Scenario building: Uses and abuses

Scenarios hold little interest if they are not pertinent, coherent, and plausible. Although foresight requires a rigorous approach to address complex problems, the tools must also be simple enough to be easily used. Since the mid-1980s, the approach in strategic prospective workshops (a term that reminds us of the participatory nature of the French approach) has proven its effectiveness in meeting these criteria (simple, rigorous and appropriable; i.e., may be appropriated by participants). The authors try to reply to simple and important questions: What is a scenario? How to judge the quality of a scenario? Which strategies for which scenarios? These questions remind us that applications of strategic foresight tools are contingent and modular. They could also involve the stakeholders from upstream to downstream, as seen in the agro-food sector. Finally, they argue that the future still has to be built and that futurists produced too many scenarios and not enough projects.     

Relationship between the trading behavior of three institutional investors and Taiwan Stock Index futures returns

The relations between institutional investors' behavior and futures returns are examined in this study. Evidence suggests that net trading volume by foreign investors and investment trust have forecasting power for futures returns. In addition, the study applies a time-varying parameter vector autoregressive (TVP-VAR) approach to estimate the relative effects of trading behavior by institutional investors on futures returns over time. The impact of open interest by three institutional investors is decreasing over the recent years. This implies that the value for open interest information from three major institutional investors is gradually declining in Taiwan.     

中国大豆期货市场有效吗?——基于事件分析法的研究

中国期货市场是否有效是学术界争论的焦点之一,本文在事件分析法的研究框架下通过GJR-GARCH形式的市场模型研究中国大豆期货市场上的日历效应和事件效应。研究发现,中国汇率制度改革、美国信贷危机爆发、中国人民银行调整利率以及中国南方地区遭受重大雪灾等事件在大豆期货市场上产生了非正常累计收益,从而表明大豆期货市场不是半强式有效的。同时,主力合约收益序列存在显著的周日历效应,从而表明该市场也不是弱式有效的。由此证伪了中国大豆期货市场是有效市场这一命题。因此,需要进一步加强制度建设来提升期货市场的有效性。     

The responsibility of futurists in strategic foresight — Hungarian examples

The Futures Studies Department at the Corvinus University of Budapest conducted a few strategic foresight projects at the beginning of the twenty-first century. The goals of two projects were to increase the regional competitiveness of two towns in Hungary; whereas, two other projects dealt with the long-term, 15- to 20- year-long, macro-development opportunities of Hungary. They focused on defining social trends that influence the long-term decision-making environment of the regions and the country. The two types of experience made it possible to enhance strategic foresight by defining the role and responsibility of professional futurists and average, everyday people.     

Beyond the obvious: Examining ways of consolidating early detection schemes

In the domain of futures studies, the need to develop methods and concepts to identify risks or opportunities “early enough” has become an issue and almost a discrete sub-field with its own debates, specialties and schools of thought.Our examination of the literature in this domain shows that early detection, early warning or weak signal analysis, to mention just a few of the terms being used, tends to convey the idea that finding faint evidence of possible futures is actually rather easy. We, however, believe that it is far from being an off-the-shelf process for whoever wants to detect early signs of changes. At the very least it raises cost/benefit questions, and it may have some shortcomings which, if ignored, could substantially increase the vulnerability of an organization. Our goal in this paper is to explore ways of going beyond an overly optimistic approach and provide a basis for the pragmatic use of weak signals and similar notions in strategic management and policy-making processes.After browsing through the several approaches that propose methods for the “early” tackling of trends, uncertainties, risks or opportunities to come, we will focus on the approaches defined by 1) weak signals and 2) early warnings or equivalents for the analysis of possible futures. We will in particular examine how mainstream claims have been presented then improved in the last 25 years, as well as how some of the problems involved have been insufficiently addressed so far. We will then show how these problems (closely linked to how the early perception claims are configured — how they are framed and modeled but also made affordable and useful) can directly impact the performance and management style of the organizations and societal settings in which they are deployed. The concluding section will propose a pragmatic approach to the problems raised: paradigmatic weaknesses or forms of blindness. This precautionary principle should lead to a real option approach in terms of futures to be considered and evaluated, so as to enhance the chances of avoiding risks, as well as following up promising directions, radical innovations or, more generally, strategic decision-making processes in both the corporate and policy-making arenas.     

