A Combined Approach - Exploring the unification of explorative and normative scenario planning in the context of CRE portfolio strategy

Master thesis (2024)

Authors

A. Arrindell Architecture and the Built Environment

Contributors

H.J.M. Vande Putte Real Estate Management - Architecture and the Built Environment (mentor)
K.B.J. Van den Berghe Urban Development Management - Architecture and the Built Environment (graduation committee member)
Faculty
Architecture and the Built Environment, Architecture and the Built Environment
More Info
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Published Date

28-06-2024

Language

English

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Faculty

Architecture and the Built Environment

Abstract

When considering the future, an inherent debate is whether the future ‘overcomes us’ or is steerable. This is reflected in how the future is approached in both postmodern and positivist theory, respectively, according to Gong (2024). However, considering the paradox of observing systems as put forward by Luhmann (1995), one always has influence over the future. Therefore, the future must be approached as something that both ‘overcomes us’ as well as something steerable. It is at this point where the theory of critical realism finds the middle ground between postmodern and positivist theory.
Engaging with the future within the context of our field, management in the built environment, specifically corporate real estate (CRE) portfolio strategies, an often used tool by portfolio managers is scenario planning. Scenario planning for use in strategies can be split up into two schools of thought: explorative scenario planning (XSP), which is mainly used by the private sector and aligns with postmodern theory on futures that ‘overcome us’ on the one hand, and normative scenario planning (NSP) on the other, which is mostly used by the public sector and builds on the positivist theory that the future is steerable. Meanwhile, there appears to be no method of scenario planning that aligns with critical realist theory. Combining XSP and NSP to form a Combined Scenario Planning (CSP) method could possibly fill this gap. To this end, this thesis aims to answer the following question: Can explorative scenario planning and normative scenario planning be combined in a single method and what could be its impact on corporate real estate portfolio strategies?
Through in-depth interviews and literature study, it has been found that while these methodologies differed, there was no upfront hindrance in combining XSP and NSP. Combined with how scenario planning can be used in formulating CRE portfolio strategies, it was possible to develop a new CSP method through of research by design. This CSP method proposes an 8-step protocol in which normative brainstorming delivers a list of actions, which are tested against either chosen or developed explorative scenarios. When an expert panel of CRE portfolio managers evaluated this method on how this could perform for strategizing, it was found that while the CSP method shows promise, particularly as a strategic support tool, its practical implementation and ease of use need refinement. Real-world testing and further development are essential to address the concerns raised by the expert panel.