Scenario Planning

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What is Scenario Planning? Description

Scenario Planning

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.

Special Interest Group

Scenario Planning Special Interest Group.

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Forum discussions about Scenario Planning. Below you can ask a question about this topic, share your experiences, report a new development, or explain something.

topic 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 fut...
Comments3 comments
topic 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 hav...
topic 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 m...
Comments1 comments
topic 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...
Comments4 comments
🔥 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....
topic 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, me...
Comments5 comments
topic Uses of Scenario Planning
What exactly can we use scenario planning for? I mean what are common applications, purposes of scenario planning?...
Comments2 comments
topic 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....
topic 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. ...

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Best Practices

The best, top-rated topics about Scenario Planning. Here you will find the most valuable ideas and practical suggestions.

Expert Tips

Advanced insights about Scenario Planning. Here you will find professional advices by experts.


Defining Feasable / Probable Scenarios

Finding Driving Forces for Scenario Planning
To investigate potential driving forces, you can perform a PEST analysis (Political, Economic, Society, Technology) or S...

Change How Decision-makers See the World

The Impact upon Mental Models of Decision-makers
A valuable insight by Pierre Wack on his pioneering work at Royal Dutch Shell was that scenarios had to connect with man...

Four Bad Practices in Scenario Planning

Scenario Planning, Scenaro Thinking, Scenario Analysis
Harris (2014) mentions 4 common bad practices that should be avoided when conducting scenario analysis. These are the fo...

Describing and Analyzing Driving Forces

Scenario Planning
Scenarios are caused by trends or driving forces. When analyzing potential trends or driving forces, for them to be rele...

What to do after the Scenarios have been Described?

The Next Steps to Take...
According to Jeremy Kourdi, once you selected a relevant future scenario that you can work through to evaluate your orga...

Transformation Scenario Planning

Scenario Planning, Strategic Team Collaboration
Transformational Scenario Planning is not about adapting to certain possible situations; rather it focuses on the partic...

Why Society is More Risky than Before

Understanding New Risk Categories, Risk Management
In his 1992 book "Risk Society: Towards a New Modernity”, Ulrich Beck describes new risk scenarios that companies have t...

How to Build Strategic Agility?

4 Phase Framework of Johnson & Johnson
In order to get strategic flexibility you can use the Johnson & Johnson “four-phase framework": 1. “Anticipate” – Ident...

Learning via the Case Method

Decision-making, Problem-solving
The case method in business education has often been criticized, although it can be an appropriate and powerful approach...

The Advantages of Group Decision-Making

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

Ten Commandments for Strategic Forecasters

Strategic Forecasting, Strategic Vision, Scenario Planning, Predicting the Future, Wisdom of the Crowds
Philip Tetlock and Dan Gardner researched forecasting the future in "the Good Judgment Project". The idea behind this pr...

Taking Risk Management from Control and Compliance into a Competitive Advantage

Strategic Risk Management
Since events tend to be repetitive over time, many management experts support the idea that an effective risk management...

Align Strategy and Risk Management

Performance-Aligned Risk Management
In a recent white paper titled "Foundations of GRC: Enhancing Business Performance Through Risk Management", which was p...

How to Link Risk Management and Strategy?

Strategic Risk Management, Best Practices
Firms practicing strategic risk management: 1. Create value by embracing risks, shaping risks, and exploiting flexibili...

3 Causes of Disagreement in Team Decision-making Processes

Group Decision-making, Team Decision-making, Reasons for Disagreement, 3 Fs, Group Collaboration
According to Freeman and Haskins (2014), there are three main categories of potential root causes for disagreements with...

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 ...

From Scenario Planning to Scenario Thinking and Scenario Learning

Scenario Planning
Recently you can also encounter the terms scenario thinking, scenario analysis and scenario learning. These terms are re...

How to Use Counterintuition to Fight 5 Frequent Decision Making Errors

Strategic Decision Making, Dealing with Complexity, Dealing with Uncertainty, Strategy
Mauboussin describes five mistakes in decision making that are often made and result in making the wrong decisions. Thes...

Narrative-based Scenario Planning

Scenario Planning, Strategic Agility, Anti-Fragility
Traditional scenario-planning generally provides a bigger picture in which trends and shocks are revealed. Such scenario...

Meta-cognition (Meta-thinking) in Scenario Thinking

Schools of Thought, Strategic Thinking, Scenario Thinking, Strategic Assumptions, Strategic Reasoning
Most businesses are primarily concerned with the type of thinking that tries to make complex problems or interconnected ...

The Disadvantages of Group Decision-Making

Group Decision-Making
The drawbacks of group decision-making include: - Longer time frame: Groups generally need more time to make decisions ...

Having more than 1 Team in Scenario Planning

Scenario Planning
HBR March 2007 has an interesting short article on Coevolutionary War Gaming by Alidade consultants Jeff Cares and Jim M...
Information Sources

Various sources of information regarding Scenario Planning. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops.


Comprehensive Introduction to Scenario Planning

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

How to Improve Strategic Decision Making?

Strategic Decision Making, Cognitive Bias, M&A, Corporate Finance
In this video Michael Mauboussin, Credit Suisse's Head of Financial Strategies, briefly explains parts of Philip E. Tetl...

Scenario Planning and Risk Management in Uncertain Business Enviroment

Scenario Planning, Risk Management, Strategic Uncertainty
Extensive and detailed presentation. about scenarios, risk and uncertainty. Topics: - Integrated Risk Management Framew...

An Explorer's Guide to SP

Scenario Planning
Guidance and ideas by Shell for those interested in scenario thinking. Contains two parallel streams: one explains the i...

Scenario Planning Diagram

Exploring, Challenging Future Options
Download and edit this 12manage PowerPoint graphic for limited personal, educational and business use. Republishing in ...

Research Links

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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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