In the strategic planning world, scenario planning is a way of simplifying a complex future by providing the opportunity to ask the what-if questions and to rehearse how you may respond should a certain event or trend happen in the future. Pierre Wack sums up the outcome that scenarios seek to change our mental maps of the future.
Scenario planning was first developed and used by the U.S. Air Force during World War II. It gained acknowledgement in the business world when Shell Oil utilized scenario planning techniques to predict the oil crisis of the 1970s. For organizations, scenario planning provides an invaluable opportunity to have a strategic discussion around key drivers and critical uncertainties in your operating environment.
Scenarios aren’t an end in themselves. They’re a management tool to improve the quality of organizational decision making. You may not always have time to do scenario planning, but consider doing a scenario analysis to push the bounds of your thinking. You never know what you may come up with. Use scenario planning in the following situations:
When the CEO and her core thinkers need to push their planning horizon far into the future to sharpen their perspectives
When you’re starting to update your plan and need to re-imagine your vision, especially if the future is less than clear
When you’re starting from scratch and want a robust way to ensure you’re developing a strategic direction that incorporates all the environmental trends
When you’re trying to get your team to think outside of the box
When you want to develop mini action plans for short-term risks
With scenario planning, you’re imagining not just one but a variety of future possibilities. All the great opportunities in the world aren’t enough unless you have contingencies in place. And remember, you’re not only preparing for unexpected threats but also trying to foresee unanticipated opportunities.