Scenario Planning

“ For tomorrow belongs to those who prepare for it today.” – old African Saying

The future is something that is in most cases uncertain . Managers in today’s world are expected to be able to see through the uncertainties and then take the best possible decision for the business. So , in a certain way the modern day manager is expected to act as an oracle in today’s fast changing world. So, how does a manager on whose decision , a thousand livelihoods depend , decide with such surety that the decision taken is the right one and that the business will thrive , no matter what the future brings ?

Scenario planning is one among the futures frameworks which help managers in taking those critical decisions , by giving them some insight into what the future might hold for them and the economy as a whole. It is impossible to predict the future, but based upon what we know today, scenarios can help depict plausible possibilities for the future. Unlike other planning exercises which are limited to the boardroom or to company officials , scenario planning as a methodology is being adopted by communities as a whole in order to take a peek into their futures and to help decision-makers use these scenarios as a guideline when taking decisions.

Scenarios are powerful planning tools that are neither predictions nor strategies but are hypotheses of different futures which are specifically designed to highlight certain risks and opportunities which could affect the business. The typical scenario planning methodology would be on the following lines :

a) Put together a team of stakeholders and domain experts with varied interests , so as to bring depth of knowledge of the industry as well as of the general environment into the scenario.

b) Since we are trying to understand the various futures possible , the team tries to pin down the various forces that drive the world and important factors that indicate the state of the world as such. The factors and forces could typically be classified under

a. Social Dynamics

b. Economic Issues

c. Political Issues

d. Technological Issues

c) The team discusses the various ways that each of these forces can behave in and various forms that these factors can take .

d) The behavior of these forces and factors is then assimilated into a fixed number of scenarios as pre-decided and fleshed out into a imaginable future.

Before taking any decision , managers play out the after-effects of each alternative of that decision in every scenario designed , so as to take a more informed decision which will work out favorably in most cases. The following diagram shows us where the scenario development fits into the overall planning process.

Figure 1 . Strategic Planning Process (Source : Strategicframing)

The scenarios also help the managers to have what is called in industry lingo “ a memory of the future “ , which basically means that when a manager spots a change in one of the driving forces in the present , he can expect the present to be veering a bit towards the corresponding scenario and adjust his future plans accordingly.

One of the observed drawbacks in a scenario planing process might be the gap in understanding between the user of the scenarios and the team which actually designed the scenarios.

'This document is the result of my independent work. All sources of information used in the document have been duly acknowledged in the references.'

References :

[1] Eaves, Elisabeth , "The Futurists " , Retrieved 07/09/08 from http://www.forbes.com/2007/10/13/futurist-business-consultant-tech-future07-cx_ee_1015futurist.html
[2] Yacoob Abba Omar , "Thinking creatively about a world yet to unfold" , Retrieved 07/09/08 from http://www.businessday.co.za/articles/topstories.aspx?ID=BD4A837266
[3] "Scenarios can help prepare businesses for times of change" , Retrieved 07/09/08 from http://www.belfasttelegraph.co.uk/business/help-advice/business-clinic/scenarios-can-help-prepare-businesses-for-times-of-change-13948854.html
[4] Wilkinson , Lawrence , "How to build scenarios" , Retrieved 07/09/08 from http://www.wired.com/wired/scenarios/build.html
[5] QJ Wang, Leon Soste, David Robertson, Selina Handley and Robert Chaffe , "Scenario planning for irrigation futures of the Goulburn Broken Region" , Retrieved 07/09/08 from http://www.regional.org.au/au/apen/2006/refereed/1/3035_wangqj.htm
[6]Scenario Planning Peer Workshop , Retrieved 07/09/08 from http://www.fhwa.dot.gov/planning/scenplan/ncscenplanrpt.htm