Exploring e-government futures through the application of scenario planning

In this paper, we examine the impact of information and communications technologies (ICT) on government departments/agencies and the contribution of external agents to change and development programs. We present empirical evidence of externally facilitated change to mindsets and patterns of behavior within local government through use of a scenario planning-based approach. Our aim was to facilitate the organizational actors' conduct of investigation of the ‘limits of the possible’ for a range of plausible futures and determination of strategic responses to these. Participants used their own current knowledge and understanding as a basis for development, with the introduction of external ‘expertise’ to challenge their thinking and to expand their understanding. Following this, we facilitated the participants' elucidation of key uncertainties on the future, exploration of the relationships between them and possible outcomes. The participants then constructed scenarios that outlined four possible and plausible futures. These held explicit meaning for the participants, enabled them to identify implications of each possible future in relation to structure and service requirements and informed analysis of current structure, service, etc. We compare and contrast the process and outcomes of our scenario-planning intervention (based on intuitive logics) with both those of other futures methodologies (decision analysis, Delphi and environmental scanning) and with other scenario methodologies (trend-impact analysis and cross-impact analysis). We argue that the external facilitation of internal generation of knowledge, understanding and meaning, and of exploration of the limits of the possible for the future, is a valuable tool for comprehending strategic choices. We conclude that our scenario approach, utilizing intuitive logics, enables organizational actors to make sense of the complexities and ambiguities that they face and so facilitates strategic change.     

Strategic noise traders and liquidity pressure with a physically deliverable futures contract

Do physically deliverable futures contracts induce liquidity pressure in the underlying spot market? The answer is believed to be no since the asset is delivered sometimes after the expiration of the contract so that the futures trader's payoff does not clearly depend on the price of the underlying stock at expiration. We construct a rational expectations equilibrium model in which a strategic uninformed trader induces liquidity pressure in the underlying spot market at the expiration of a physically deliverable futures contract. Liquidity pressure is the result of a pure informational advantage: if it is known that futures traders hedge their position in the spot market then a strategic trader with no information about the fundamental value of the underlying has an incentive to create noise in the futures market in order to gain information on the composition of the spot order flow at future auctions. We show that informed traders benefit from this form of strategic noise and that the efficiency of the prices remains unaffected.     

Multi-ontology topology of the strategic landscape in three practical cases

This article develops and uses a futures sensemaking and decision-making tool with which to navigate the multi-ontology topology of strategic landscapes. The research approach is design science; i.e., research clearly targeted at developing a means to an end. The tool is described according to an eight-point structure of a design theory proposed by Gregor and Jones (2007), presenting specific testable propositions. The authors show how the tool works in three practical cases by referencing an underlying kernel theory, sensemaking theory.     

Futurists and state energy policy: The Wisconsin story

This analysis of the development of state energy policy focuses on the role of futurists and of alternative energy futures, from the experience of Wisconsin during the 1970s as viewed by participants in that development. First considered in the early 1970s, the concept of state energy policy has rapidly gained acceptance and become an important component of overall state policy. Methodological improvements and diversity and the involvement of growing numbers of people, groups, and agencies have been essential to shaping and improving the policy development process. A major success of Wisconsin's energy policy has been avoiding the construction of excess generating capacity by public utilities. A notable failure was not planning for revenue shortfalls with declining use of gasoline, despite early studies projecting the decline. Problem areas for improving the practice of energy policy analysis include the lack of creativity and imagination, the dissemination and embedding of results, and the analyst's need, in specifying problems and objectives, to work from the standpoint of policy makers.     

