably it cannot, because of the idiosyncratic factors in –and timing of- that unique situation; and because of the particular embodied skills in van der Heijden himself, and in his World Bank and Indian organization counterparts. A novice practitioner reading his chapter could not expect to replicate the process or the success of that project, but could come to an appreciation of the process – and perhaps the skills ‘behind the curtain’ that were deployed to orchestrate it. In short, this work consists of an after-the-fact account of practices that worked well in a particular context (Feyerabend, 1975). The engagement van der Heijden recounts in his chapter produced situated , not general (fully replicable) knowledge.

In short, scenario work can be scientific if the claims to science involve ex plicitly clarifying the epistemological assumptions made, the choices between alternative courses of action in the scenario process, and the conditions in which the work was carried out. This allows expost analyses of the opportunity costs and advantages that the work yielded in ways that 22 / 38


can be redeployed in further work, presumably enhancing effectiveness. The ‘reflective practice’ (Schon 1983) that his makes available in the public domain renders the accumulated wisdom from the practice a public good, which is what scientific (as opposed to consultant) knowledge is. The explicitation allows for criticism and further knowledge refinement and accumulation, in a constructed body of knowledge that involves methodology: critical, reflexive conversations on method, effects, and costs.

The ontology of the turbulent causal texture of a field Is turbulence objectively ‘out there’, independent of the self; or is it ‘in here’, perceived? And in any case, why is turbulence considered bad, uncomfortable or threatening? Why does it require ‘coping behaviour’?

Various disciplines have explored why intense uncertainty in one’s environment is problematic. Psychologists highlight the detrimental effects of stress and distress (for instance, in times of war), and how uncertainty challenges an individual’s sense of identity (Sennett, 1998). Economists argue that lack of predictability destroys rent opportunities associated with long term investments, and that externalities which cannot be traded yield unsustainable ‘limits to growth’ (Meadows et al., 1972). Anthropologists and sociologists consider how the dissociation and anomie created by maladaptive responses to uncertainty lead to passivity or conflict. Political scientists focus on how inter-group conflict often results from uncertainty regarding resource bases. What does the causal textures theory suggest? Its basic argument is that head-to-head competition in type III causal textures will continue to increase without appropriate governance, leading to the creation of a situation in which the type III environment becomes a Type IV turbulent one, where the causal textures are experienced as ‘increasing relevant uncertainty’. This is manifested as unpredictability, and as increased anxiety among the actors in the turbulent field. If the anxiety begins to be manifest while still in the (late stages of) Type III environment, it will contribute to behavior that accelerates the passage to Type IV conditions. The bonus-fed competition for better results than the competition in derivatives and securitization in the last decades and the creation of the financial crisis is an excellent example of this. ‘Coping’ with turbulence means both (a) recognizing that the causal texture of a field can become turbulent, and (b) 23 / 38


acting to prevent this by engaging in ‘active-adaptive’ behaviour and avoiding maladaptive behaviour (F. Emery, 1977; Baburoglu, 1988; M. Emery, 1999).

On the other hand, Prigogine argues that increasing the complexity of a large field increases the possibility of occurrence of ‘dissipative structures’ – new and unforeseeable sources of order and predictability - in and around that field (see Bernard, 2008). So more complexity in a sufficiently large field might be beneficial; in that the number of potential new unexpected sources of order that may arrest the development of turbulence increases. But of course the new sources of order and predictability might not be welcome if the field were not so complex and uncertain in the first place.

Recognizing how turbulence might come about, progress and unfold is an important role of scenario work. Scenarios support the understanding of how the contextual (L22) relationships may evolve and become or remain turbulent in the future.

These perspectives on why turbulent causal textures arise, how they might be co-produced and be best avoided beg an important question: How can contextual forces in a field that risks becoming turbulent be reconciled with the choices made by individual systems in such a field? We explore this question next.

Turbulent macro evolution & strategic choice Emery and Trist’s seminal 1965 paper predated the distinction between the transactional and the contextual environment. Based on their later writings, we conclude that for any given system L12 (planning) and L21 (learning) relations connect that system with its transactional environment and L22 relations constitute its contextual environment, which ‘bounds’ the system’s transactional environment. This implies that the contextual environment happens outside the sphere of influence of the system – affecting its transactional environment, but unable to be influenced by the system itself on its own. In contrast, the system is able to influence its transactional environment (L12, L21), for it transacts with it and co-determines it along with those with whom it transacts.

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Emery and Trist suggested that the criteria for turbulence were related to the degree of ‘salience’ of the L22 relations, even if they did not indicate how salient the L22 relationships had to be in order to shift the causal texture of the field from a type III to a type IV environment. They went as far as to suggest that in the type IV causal texture the contextual environment becomes so important that it threatens to overwhelm and disable the L12 and L21 relations; but they did not work this out in any detail. However, the important point here is that the contextual environment (by definition) cannot be influenced directly by any individual system on its own. That means that the increasing salience of L22, as the causal texture becomes turbulent, cannot be reduced by the actions or strategy of any individual system in that field working by itself. The turbulence in the field follows its own logic as it evolves over time, and individual systems in it can do nothing about it alone. What, then, does ‘coping behaviour’ mean, if it cannot be grounded in the individual system’s acting to reduce the turbulence of its contextual environment?

