Scenario Planning (Cont.) Scenario Planning Involves Creating Images About The Future

. How the future might turn out

. Alternative views of the uncontrollable parameters in the external business environment; alternative images of the future

. Makes sense of future events in the same way as historical analysis makes sense of the past

. Connects disparate forms of information into holistic concepts of future

. Represents causal accounts of the future which provide operational insights

Scenario planning is aiming for better decisions today about the future by

. Questioning assumptions

. Developing fresh insight

. Getting the "measure" of problems

. Sharing understandings

. Rehearsing responses.

For example, Shell Oil Company (one of the modern pioneers of scenario planning) has this view of the objective of scenario planning:

"...explore and discuss what is happening now, so as to identify possible changes in advance and identify their consequences, so as to challenge and, if necessary, change the mental maps of decision-makers, so as to gain advantage..."

as quoted by Art Kleiner, 1996

Why Scenario planning?

. To sensitise decision-makers to handle the subtle changes in the environment, ie what has not been considered won't be perceived early enough?

. Econometric models cannot identify sharp discontinuities, ie qualitative shifts require qualitative understanding

. To identify changes in the type of business you are in

. To set or determine organisational strategies

. Identify opportunities for differentiation or diversification

. To change organisational structure

. To answer specific questions

. To adapt priorities for action

. To identify conclusions common across scenarios

. To identify key uncertainties for future study

. To establish a common language and framework

. To remove emotions from the future.

Scenario plans are relevant because they offer opportunities to

Simplify complexity

Evaluate risks

Understand sources of discontinuity

Clarify the emerging rules of the game

Encourage flexible thinking and learning

Align decentralised decision-making

Improve speed of response

Reflect diversity of thought

The role of scenario planning lies in:

Challenging the sacred corporate myths

Building the corporate knowledge base

Understanding the significance of seemingly unrelated events

Monitoring the unexpected

Scenario planning is not

An annual strategic planning "rain dance"

Foretelling or predicting

Crystal-ball gazing

The silver bullet for corporate strategies

Rather, it is

A deeply embedded manner of thinking and behaving in the organisation

Sensitising management to what could happen

Enabling management to recognise the significance of events as they unfold

Part of the strategic management toolkit

Involving of the entire organisation

More comments on scenario planning

. Some people do not see scenario planning as meaningful as they feel that the future is beyond their control and have a sense of helplessness because past goals, such as alleviating world poverty, have not been achieved

. Scenario planning tries to suggest what might happen in the future so that people can decide what they want to make happen. By looking at current trends, it is possible to make projections of what might be the case in the future. For example, if the population of a city is growing at two percent a year, we can suggest that the city will have more people in the future than it has now. We can calculate how many additional people the city might have. On the other hand, it does not mean that the city will definitely have those additional people. Many things could happen to stop or even reverse the city's population growth.

. Sometimes the forces that create the future have already shown themselves. For example, the effects of heavy rains at the source of the river can be predicted with a fair degree of certainty: flooding downstream will occur. This is really describing future implications of something that has already happened. On the other hand, some events are unavoidable and even imminent but when the events will occur is unpredictable, such as the crash of the stock market.

. A variation of scenario planning is called "pre-mortem", ie prospective hindsight to devise ways to help at project team identify issues at the start or outset. This is done by assuming that the project/activity, etc "failed" and to identify reasons on what went wrong