Scenario Planning

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Learning about the future in which a corporate strategy is formed. Explanation of Scenario Planning.


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Scenario Planning

What is Scenario Planning? Description

Scenario Planning is a model that can be used to explore and learn the future in which a corporate strategy is formed. It works by describing a small number of scenarios, by creating stories how the future may unfold, and how this may affect an issue that confronts the corporation.

Royal Dutch Shell, one of the first adopters, defines scenarios as follows: Scenarios are carefully crafted stories about the future embodying a wide variety of ideas and integrating them in a way that is communicable and useful. Scenarios help us to link uncertainties about the future to the decisions that we must make today.

The scenario planning method works by understanding the nature and impact of the most uncertain and important driving forces affecting the future. It is a group process which encourages knowledge exchange and development of mutual deeper understanding of central issues that are important to the future of your business. The goal is to create and craft a number of diverging stories by extrapolating uncertain and heavily influencing driving forces. The stories, plus the processes to create them, have a dual aim: to increase the knowledge of the business environment and to widen both the receiver's and participant's perception of possible future events. The method is most widely used as a strategic management tool, but it is also used for enabling group discussion about a common future.

Steps in Scenario Planning. Process

  1. Identify people who will contribute a wide range of perspectives.

  2. Comprehensive interviews/workshop about how participants see big shifts coming in society, economics, politics, technology, etc.

  3. Group (cluster) these views into connected patterns.

  4. Group draws a list of priorities (the best ideas).

  5. Create rough pictures of the future, based on these priorities. Stories and rough scenarios.

  6. Add further detail to get impact scenarios. Determine in what way each scenario will affect the corporation.

  7. Identify early warning signals. Things that are indicative for a particular scenario to unfold.

  8. The scenarios are monitored, evaluated and reviewed.

Some traps to avoid in Scenario Planning

  1. Treating scenarios as forecasts.
  2. Constructing scenarios based on too simplistic a difference. Such as optimistic and pessimistic.
  3. Failing to make the scenario global enough in scope.
  4. Failing to focus the scenarios in areas of potential impact on the enterprise.
  5. Treating scenarios as an informational or instructional tool rather than for participative learning and/or strategy formation.
  6. Not having an adequate process for engaging management teams in the scenario planning process.
  7. Failing to put enough imaginative stimulus into the scenario design.
  8. Not using an experienced facilitator.

Scenario Planning Forum
  Exploring Possible Strategic Directions
It is a very good approach for identify two or more possible directions to judge what is right and what is wrong. By using scenario planning, we can narrow the decision making down to a smaller scope. Usually, before taking action to get a strategy p...
  Scenario Building Elements
Who can help me out with a basic structure for building future scenarios? Literature of theory around this theme is also very welcome. So what elements are relevant to use as a guideline for using future scenarios?
Thanks in advance....
  Why Scenario Planning is Important
Most companies have their methods for planning - Some good, some not so good. But most don't take time to do effective scenario planning. Do they believe it takes time off from the key activities of making money?
It's important that scenarios ar...
  Scenario Planning Instruments
For the thesis of my MBA study I'm researching the influence of culture on the succesful implementation of scenario planning in organizations. As guideline for my research I'm looking for a theory, method, instrument or model for scenario planning or...
  Uses of Scenario Planning
What exactly can we use scenario planning for? I mean what are common applications, purposes of scenario planning?...
  Decision makers disagree
One is always dealing with perceptions. One technique I have found quite useful is to populate a matrix with objective/subjective 'lens' on the one side and finance/non-finance 'impact' on the other. The subjective and non-financial quadrant is where...
  What is a Scenario? Definition
A scenario is a description of a plausible future context in which a firm might find itself. Scenarios are typically presented as a small set of stories about how the surrounding environment might have evolved into the future. They are produced by ca...
  Time Frame in Scenario Planning?
A scenario consist of a statement of an end state and a story explaining how the end state has developed, together with the underlying logic of external environment and internal forces in the industry / firm.
Did a write up on scenario planning ...
  Embracing Complexity
Scenario Planning is a strategic tool which can be used to understand or even embrace complexity, rather than avoid or neglect or scare away from it....

Scenario Planning Special Interest Group

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Scenario Planning Education & Events

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Best Practices - Scenario Planning Premium

Expert Tips - Scenario Planning Premium

Defining Feasable / Probable Scenarios

To investigate potential driving forces, you can perform a PEST analysis (Political, Economic, Society, Technology) or STEEPLE VARIANT (id + Legal, Et...
Usage (application): Finding Driving Forces for Scenario Planning

Change How Decision-makers See the World

A valuable insight by Pierre Wack on his pioneering work at Royal Dutch Shell was that scenarios had to connect with managers' assumptions, beliefs...
Usage (application): The Impact upon Mental Models of Decision-makers

Describing and Analyzing Driving Forces

Scenarios are caused by trends or driving forces. When analyzing potential trends or driving forces, for them to be relevant they must have at least o...
Usage (application): Scenario Planning

Four Bad Practices in Scenario Planning

Harris (2014) mentions 4 common bad practices that should be avoided when conducting scenario analysis. These are the following:
1. Mistaking ...
Usage (application): Scenario Planning, Scenaro Thinking, Scenario Analysis

What to do after the Scenarios have been Described?

According to Jeremy Kourdi, once you selected a relevant future scenario that you can work through to evaluate your organization’s future, you should ...
Usage (application): The Next Steps to Take...

