Scenario Planning

by Eric Britten

“Scenario planning is a discipline for rediscovering the original entrepreneurial power of creative foresight in contexts of accelerated change, greater complexity, and genuine uncertainty.” —Pierre Wack, Royal Dutch/Shell, 1984

Scenario planning is a process in which managers develop and then consider, in depth, several varied scenarios of equally plausible futures. The scenarios are based upon substantive information gathering and data development. The objective is to bring forward surprises and unexpected leaps of understanding. Scenario planning derives from the observation that, given the impossibility of knowing precisely how the future will play out, a good decision or strategy to adopt is one that plays out well across several possible futures (scenarios). To develop that "robust" strategy, several scenarios are created such that each scenario diverges markedly from the others. Strategies are then developed from identifying similarities or trends within or among the scenarios.

The most significant concept is not whether the planning team is "right" or "wrong". Rather, it is that the team digs deeply down to understand and remove the artificial constraints and limitations that affect their assumptions and perceptions about the future. Then they can objectively evaluate the plausibility and exponential relationships of the elements that comprise each of the scenarios.

No matter what future takes place, a company and its management team is much more likely to be ready for it and influential in it, if it has engaged in serious discourse and discovery surrounding possible situations or environments in which the organization may find itself.

In brief, the steps of the scenario planning process are:

• Develop the information that will drive the process
• Identify external factors that can significantly influence the industry
• Bring the issues and influencers together into a viable framework
• Produce multiple initial mini-scenarios; reduce to 2 or3
• Analyze the scenarios for the most important connections and relationships
• Determine what actions will be taken to address the most significant issues discovered

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