Scenario Planning

Scenario planning (sometimes called “scenario and contingency planning”) is a structured way for organizations to think about the future. A group of executives sets out to develop a small number of scenarios - stories about how the future might unfold and how this might affect an issue that confronts them. The issue could be a narrow one like whether to make a particular investment, for example. Should Big Bazaar put millions into more retail stores and their attendant car parks, or should it invest in secure websites and a fleet of vans to make door-to-door deliveries? Or it could be much wider like the government contemplating the impact of demographic change on the need for new schools.

Scenario planning has been used by some of the world’s largest corporations, including Royal Dutch Shell, Motorola, Disney and Accenture.

The process of scenario planning usually begins with a long discussion about how the participants think that big shifts in society, economics, politics and technology might affect a particular issue. From this the group aims to draw up a list of priorities, including things that will have the most impact on the issue under discussion and those whose outcome is the most uncertain. These priorities then form the basis for sketching out rough pictures of the future.

Scenario planning is an effective methodology to be prepared for the future and can be very useful especially for organizations operating in unstable environment.

Like all tools and methodologies Scenario planning has got its cons and must keep in mind the following things while doing scenario planning:

·        Treating scenarios as forecasts

·        Constructing scenarios based on too simplistic parameters like optimistic and pessimistic

·        Failing to understand the global impact

·        Failing to focus on areas which could impact the business

·        Failing to involve top executives with experience in the process

·        Not enough imaginative stimulus

·        Lack of an experienced facilitator

When done properly it does prove out to be an efficient tool for strategy making.