How Pierre Wack foresaw the oil crisis at Shell. On the limits of forecasting, complex systems, and preparing for the future through "rehearsal of the mind."
The Shell Centre on London’s South Bank was one of the city’s most austere buildings. In the early 1970s, in one of the meeting rooms on the upper floors of that building, a man with a French accent, who was never without his cigars, was explaining to the executives that the price of crude oil could soon rise several-fold. Those in the room listened politely. They were even impressed by the figures and the elegance of the presentation. Then they left and carried on with their work as usual. Because everyone knew that tensions in the Middle East would subside sooner or later. It had always been that way. Prices had followed a steady, predictable trend for decades, and the charts confidently extended that trend into the future.
The man’s name was Pierre Wack. They didn’t listen to him.
Years Spent in the East
To understand how Wack came to be there, we need to go back thirty years. In 1943, at the age of twenty, in the midst of the war, he had met a mysterious teacher in Paris who was born in Yerevan: Georgi Gurdjieff[1]. At a time when everything was in short supply, Gurdjieff nourished him with both lavish meals and a kind of spiritual sustenance. Years later, Wack would say, ‘He cured my tuberculosis.’ But what he truly received was not merely health, but a discipline: the discipline of seeing.
In Gurdjieff’s teaching, ‘seeing’ was something other than merely looking with the eyes. It was like the archery of a Zen archer. He said that the art lay not in shooting the arrow, but in seeing exactly where and when it should strike. To be able to perceive the right moment, the right point, that naked truth obscured by preconceptions. Wack never gave up on this pursuit for the rest of his life. In the years that followed, he stayed in Zen monasteries in Japan, practised meditation in Burma and Thailand, and visited gurus in India. In 1961, at an ashram, he met a teacher who would profoundly influence him.
This entire journey revolved around a single question: how can a person truly see the chaos before them? How does one free oneself from the habits that cloud one’s vision, and from the assumptions everyone repeats? Wack later gave this a name: ‘seeing anew’. To free oneself from old perceptions and perceive the new, all at once.
For a mystic this was a path to enlightenment, Wack took it and brought it to the planning desk of an oil company.
The Lie of the Graph
When he returned to Shell, the mainstream thinking that surrounded him was simple. It was so widespread that it was no longer even perceived as a choice: analyse, predict, devise the best plan, optimise. Break the system down into its components, understand it; use that understanding to forecast the future. Then allocate all your resources in the most efficient way possible in line with that future.
This way of thinking carries a silent assumption: tomorrow is a place governed by today’s rules. Yesterday’s relationships will still hold true tomorrow; only the figures will shift slightly. In such a world, prediction is possible, because the future is an extension of the past. It is enough to prepare for a single future as an extrapolation of past.
This was precisely what Wack saw. That calm graph of oil prices was not depicting a reality, but a habit. The line remained flat in the long term because that was how it had always been; this was not proof, but an assumption. Yet, beneath the surface, another system was stirring: the shifting intentions of producer nations (OPEC), dwindling reserves, and actors watching each other’s backs in a precarious balance. Wack had observed this system not through prophecy, but through careful observation. He recounted what he had seen.
Years later, Wack would describe his work as follows: it was like hunting within a pack of wolves, being the eyes of the pack and relaying what he saw back to the pack. ‘You see something serious, but if the pack doesn’t notice,’ he would say, ‘you find yourself wondering, “Am I leading the way?”’ Perhaps this is the most concise definition of the concept of scenario thinking. To be at the head of the pack, to see what has not yet come to pass, and to pay the price for it, often by being left alone.
They did not listen. Because the future he pointed to lay beyond the boundaries everyone was familiar with. People struggle to see beyond the lines they are accustomed to. An eye that does not know how to see will fail to recognise the evidence even if it stares right at it.
Then came October 1973, with the embargo. Prices multiplied within a few months, not by two or three, but by four or five. All the world’s carefully optimised plans were shattered at once.
The Hidden Vulnerability of the Best Plan
Right here, there is something beyond a simple lesson that begins with ‘I told you so’. It wasn’t just the incorrect predictions that were shattered. What was shattered were the most carefully constructed, most efficient plans.
Because optimisation means building all the supports to bear the weight of a single future. If that future comes to pass, the structure stands firm without a care. Should a different future materialise, every choice that made the structure flawless turns into a weakness. There is no redundancy in an optimised system, because redundancy is waste. Yet in an unpredictable world, redundancy is survival itself! One might say that the best plan is the one most tightly anchored to the narrowest possible future. That is precisely why, when the world changes, it is that plan which breaks first.
The flaw in the classical cycle does not lie within it. For a bridge crossing a river, the ‘analyse–predict–optimise’ approach is still the correct answer. The loads the bridge will bear are known; the laws of physics will remain the same tomorrow. The mistake lies in applying this cycle to a world for which it is not intended. It lies in imposing the logic and reasoning of ordered systems upon complex systems.
Two Worlds, Two Approaches
In a regular system, there is a fixed, predictable link between cause and effect. If you press the same button, the same light comes on. Such systems are the domain of experts. Someone with sufficient knowledge can predict what will happen.
