Reassessment of cross-impact analysis

Five problems in cross-impact methodology are discussed, solutions are proposed, and a simple illustrative case is provided. The problems are lack of commutativity, probabilistic imbalances, double counting of impacts, linearity, and two-dimensionality.     

Problems in futures research: Delphi and causal cross-impact analysis

The explosive numerical growth of the futures-research community during the last 15 years has been astonishing. Its intellectual growth cannot be said to have advanced at an equal pace. This article looks at the inherent constraints that make reliance on expert judgement an essential part of futures research. Two methods are discussed: Delphi and cross-impact analysis. The latter part of the article examines a new causal cross-impact model that avoids the criticisms that have been levelled at correlational cross-impact analysis.     

A sequential approach to cross-impact analysis

A knowledge of the likelihoods of future scenarios is needed for planning in industry and government. The approach in this article employs the knowledge and the experience of “experts”, in the form of subjective probabilities, to determine the likelihood of the events. The necessary and sufficient conditions that the elicited information from the experts must satisfy in order to consistently compute the likelihoods of the scenarios are derived. A sequential procedure is developed that uses this information in generating the probabilities of the scenarios. Approximation schemes and sensitivity analysis are recommended to implement the approach with less time, effort, and cost.     

A note on cross-impact analysis: a calculus for sequence-dependent events

As the example presented demonatrate, the analysis of cross-impactss amount a group of related events is somewhat more complex than perhaps heretofore imagined. Impacts of effects between such events very often carely depend on their temporal sequence. The event outcome space is accordingly multiplied considerably over the case where such dependency is ignored. The result is that high premium is placed on methods that seek to reduce analytical complexity without distorting essential event intrications.     

Scenario analysis in interfutures

The interfutures project used a scenario approach and focused on issues of economic development over the next 20 years. The author describes the five main stages of scenario construction and gives a summary of the six scenarios which were finally chosen. The scenarios provide possible boundaries for the world economy in the year 2000. If there are no major discontinuities, most OECD countries are likely to experience structural unemployment, protectionism, and moderate rates of growth throughout the next decade—the outlook for Third-world countries is perhaps more favourable, with growth rates generally higher than in the OECD countries.     

Two complementary cross-impact models: MIP1 and MIP2

The postulates on which probabilistic cross-impact models are built have progressed considerably and still vary today from author to author. The author reviews the characteristics of these models and the objectives that their users can hope to achieve. Two new models, MIP₁ and MIP₂, designed to minimise the disadvantages of existing models, are proposed.     

Balancing laws for R-space in cross-impact models

This note is concerned with mathematical procedures for adjusting expert estimates of probabilities of events occurring, so that they fit classical probability axioms. Issue is taken with some points raised by Alter in a previous Futures.     

Scenario planning interventions in organizations: An analysis of the causes of success and failure

This paper presents a case analysis of a successful scenario intervention in an organization. This intervention is compared and contrasted with an unsuccessful one reported in Hodgkinson and Wright [Confronting strategic inertia in a top management team: learning from failure, Organization Studies 23 (2002)949-977]. We demonstrate that analysis of the answers given by workshop participants in a pre-intervention interview can be helpful in determining the receptiveness of an organization to a subsequent scenario intervention. We theorize that strategic inertia-characterized by coping patterns of bolstering failing strategy, procrastination (over a strategic dilemma) and buck-passing (the responsibility for the dilemma's resolution), can be caused by the psychological attenuation of the perceived level of environmental threat to the organization, culminating in unconflicted adherence to the currently followed strategy. We contend that the expression of such coping behaviour is antithetical to a subsequent successful scenario exercise since, if the exercise fails to identify an unconflicted strategic alternative, the sharp focus of the scenarios on futures unfavourable to business-as-usual strategy will re-activate the cognitive stress-reduction mechanisms. Strategic inertia will thus be reinforced. We conclude with a review of the implications of our diagnosis for reflective practitioners.Our paper is divided into four sections. In Section 1, we overview writings on inertia in strategic decision making. We pay especial attention to identifying potential causes of inertia. Next, we present Janis and Mann's [Decision Making, Free Press, New York, 1979] views of the psychological processes invoked by conflicted decisions and analyse the relevance of this laboratory-based theory to provide a psychological explanation of strategic inertia. Finally, we briefly describe the scenario intervention process and argue that it contains the potential to overcome strategic inertia. In Section 2, we review an already-published study of an unsuccessful scenario planning intervention, which illustrates the operation of components of Janis and Mann's model. Next, in Section 3, we focus on our own case investigation of a successful scenario planning intervention. The early part of this section documents the “success”, whilst the latter part analyses the causes of the success—again using the components of Janis and Mann's model. We conclude in Section 4, where we compare and contrast the application of Janis and Mann's model to both cases and we demonstrate that application of the model to pre-intervention interview data can aid the practitioner determine, at the outset, whether or not the organizational context will be receptive to the intervention.     

Scenario Simulation: Theory and methodology

This paper presents a new simulation methodology for quantitative risk analysis of large multi-currency portfolios. The model discretizes the multivariate distribution of market variables into a limited number of scenarios. This results in a high degree of computational efficiency when there are many sources of risk and numerical accuracy dictates a large Monte Carlo sample. Both market and credit risk are incorporated. The model has broad applications in financial risk management, including value at risk. Numerical examples are provided to illustrate some of its practical applications.     

Disentangling demand and supply in credit developments: A survey-based analysis for Italy

This paper combines qualitative information from the Eurosystem Bank Lending Survey with micro-data on loans for the participating Italian banks to assess the role of supply and demand factors in lending to enterprises developments, with a focus on the 2007-2009 financial crisis. Both demand and supply have played a relevant role, in the whole sample period and during the crisis. A counterfactual exercise shows that the effect of supply factors on the growth of lending was strongest after the Lehman collapse. On average, over the crisis period the negative effect on the annualized quarter-on-quarter growth rate of the panel banks’ lending to enterprises can be estimated in a range of 2.3-3.1 percentage points, depending on the specification. About one fourth of the total supply effect can be attributed to costs related to the banks’ balance sheet position, the rest to their perception of credit risk.     

Scenario probability scaling: an eigenvector analysis of elicited scenario odds ratios

If odds ratios elicited from experts (eg via Delphi) are translated into scenario probabilities by nonsymmetric matrix eigenvector analysis, then such problems as inconsistency between individuals' responses can be conveniently analysed, and revised, more consistent responses can be sought.     

Framing financial responsibility: An analysis of the limitations of accounting

In organisations, accounting—understood broadly as calculative practices—is claimed to serve as a critical vehicle when introducing forms of individual financial responsibility. Whereas most prior accounting research has been preoccupied with asserting this claim, this paper opens an opportunity to examine the limitations of accounting as a technology of responsibilisation. It does so by moving the empirical focus beyond the borders of people's work settings and into the private sphere of everyday life, investigating governmental efforts to turn high school students into financially responsible citizens. The analysis, informed by framing theory, reveals that the efficiency of accounting is conditioned by people's calculative understanding. Hence, in situations where individuals are expected to lack this basic calculative competency, accounting is presumed to be inappropriate as a means of introducing financial responsibility. This has implications for re-considering how the relation between accounting and responsibility is constituted.     

Scenario types and techniques: Towards a user's guide

Various scenario typologies have been suggested in attempts to make the field of futures studies easier to overview. Our typology is based on the scenario user's need to know what will happen, what can happen, and/or how a predefined target can be achieved. We discuss the applicability of various generating, integrating and consistency techniques for developing scenarios that provide the required knowledge. The paper is intended as a step towards a guide as to how scenarios can be developed and used.