Scenario Planning

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Scenario Planning

• Nancy Pridal
• Pam Nienaber
• Dan 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 ones 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 1970s 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
  companys 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 companys success?
• Pre-determined elements or factors we can count
  on
• Critical events that may influence success?

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Steps in Scenario Planning

• 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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Steps in Scenario Planning

• 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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Steps in Scenario Planning

• 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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Steps in Scenario Planning

• 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.ph
  p
• Presence, Exploring Profound Change in People,
  Organizations and Society by Senge, Scharmer,
  Jaworski, Flowers
• Orbiting the Giant Hairball A Corporate Fools
  Guide to Surviving with Grace by Gordon MacKenzie