If an individual system in a field that is taking on or has become subject to a turbulent causal texture can do nothing about that on its own, the least it can do is to try to escape from it. This strategy of ‘escape’ is only effective if there is some place to escape to, that is, if turbulence is not a homogeneous condition in the field and its neighbours. Walls and other physical boundaries such as moats are examples of ensuring that such an escape strategy becomes sustainable (e.g., Berlin Wall, Israel-Palestine wall, Great Wall of China, ‘gated’ residential communities, military barracks, monasteries). Border patrols, moats, draw bridges, and defensive fortifications create bounded spaces intended to protect the certainty of the order ‘inside’ from the disordered uncertainty perceived to lie ‘outside’ or on the ‘other side’. For the insiders in the bounded spaces the strategy of escape from the turbulence outside constituted as a turbulent field consists of securing a niche of relative predictability, allowing growth and development that allows them, at least, to escape the turbulence outside their enclave. This involves setting up real or virtual barriers to the turbulent outside world which may have to be defended against incursions triggered in this turbulent context. For the excluded outsiders the bounded spaces represent a different (perhaps perverse) ‘order’, with which L12 and L21 relations are highly restricted, if not impossible. These barriers establish identity by clearly distinguishing Other from Self. McCann and Selsky 25 / 38


(1984) believe such boundaries increase adaptive capacity within the Self by restricting resource allocation from the Other. Yet in and of themselves the boundaries do not reduce turbulence – they reallocate it, Because of the outside’s threat to the viability of the inside it is crucial for those inside to understand the L22 forces, in order to appreciate how such a niche might be designed, where and when new such niches might be needed, and under what conditions the niche defences may fail, and the escape from turbulence foiled. It is these considerations – how this might happen – that scenarios help to apprais e. But scenarios can also be used to understand how the niche might be expanded, and the turbulence be pushed back further afield, by creating new and/or more effective collaborative arrangements (Ramirez & van der Hejiden, 2007).

This is one definition of active adaptation in a turbulent causa l texture. Emery and Trist believed that in turbulent conditions systems could no longer act alone and expect to be successful. Instead, those sharing a field would need to act together. In pursuing this line of thinking McCann and Selsky (1984) explored how it might be possible to create a lowuncertainty niche, which they called a ‘soc ial enclave’. Their idea was that while the violent L22 forces prevail all around, the collaborating systems shut these forces out from the enclave by sharing sufficient basic values and resources to enable them to build and sustain institutional arrangements that keep turbulence on the other side of the enclave’s boundary. Since no individual system could be resourceful enough to create a niche by itself, this strategy would require the collaboration of multiple actors. This, we believe, is the underlying explanation and justification for Emery and Trist’s promotion of collaboration as the effective response to turbulence.

It may be helpful to think of multi-lateral institutions, such as Bretton Woods, the IMF, the UN, and the G20 in terms of this kind of collaborative niche building. These collaborative arrangements allow systems in that field to keep unpredictable fluctuations outside the ‘club’ and long term investments to be made. The relative stability and investments in turn generat a level of economic development that would otherwise have been impossible in the thick of the political, economic and social upheavals after World War II.

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This logic suggests that a strategy to escape turbulence by collaborative action needs to be based not only on common values and ideals alone but also on institutional arrangements that protect the collaborative enclave against incursions from outside, and from opportunistic behaviour inside. (See Emery & Trist’s 1965 discussion of ‘organizational matrixes’; and Wilkinson & Young (2005) for a more recent assessment of collaboration in turbulent conditions.) Once a viable niche has been created it needs to be adapted actively over time through a continuous process of updating, renovating and improvising its institutions in the ever-changing turbulent conditions it has to deal with. When adaptation slows, crisis looms. If a governance or regulatory system realises it is in ‘crisis’ due to some turbulent force in the causal texture, this is an invitation to renew the niche with new or renovated institutions. Whether turbulence itself can be reduced (and not only escaped from or redistributed) other than through the appearance of new dissippative structures is something that remains to be determined.

While collaboration is enacted at the micro level when individual systems exercise strategic choice to collaborate together with other such-minded systems in forging and maintaining joint institutional arrangements; at the contextual macro level the field evolves in ways beyond the control of any one system. In an important contemporary development, complexity theory has thrown new light on this link between individual system (or ‘actor’) strategies and macro evolutionary processes. Prigogine examined those sensitive moments in the history of a sufficiently large and complex field, which he called ‘bifurcation’ points in which the direction of development of the whole f ield depends on minor fluctuations of a few variables (Bernard, 2008). In terms of causal texture theory this means that under the right conditions even a single individual system, through an incisive decision or serendipitous intervention, can entrain a series of actions that may alter the trajectory of a field as it emerges in time. Roggema (2008) suggests how at such a sensitive fork in the road one person may make the difference for a whole province or country trying to cope with the possibility of turbulent climate change.

