Scenario planning

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Scenario Planning

Nancy PridalPam NienaberDan Schaecher

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What is Scenario Planning?

Scenarios are stories about the way the world might turn out tomorrow

A planning tool for ordering one’s perceptions about alternative future environments to guide decision making

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What Scenario Planning is not…

Scenarios are not predictions or forecasts Scenarios are vehicles for helping people learn Scenarios allow a manager to say, “I am prepared for whatever happens.”

Scenario planning is an art - not a science. The end result is not an accurate picture of

tomorrow, but better decisions about the future

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Historically

Roots in military exercises

Corporate World – 1970’s Oil Crisis Royal Dutch/Shell Background:

Emergence of OPEC as a major global force and influencer

Depleting US oil reserves.

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Historically - Royal Dutch/Shell

Pierre Wack used scenario planning to help evaluate events that may affect the price of oil

He helped managers imagine the decisions they might have to make

Of the major oil companies, only Shell was prepared emotionally for the change. The company’s executives responded quickly.

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Steps in Scenario Planning

Preparation Identify people who will contribute a

wide range of perspectives

Isolate the decision to make Evaluate

Key drivers for the company’s success? “Pre-determined elements or factors we can

count on” Critical events that may influence success?

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Identify Driving Forces Consider providing a comprehensive

interviews/workshop about how participants see big shifts coming

Society Technology Economics Politics Environment

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Next - Look at possible changes in these key drivers More of the same, but better Worse

Decay and depression Different but better

Fundamental change

Cluster or group these views into connected patterns In a group draw a list of priorities (the best ideas)

Sketch out rough pictures of the future based on these priorities (stories, rough scenarios)

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Dialogue around the implications Determine in what way each scenario will affect the

corporation Identify early warning signals - things that are

indicative for a particular scenario to unfold

Monitor, evaluate, adjust

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Typically you find yourself moving through the scenario process several times Refining a decision Performing more research, Seeking out more key elements Trying on new plots More dialogue

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Scenario Planning – More Info

Suspend your disbeliefs What might happen that you might

otherwise dismiss

Research Pursue and gathering information Educate yourself so that you will be able

to pose more significant questions.

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Traps to Avoid

Treating scenarios as forecasts Remember - scenarios are not about predicting the

future, rather perceiving futures in the present

Constructing scenarios based on too simplistic difference Such as optimistic & pessimistic

Failing to make the scenario global enough in scope

Failing to focus scenarios in areas of potential impact on the business

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Traps (continued)

Treating scenarios as an information or instructional tool Credibility increases when it is participative

learning and strategy formation

Not having an adequate process for engaging executive teams

Failing to put enough imaginative stimulus into the scenario design

Not using an experienced facilitator

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Sources

The Art of the Long View: Planning for the Future in an Uncertain World” by Peter Schwartz 1991

“Scenarios. The Art of Strategic Conversation” by Kees Van Der Heijden 1996

Website: Valuebasedmanagement.net

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Sources

The Mind of a Fox, Scenario Planning in Action by Chantell Illbury & Clem Sunter. Website: http://www.mindofafox.com/introduction.php

Presence, Exploring Profound Change in People, Organizations and Society by Senge, Scharmer, Jaworski, & Flowers

Orbiting the Giant Hairball – A Corporate Fool’s Guide to Surviving with Grace by Gordon MacKenzie

Business

Scenario planning