Chart a durable course for 2030.
From one side: Company leaders are under heavy political pressure to support—with investment decisions—the energy dominance narrative.
From another: The Myth of an Easy Energy Transition is far from dead.
And here you are, just trying to get your job done—which was hard enough before things got so politicized and crazy!
In “The Myth Revealed by The Moment,” I explained three key reasons we need to understand the continued potency of The Myth: (1) to capture the relevant lessons of its unraveling, (2) to recognize its continued influence, and (3) to seize the opportunities it leaves in its wake. That piece set the stage for today’s brass tacks: How do you make durable strategic plans in the face of so much pressure, volatility, and uncertainty?
Both of these things are true:
- Today’s energy dominance narrative seems to many as if it will last decades, and The Myth of an Easy Energy Transition seems well behind us.
- Everything seemed 100 percent different just six months ago.
The situation: Everything changes … including today’s political reality
In the past 10 years, the political winds have shifted dramatically—not one, not two, but three times. From Obama to Trump 1 to Biden to Trump 2.
What does this tell us about our political fortunes in the next 5 years? 10 years? We know one thing for certain: Things will change. That leaves a lot of uncertainty: Where, how, and with what impact?
I’ve had plenty of recent conversations with company leaders who must decide whether to continue their investments in hydrogen hubs, transparent emissions data systems, and community benefits plans. They are under tremendous pressure—often contradictory pressures—to rationalize their investments. On the one hand: repudiate climate, DEI, and environmental justice endeavors. On the other: pressure to affirm their steadfast commitment to emissions reductions, community partnerships, and innovation.
It’s no surprise, then, that one of the most important questions facing these leaders is: What will the political environment look like in 2030 for U.S. oil and gas companies?
Tackling this question (and other urgent questions The Moment is forcing on us) requires a thoughtful, systematic process—one that helps you work through the wide range of variables and outcomes in a way that channels any anxiety productively.
Let’s look at the approach I use with my clients: Alternative Futures Analysis.
Seize the day: Conduct an Alternative Futures Analysis
There are eight steps to conducting an Alternative Futures Analysis. They can be done by a small team, either sequestered for a couple of days or in a series of one-hour meetings that build off each other. The point: to expand the team’s aperture on both variables and outcomes and, ultimately, gather buy-in on recommended actions.
Step 1: Determine the question. A good question lays the foundation for the rest of the exercise. The question should be broad enough in scope that multiple scenarios are plausible, but specific enough that you can determine action from the outcomes. Right now, the 5-year U.S. political forecast is what many companies are focusing on. Other questions could explore public opinion, global security, or technological breakthroughs, for example. The exercise is conducted around just one question. Because the process is interactive, sometimes the question must be tweaked mid-workshop.
Step 2: Choose your forces. Forces represent factors and dynamics that impact the question’s answer. Well-defined forces are neutral descriptions of these factors and dynamics—in categories such as economics, policy, society, technology, geography, and security. For the question “What will the political environment look like for U.S. oil and gas companies in 2030?” forces could include geopolitics, the U.S. economy, the U.S. demographic composition, the political composition of the three branches of U.S. government, power grid capacity and reliability, energy technological breakthroughs, and cost of energy (fuels). A brainstormed list of forces is distilled to no more than seven for the next steps.
Step 3: Agree on the baseline. For each force, the team articulates the baseline conditions, or status quo. The status quo is a description of how each force is acting at the present time. Coming to a common understanding of baseline conditions is an important step for a team charged with strategic decision-making. This step highlights differences of opinion on your team around, for example, current economic conditions, geopolitical influences, and the state of the regulatory environment.
Step 4: Map how forces may act. For each force, the team then builds a range of assumptions about how the behavior of the forces can change in the future. Each assumption must be plausible in the timeframe of the question, should change only one variable, and it should not overlap with other assumptions. For a unique force such as “federal election outcomes,” assumptions may include descriptions of all-Democratic rule, all Republican rule, various configurations of divided rule, and uncertain outcomes left to be decided by the courts.
Step 5: Craft scenarios. With these building blocks in place, the team then identifies alternative future scenarios. In practice, these are often crafted independently (in a top-down fashion) by imagining plausible futures resulting from the range of forces considered. For teams with more time, they can be crafted up in a bottom-up fashion derived from the mapping of forces. Alternative futures answer the question identified in Step 1. Examples from the question “What will the political environment look like for U.S. oil and gas companies in 2030?” could include: the MAGA movement endures and dominates; the pendulum swings to the far left; there is a “great sort,” reflecting polarized politics by state; and, finally, the country sees moderate, mixed results.
Step 6: Select signposts. Signposts are measurable, trackable, distinct indicators that the world is moving toward a specific scenario. For the question posited here, one signpost might be price of gasoline, which can often foreshadow discontent with incumbent political parties. Another might be off-year election results in a state representing the company’s political operating environment, foreshadowing election results in other jurisdictions. Brainstorming for signposts helps the team understand how to watch to determine which scenarios are becoming more likely over time, and, thus, allows for the proactive adjustment of action plans.
Step 7: Mitigate risks and act on opportunities. Now that it has envisioned various possible futures, the team can discern the risks and opportunities that each one presents. For instance, an increasingly polarized political environment might bring significant regulatory swings and instability, whereas the rise of conservative ideology could bring even more emphasis to energy security and domestic production. By assessing each future through the lens of underlying forces and corresponding assumptions, the team gains clarity on which paths are most fraught with risk, which hold the most promise.
Step 8: Identify options for action. With a clear understanding of the forces at play, the alternative futures on the horizon, and the risks and opportunities inherent in each, the analysis team will be in a position to identify actions such as maintaining or pulling back from investments, conducting outreach to new partners, or pursuing projects in a specific geography. The team can prioritize approaches that could be successful in multiple scenarios. Such overlapping solutions can help the company hedge in times of uncertainty. This step emphasizes creating options, rather than deciding on one path forward. It’s crucial, because garnering buy-in from the rest of leadership, investors, and stakeholders will require a strong assessment of options and the selection of some over others.
Now what?
Doing an Alternative Futures Analysis is essential for creating your company’s plan for The Moment—or stress-testing your existing one. Email us to schedule a briefing for or workshop with your team.
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A special thank you to Rebecca Keller Friedman for her support of this piece.
To being tough as nails,
Tisha