EFFECTS OF STOCHASTIC INTEREST RATES AND VOLATILITY ON CONTINGENT CLAIMS*

We investigate the effects of stochastic interest rates and the volatility of the underlying asset price on contingent claim prices including futures and options prices. The futures price can be decomposed into the forward price and an additional term; the options price can be decomposed into the Black‐Scholes formula and several additional terms by applying the asymptotic expansion approach of the small disturbance asymptotics developed by Kunitomo and Takahashi (1995, 1998, 2001, 2003a, 2003b). The technical method is based on a new application of the Malliavin‐Watanabe Calculus or the Watanabe‐Yoshida Theory on Malliavin Calculus in stochastic analysis. We illustrate our new formulae and their numerical accuracy.     

未来10年金融衍生产品市场在中国的发展趋势

随着中国进入 WTO的日益临近,中国金融市场对外开放不可避免,市场的动荡将加速。因此,建立与发展中国的金融衍生产品市场已是大势所趋。发展衍生产品市场必须循序渐进。按照需求变化,衍生产品出现的顺序可能是股票指数期货、股票指数期权、可转换债、认股权证、利率期货、债券期货、利率掉期、债券期权、利率期权、外汇期货与期权。     

Developing a transformative business strategy through the combination of design thinking and futures literacy

The paper describes a systematic methodology that combines futures literacy and design thinking to enable the collective discovery of new and disruptive business niches. It is a participatory approach centred on design know-how, which promotes innovative forms of engagement and articulation. The proposed methodology balances experience in designing and applying foresight approaches and futures literacy knowledge labs together with a multidisciplinary understanding of institutional context.

The methodology fosters decision making processes that embrace complexity and treat uncertainty as a resource, thus improving an organisations’ capacity to use the future to expand its understanding of the present. It has been applied at the Center for Strategic Studies and Management (CGEE), an organisation where institutionalised foresight and technology assessment takes place in Brazil, especially in support of Science, Technology and Innovation (STI) policy design and implementation, as well as evaluation. However, its clients also include different ministries within government and industries alike.

The article outlines the ways in which the organisation involved all its collaborators in jointly rethinking its future, building upon collective intelligence, narrative building, sense making, framing and reframing. The design principles called for these experiments to follow a collective learning curve that enable a renewed focus on systemic and transformative innovation. The crafting of new strategic questions was inspired by jointly expanding the understanding of the imaginary futures of the interrelated systems in which the organisation might play a role. As a consequence, new and disruptive possible roles for the institution were identified. These insights then informed the assessment and choices for the redesign of the business strategy.

This paper presents the methodology for combining design thinking and futures literacy, the application of this methodology to CGEE, and the major findings of the overall exercise. Readers will find out about the impact of this exercise on the organisation’s approach to both its own strategic positioning and to the design and implementation of foresight and strategic studies. The paper concludes by outlining the implications of the proposed methodology for foresight practice.     

Futures-oriented municipal planning

Amid the current political and economic uncertainties, the long-term perspective in municipal planning in Sweden has been shortened and planning has become more like crisis management. This paper presents a model for municipal futures studies that may contribute toward development of a municipal planning system that can adapt itself to different types of sudden change while still taking long-term welfare goals and resource conservation issues into consideration.So far, models in futures studies have been largely developed to study global and national development. The article therefore places special emphasis on the methodological issues of developing a model for municipal futures studies. The aim of the model is to increase strategic thinking by planners and decision-makers; it requires that futures studies and conventional planning activities be closely integrated.The model is in the process of implementation in the municipality of Västerås. Some features of the model will also be integrated into a futures study of urban housing to be undertaken in the municipality of Umeå.     

Intermarket spread opportunities between Canadian and American agricultural futures

This study extends Carter's (1989) study of the efficiency of Canadian canola and American soybean oil futures markets during 1981–1987 to a new period (1988–1993). It also uses a different spread strategy than Carter to see if the same conclusions hold for canola and soybean as well as Canadian feed wheat and American wheat futures. Our findings confirm that in the 1981–1987 period there were no opportunities for intermarket spread profit between canola and soybean oil futures and between feed wheat and wheat futures. Our findings for the period 1988–1993, however, suggest there were some opportunities for such profits. Thus, it was possible for floor traders (and possibly institutional investors), who paid low transaction costs, to experience some additional profits. We also find that these opportunities are neither due to changes in currency values over time, nor to the use of weekly or daily exchange rates. Nevertheless, nonparametric tests show that spread profits are statistically insignificant.     

