Scenario Planning

Scenario Planning

Events will shape the future in many different ways, and it’s impossible to predict everything that will happen tomorrow, let alone 5 or 10 years in the future. One way to deal with this is to use Scenario Planning, first introduced by energy giant Shell in the 1970s.

In Detail

If you've carried out an exercise like PESTLE to analyse your business context and its contributing factors, you can start to move on to thinking about how they might all interact with each other in the future.

Because of the sheer variety of ingredients involved, there isn’t one defined future that is set in stone and that will apply to everyone in exactly the same way. Events will shape the future in many different ways, and it’s impossible to predict everything that will happen tomorrow, let alone 5 or 10 years in the future.

One way to deal with this is to use something called Scenario Planning, which has been in use at the energy giant Shell since the 1970s.

These scenarios are not predictions but can provide a deeper foundation of knowledge and self-awareness in approaching the future. They present different possibilities for how the future may play out if certain events or trends come to the fore.

These scenarios stop Shell assuming that the future will look much like the present, and enable executives to open their minds to previously inconceivable or imperceptible developments.

Shell’s scenarios are not presented in any order of preference or likelihood. Shell’s rationale that the trap of having a “good” versus a “bad” future is that there is nothing to learn in heaven, and no one wants to visit hell.

But you might find it useful to try “preferred future” planning. Planning for a ‘preferred’ future allows us to understand the events and changes needed to bring about a positive future for our companies or ourselves.

A slightly different version of this is called “alternative futures”. Imagine two children arguing over a toy. You could choose to allow the future to play out, by just allowing them to carry on arguing. This is a default future, where you do nothing different to influence what happens.

There might also be another future, a best case scenario, where they stop arguing, and apologise to each other. Then go and play together really nicely.

Or there might be a worst case scenario where they keep on arguing and it actually escalates into a full blown fight.

But sometimes, something totally unexpected happens. This is an outlier. They stop arguing, agree to share, apologise to you for making so much noise and take themselves off to do their homework.

We can think of these four alternative futures in business: the best case, where everything goes well (where the organisation desires to move towards); worst case (where everything goes bad); outlier (a surprise future based on a disruptive emerging issue) and business as usual (no change).

Once you've envisioned your potential futures, then you can think about how you might prepare for the challenges and uncertainties your business might face.

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