Scenario Planning

What is Scenario Planning?

Rising uncertainty about the future business environment requires a powerful tool to successfully manage futures. The need to rigorously imagine alternative outcomes is essential for business leaders to anticipate and prepare for the future. That is the fundamental rationale for scenario planning.

Scenario planning is a strategic planning tool used to make flexible long-term plans. It is a method for learning about the future by understanding the nature and impact of the most uncertain and important driving forces affecting our world.

Scenarios enable us to provide our clients with a more distant horizon and a broader field of vision. This enhanced vision translates into an improved command of strategic alternatives and a sharper understanding of both opportunities and risks.

Accurately predicting the future is complex. Scenario planning uses trend analysis helps build tests of plausibility into the process.

Scenario planning however assumes that the future can differ greatly from what we know today. The method is based on creating a series of 'different futures' generated from a combination of known factors, such as demographics, with plausible alternative political, economic, social, technical, legal and environmental (PESTLE) trends which are key driving forces. The goal is to craft diverging worlds by extrapolating these heavily-influencing driving forces. The technique can also include anticipatory thinking elements that are difficult to formalize, such as subjective interpretations of facts, shifts in values, new regulations or inventions.

It is a group process which encourages knowledge exchange and development of mutual deeper understanding of central issues important to the future of your organization. Although the method is most widely used as a strategic management tool, it can also be used for enabling other types of group discussion about a common future.

The thought processes involved in getting to the scenarios have the dual purpose of increasing knowledge of the environment in which you operate and widening the perception of possible future events. For each of these worlds, appropriate action plans can be considered. Asking the key question, 'what do we need to do (now) to be ready for all scenarios?', can then inform the formulation of strategies to cope with these differing pictures of the future.

The benefits of this approach can be significant. Scenarios give firms a structure for dealing with complexity and turbulence, a means by which planners can stress-test their assumptions and conclusions, align leadership, and build shareholder value.

The art of scenario-based strategic planning is to connect the world of what ifs with down-to-earth decision-making. This requires translating complex concepts into clear and compelling implications for markets, sectors, and individual companies. If done effectively in a creative, rigorous manner with engaged, open-minded stakeholders scenario planning can be an invaluable tool for gaining immediate impact and longer-term advantage.

Potential Use

Scenario thinking can be used at several levels within an organisation, and in many different contexts, whether for specific projects or for overall strategic management.

How we can help you

Quantitative

We do not focus on intricate storytelling, although our scenarios are grounded in realistic appraisals of political, economic and technological uncertainties. We focus on and quantify the parameters that are most important to you, along with our assessment of probabilities.

Customizable

Each client may have their own particular views or concerns over key assumptions. We allow clients to get a consistent view of their industry, under their assumptions. We also work with clients to assist them in determining how best to incorporate the conclusions of the scenario work into their decision-making process.

Scenario Planning Process