The future of the future: Strategic foresight in Latin America

With few differences in timing, future studies in Latin America were initiated with a linear conception of reality. Orchestrated with techniques such as the Delphi, future studies were supported by mathematical principles of probability. Several countries have surpassed this stage while moving into strategic foresight. Strategic foresight analyzes the future as a multiple reality. In other words, it means thinking differently and not reading reality in a linear manner. It means accepting that there is not one future but several futures and that one question could have more than one answer.This change has demanded a shift in mentality. The presence of the disciplines in universities is of vital importance. For example, the Technological Institute of Monterrey (Mexico) and the Universidad Externado de Colombia (Bogota) offer foresight and strategy programs at the graduate level.This article describes how different individuals, groups, agencies and institutions in Latin America have emerged thanks to the support provided by the science and technology governmental agencies of each country. The author provides examples from different countries including Colombia, Brazil, Chile and Mexico. Currently, strategic foresight is slowly gaining recognition and acceptance as a compass for productive sectors and as a generator of competitiveness.However, despite the contributions of strategic foresight, Latin American countries, with the exception of some of the above-mentioned countries, have struggled to take off into the future. The role of strategic foresight can become the driving force behind this awakening, if the challenge of linking global trends with local contextualization through scenarios is accepted.     

论传统期货交易所公司化改造的背景

许多传统的会员制非赢利期货交易所近年来纷纷进行公司化改造,成为赢利性的股份公司。尽管对这种组织变革及其相关问题存在着一些不同认识,但要深入研究这些问题,必须首先弄清出现公司化改造浪潮的背景。研究表明,促成这类战略决策的主要因素包括三个方面：信息技术的变革与创新使传统交易方式和组织形式面临技术竞争力方面的压力;国际期货市场结构发生了重大变化,传统交易所组织形式面临竞争方面的严峻挑战,有关国家的市场监管部门为提升本国期货业的竞争实力,对交易所的组织变革提供了有力支持。     

Commodity futures contracts: Furnishing an elastic currency in the nineteenth century

In this paper, I show that nineteenth century US interest rates are relatively more volatile before 1874 and I propose, and demonstrate how, commodity futures trading is the likely principal proximate explanation for this change in behavior. Borrowing from Turnovsky [Econometrica 51 (1983) 1363], I model the optimizing behaviors of risk averse producers and risk neutral speculators in the absence and presence of futures contracts and I show that, so long as one party to a futures contract was risk averse, futures markets would have quelled interest rate volatility caused by variations in planting and harvesting conditions.     

The High‐Frequency Responses of Australian Financial Futures to Unexpected Cash Rate Announcements*

This study examines the high‐frequency responses of Australian financial futures to monetary surprises using intra‐day futures data. Using the event window method with tick data to control for the endogeneity between market interest rates and the cash rate, our empirical findings support the following. First, monetary policy announcements significantly impact not only short‐term interest rate futures but also longer‐term treasury security future markets. Second, the most significant responses of these markets occur in the event window that contains the policy announcement. Third, we also find that the monetary policy is not well anticipated by market participants until the Reserve Bank of Australia’s policy release.     

我国商品期货市场节约社会试错成本研究

随着市场经济的发展,对期货市场功能的认识不断深化。文章在总结已有研究的基础上提出了价格发现是期货市场基本功能的观点,并将价格发现功能归结到微观上的套期保值、投机、套利和宏观上的节约社会试错成本。文章通过南华期货商品综合指数与PPI的关系检验,证实我国商品期货市场起到了节约社会试错成本的作用。为更好地发挥这一功能,应大力推进期货市场建设,完善商品期货体系,推出权威合理的商品期货指数。