Transformation Scenario Planning

Transformational Scenario Planning is not about adapting to certain possible situations; rather it focuses on the participants (actors) to change them...
Usage (application): Scenario Planning, Strategic Team Collaboration

Why Society is More Risky than Before

In his 1992 book "  

How to Build Strategic Agility?

In order to get strategic flexibility you can use the Johnson & Johnson “four-phase framework":
1. “Anticipate” – Identify change d...
Usage (application): 4 Phase Framework of Johnson & Johnson

Learning via the Case Method

The case method in business education has often been criticized, although it can be an appropriate and powerful approach for situations in whic...
Usage (application): Decision-making, Problem-solving

The Advantages of Group Decision-Making

The benefits of group decision-making include:
- Synergy: Group decisions tend to combine and improve on the knowledge of the grou...
Usage (application): Group Decision-Making

Taking Risk Management from Control and Compliance into a Competitive Advantage

Since events tend to be repetitive over time, many management experts support the idea that an effective risk management policy strongly takes into...
Usage (application): Strategic Risk Management

Align Strategy and Risk Management

In a recent white paper titled "Foundations of GRC: Enhancing Business Performance Through Risk Management", which was published by Corporate Integrit...
Usage (application): Performance-Aligned Risk Management

How to Link Risk Management and Strategy?

Firms practicing strategic risk management:
1. Create value by embracing risks, shaping risks, and exploiting flexibility to deliver uniqu...
Usage (application): Strategic Risk Management, Best Practices

3 Causes of Disagreement in Team Decision-making Processes

According to Freeman and Haskins (2014), there are three main categories of potential root causes for disagreements within teams. When such a disagree...
Usage (application): Group Decision-making, Team Decision-making, Reasons for Disagreement, 3 Fs, Group Collaboration

History of Scenario Planning

- The scenario planning approach was first introduced after World War II, as a tool for military planning. The U.S. Air Force searched for what its en...
Usage (application): Decision-making

From Scenario Planning to Scenario Thinking and Scenario Learning

Recently you can also encounter the terms scenario thinking, scenario analysis and scenario learning. These terms are reflecting the change in perspec...
Usage (application): Scenario Planning

How to Use Counterintuition to Fight 5 Frequent Decision Making Errors

Mauboussin describes five mistakes in decision making that are often made and result in making the wrong decisions. These five mistakes are:
Usage (application): Strategic Decision Making, Dealing with Complexity, Dealing with Uncertainty, Strategy

Narrative-based Scenario Planning

Traditional scenario-planning generally provides a bigger picture in which trends and shocks are revealed. Such scenarios are effective in detecting t...
Usage (application): Scenario Planning, Strategic Agility, Anti-Fragility

Meta-cognition (Meta-thinking) in Scenario Thinking

Most businesses are primarily concerned with the type of thinking that tries to make complex problems or interconnected and multidimensional issues ma...
Usage (application): Schools of Thought, Strategic Thinking, Scenario Thinking, Strategic Assumptions, Strategic Reasoning

The Disadvantages of Group Decision-Making

The drawbacks of group decision-making include:
- Longer time frame: Groups generally need more time to make decisions than individ...
Usage (application): Group Decision-Making

Having more than 1 Team in Scenario Planning

HBR March 2007 has an interesting short article on Coevolutionary War Gaming by Alidade consultants Jeff Cares and Jim Miskel. They stress the impo...
Usage (application): Scenario Planning

Resources - Scenario Planning Premium

Comprehensive Introduction to Scenario Planning

Presentation with comprehensive speaking notes about scenario-planning includes the following sections:
1. Definitions of scenario planning
Usage (application): Scenario-planning, Storytelling

How to Improve Strategic Decision Making?

In this video Michael Mauboussin, Credit Suisse's Head of Financial Strategies, briefly explains parts of Philip E. Tetlock's Model of 3 areas that ar...
Usage (application): Strategic Decision Making, Cognitive Bias, M&A, Corporate Finance

Scenario Planning and Risk Management in Uncertain Business Enviroment

Extensive and detailed presentation. about scenarios, risk and uncertainty. Topics:
- Integrated Risk Management Framework
- Strategic Manag...
Usage (application): Scenario Planning, Risk Management, Strategic Uncertainty

An Explorer's Guide to SP

Guidance and ideas by Shell for those interested in scenario thinking. Contains two parallel streams: one explains the intent behind Shell's sc...
Usage (application): Scenario Planning

Scenario Planning Diagram

Download and edit this 12manage PowerPoint graphic for limited personal, educational and business use. Republishing in intranets, websites, books, ma...
Usage (application): Exploring, Challenging Future Options


Scenario Planning


Scenarios Strategy


Scenario Planning


Scenarios Strategy


Scenario Planning


Scenarios Strategy


Scenario Planning


Scenarios Strategy

Related to Scenario Planning: Chaos Theory  |  Delphi Method  |  System Dynamics  |  PEST Analysis  |  Stakeholder Analysis  |  Stakeholder Mapping  |  Strategic Risk Management  |  Force Field Analysis  |  Real Options  |  Mind Mapping  |  Brainstorming  |  Analogical Strategic Reasoning  |  Plausibility Theory  |  Game Theory  |  Root Cause Analysis  |  Dialectical Inquiry  |  OODA Loop  |  Contingency Theory  |  Six Thinking Hats

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