Leadership Strategy
Scenario Planning: Powerful Tool or Paper Chase?
By Brian Ward
Feb 11, 2007 - 2:28:29 PM

Strategic planners at Royal/Dutch Shell knew that they had to do something fundamentally different to compete in a rapidly changing world. That was back in the 70's, when OPEC ruled. Using 'Scenarios', the Shell planners changed the face of their industry. Can other leaders learn from them?

Most attempts at strategic planning veer off into taking what we are good at (our core competencies) and imposing them on the world around us. It's pretty difficult for any of us to truly get away from that. After all, it's what we are most familiar with, and feel confident doing, that drives our behaviors.

But most experts agree that the world order is getting more complex and uncertain, and that information and communications technology is enabling that change to gather greater and greater momentum.

While you may feel that you are just a small cog in a large global wheel, without that cog, the wheel can grind to a halt. And if, as that small cog, you don't keep up with the bigger cogs...well, you get the point. Scenario Planning, at the local, national and global level is here to stay, so you may as well learn how to master it. 

Here are some quick pointers, and links to resources, to help make it work for you...

Definition

The most informed explanation or definition for Scenario Planning comes from The Global Business Network (GBN), a California based consulting think tank founded by Peter Schwartz and four other partners. Schwartz is the former head of scenario planning at Royal Dutch/Shell in London, and director of the Strategic Environment Center at SRI International. His book The Art Of The Long View, which explains Scenario Planning in some detail, is a readable treatise on the subject. 

Scenario planning has been defined by another expert, Pierre Wack, as " a discipline for rediscovering the original entrepreneurial power of creative foresight in contexts of accelerated change, greater complexity, and genuine uncertainty." 

Right. Okay. Say again? GENUINE uncertainty? As opposed to false uncertainty, of course. You see leadership teams in the past have been burnt by over zealous attempts at blue sky 'visioning', which got everyone's hopes up, but paid little attention to future uncertainties. Don't believe me? Just take a look at all the failed dotcoms. 

It's that last part of the definition, dealing with genuine uncertainty, that has caused Scenario Planning to spring to the forefront of strategic planning processes. In practice, identifying and discussing these 'genuine uncertainties' empowers leaders and their teams to face reality. In other words, to discard the notion that 'visioning' needs to be predominantly a blue sky, upbeat, positive exercise. Scenarios, once described, can cover the whole gamut of positive and negative futures and everything in between. 

Steps in Scenario Planning

While GBN are undoubtedly the leaders in this field, other writers and strategic thinkers have emerged. Each has their own slant on how to conduct scenario planning, or perhaps more appropriately, scenario thinking. Here are is a short list...

Global Business Network (US) | Kairos Future (Sweden) |  Janus (Canada) 

Martin Borjesson (Researcher) | Plausible Futures Newsletter | Royal/Dutch Shell (Scenarios)

Scenario thinking is a key component of any strategic planning process. Without it, your team is likely to lapse into short term, event driven thinking that will produce more of the same, and leave you flat footed when the 'genuine uncertainties' of the future come knocking at your door. The answer is to rehearse the future, by identifying these uncertainties and discussing, throughout your organization, your likely range of responses to them.