A complex system behaves differently. Within it, a large number of elements influence one another simultaneously, create feedback loops, and produce behaviour that cannot be reduced to the sum of its parts. The economy, the market, society and healthcare are like this. In such systems, causality is only evident in retrospect. Once something has happened, you say, ‘So that’s how it turned out’; but before it happens, you cannot say with the same certainty, ‘This is what will happen’. There is a connection, but it can only be discerned after the fact.
This is the limit of prediction. It is not a moral failing or methodological laziness, but a limit inherent in the nature of the system. And this limit alters the very nature of knowing. In an orderly world, you understand first, then act. Understanding precedes action and guides it. In a complex world, this order is reversed. Understanding arises only from within the action itself. You engage with the system, observe how it responds, and act accordingly [2].
Probe first, then see. It may sound like a lack of method, yet it is the most valid method at our disposal when faced with complexity.
Mental Simulation
But, there’s a problem. Testing in the real world is expensive. An oil company cannot find out the answer to the question ‘What would happen if prices tripled?’ by waiting for prices to actually triple. By the time it learns that lesson, it will be too late. If you have to learn by tinkering with the system, but the cost of that tinkering is catastrophic, what can be done?
This was Wack’s solution. It was, in fact, the same ‘insight’ he had been seeking in the East for thirty years. He took the interaction from the real world and transferred it to the mind. A scenario is a probe into the future, not a prediction, but an experiment. A fictional scenario constructed around the question ‘What if this situation were real?’, lived out with complete seriousness from start to finish. When you bring it to life in your mind, something happens. You sense what would break in that situation, which sign would serve as an early warning, and which decision would suddenly become meaningless. You touch it without actually touching it. You learn the lesson without paying the price of the experiment.
That is why there must be multiple scenarios. Furthermore, none of them should be labelled as ‘the most likely’. The moment you assign probability to a single scenario, the mind lets go of the others and returns to a single future. That is, back to that deceptive straight line. The aim is to carry several futures simultaneously, with equal weight. This is a state that troubles the traditional mind. It craves certainty; it wants a single answer. Yet seeing requires a different kind of maturity: the ability to hold multiple possibilities in the mind without clinging to any of them prematurely. The ‘seeing’ that Wack learnt from Gurdjieff was precisely this.
Not Certainty, but Preparedness
When the second oil crisis struck in 1979, Shell was now prepared. Having been slow to react during the first crisis, the company acted ahead of its rivals during the second. It wasn’t down to some prophecy. Nobody knew the dates. The reason was that they had already experienced it once before in their minds. When the crisis struck, it felt familiar. Being able to say ‘We’d thought of this’ is something quite different, and far more solid than saying ‘We knew this’.
Let us recall Wack’s cigar-smoking, patient, and rarely resting personality[3]. What he did was not to know the future. What he did was to learn to see. To see the present as it is, stripped bare of habits, and to carry within that present several possible futures simultaneously. You cannot control a river; you cannot map out its course in advance; but if you sit by its banks long enough, you learn how the water behaves, around which stones it winds, and where it flows when it overflows. This is not a prediction, but familiarity. In an unpredictable world, familiarity offers what certainty cannot: the ability to remain standing when things break.
The deepest form of preparing for the future is not knowing it, but recognising it when it arrives as if you’d seen it somewhere before.
[1] Georgi Ivanovich Gurdjieff (c. 1866–1949): A thinker and mystic born in the Caucasus. Istanbul was one of the key stops on his journey as he brought his teachings to the West; he stayed in the city for a time in the early 1920s, closely observed the Mevlevi and Bektashi sufi traditions, and gathered some of his first students there. His teachings, based on ‘self-remembering’ and mindful ‘seeing’, went on to influence people from very diverse fields, such as Wack, in the years that followed.
[2] “Probe first, then see”, navigating by intervening in the system and reading its response has been clearly formulated as a decision-making approach specific to complex systems: within Dave Snowden’s Cynefin framework, the cycle of the complex domain is expressed as ‘probe–sense–respond’. This contrasts with the ‘sense–analyse–respond’ (analyse–predict–optimise) sequence of the ordered domain. Wack’s scenario practice can be regarded as an early example of this cycle being worked through and simulated in the mind rather than in the real world.
[3] Wack’s approach to scenario development extended far beyond the oil crisis. After leaving Shell, he taught at Harvard Business School and, through his work for the diamond company De Beers in South Africa, contributed to the country’s post-apartheid transition. It was during this work that he met Nelson Mandela. His discipline of ‘foresight’ applied the same methodology to everything from a company’s profit and loss account to the fate of a nation.
Resources and more
Pierre Wack's two classic articles, in which he describes his scenario method in his own words:
- Wack, Pierre. "Scenarios: Uncharted Waters Ahead." Harvard Business Review, September–October 1985.
- Wack, Pierre. "Scenarios: Shooting the Rapids." Harvard Business Review, November–December 1985.
To hear Wack in his own voice — a recording of a lecture he gave in the 1980s (Oxford Futures Library, Pierre Wack Memorial Library archive): youtu.be/aKN9J8hPTUw