In the future complexity theory may well provide additional insights that link micro actions and decisions in a field with macro evolutionary trajectories of that field. Perhaps this 27 / 38


illuminates why remarkable individuals have been able to make such a big difference in their societies: da Vinci; Darwin, Newton, Einstein; Ghandi, Mandela; Mozart, Picasso; Edison, Steve Jobs; Rachel Carson, Donnella Meadows.

While dissipative moments do bring forth new orders, often impersonated or articulated by single individuals, and innovative collaborations do now and then get designed (as seen earlier VISA, Xeroxing, and UHT milk are examples, as are also pod-casting and fair-trade), it would appear to us that the main way in which we deal with turbulent causal textures remains collaborative escape strategies. One day soon perhaps, advances in computing, complexity theory and related fields may bring forth a singularity which may teach us that the story of systems and/or fields at an actual bifurcation point consists of something different, or alternatively, told in retrospect, that strategizing around such a point prospectively is impossible.

Consider scenario work exploring a field that is already turbulent or might soon become turbulent such as the field concerning the future of AIDS in Africa, or the field concerning the future modes of legitimacy for the world’s intellectual patenting systems. The participants in such scenario work will be helped by the scenarios they consider and produce to identify plausible bifurcations in advance, without being capable of predicting which road in the bifurcation the field and the systems that constitute it will actually take, as this is irreducible uncertainty and therefore unknowable. In such situations causal texture theory suggests strongly that collaborative strategy is be the best available recourse to address the different forms of turbulence that the scenarios have investigated. This may explain why different collaborative possibilities like ‘open innovation’, ‘open source’, ‘social networking’ (via Plaxo, Facebook, Meetic, etc.) have flourished as turbulence has become a more prevalent causal texture. However, it is too early to determine if such collaborative options will be effective strategies to address wicked (Rittel & Webber, 1973) and messy (Ackoff, 1979) issues associated with contemporary turbulence, such as climate change, pandemics, inequality, etc.

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Conclusion We have suggested that both the amount of scenario work and its relevance has increased because 9/11, and more recently the financial crisis, brought home to decision-makers how the turbulent causal texture characterises the field they live in. It has become legitimate for senior people in business and government to express their inability to control some key uncertainties in their contexts. It is now accepted that these uncertainties need to be addressed through methods that acknowledge the reality and inevitability of such uncertainties. The conjuncture of causal texture theory and the increased importance and quantity of scenario work has prompted important insights in both areas. In this paper we have taken the historically coincident development of the two fields not as an accident but as areas of human activity jointly addressing some of the most prominent challenges of the era. Our research on the links between the nature of turbulence and scenarios work yields, we believe, four important contributions. 1. It advances understanding of turbulent causal texturesin ways that should help reflective practitioners deploying scenario methods to become more effective. 2. It provides causal textures theory a broader set of inter-disciplinary handles that can be deployed in its further development. A few of the new strands emerging from our analysis are the links with complexity theory, with institutionalization, with aesthetics, and with inequality and power. It also provides an intellectual basis for further explorations using causal textures theory of micro-macro connections], and aspects of fields experiencing contextual disturbances, bifurcation points, and (co-)evolution. 3. We have highlighted certain issues of method: the nature and role of interventions in systematic inquiry, the importance of the choice of method, the features distinguishing ‘scientific’ versus ‘artful’ inquiry, and the role of clarity. 4. Our research provides the first social science explanation as to why scenario practices have been growing, why they are consider mode relevant, and how they contribute in searching for and developing collaborative innovations enabling managers, consultants and scholars to address turbulence effectively. The scenario field has benefited as we now see more clearly the contribution that the field makes in developing strategies and institutional arrangements to address turbulent contexts, at least by escaping from them. 29 / 38


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Figure 1 Scenario planning in the management literature

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Figure 25

Peer reviewed articles in English on scenarios…. 1600 1400

Dec 2007

s 1200 e l c 1000 i t r a 800 f o . 600 o N 400

200 0 1970

1974

1978

1982

1986

1990

1994

1998

2002

2006

Years Source: EBSCO database using the key word ‘scenarios’ Jan 2008

5

One of the authors interviewed professionals at Bain and the Conference Board about the nature of this data and the rigour in its analyses by telephone in 2002. 36 / 38


Figure 3 Growth in the ‘turbulence’ and environmental complexity literature, 1970- 2007 (Source: Business Source Complete (EBSCO))

400 350 300

s e l c 250 i t r a 200 f o 150 . o N100

Turbulence Environmental complexity

50 0 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006

Ye ar

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Causal Texture

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