Scenario planning is a technique for developing a reasoned, coherent business strategy for an environment where uncertainty dominates the future outlook.

Aside from catastrophic situations like the 2020 Coronavirus pandemic, the business world has to deal with ever increasing levels of disruption and uncertainty. In such an environment, the traditional strategic planning approach is far more effective when preceded by scenario planning.

Traditional business strategic planning extrapolates our knowledge and experience forward, into a future, that by and large, we have a good understanding of. But there can be different futures. The narratives that describe these various futures are known as scenarios.

A Proven Method

Scenario planning or ‘scenario thinking’ is a proven, structured method for planning within a context of uncertainty. It is a recognised, formal process that produces relevant scenarios based on one’s understanding of reigning uncertainties. Once formulated, these scenarios can be effectively interpreted within the context of one’s business. These scenarios provide you with a basis for developing a more flexible and adaptable strategy than what would otherwise be the case.

Two well known examples of the use of scenario planning are:

  • Royal Dutch Shell’s use of the technique in the early 1990’s to understand the future of the oil market. In doing so, they anticipated and successfully mitigated the impact the Gulf war had on their oil business. 
  • It was used in South Africa in 1994 to help opposing forces develop a pathway to a peaceful transition to democracy following the fall of apartheid.

The success of the scenario planning methodology has seen it adopted by many big companies and governments as a best practice way of preparing for a range of future unknowns. In a business context, it is an especially useful input to the overall strategic planning process. It introduces far broader and longer range thinking than one would get with traditional strategic planning.

The four step Scenario Planning process

Companies that use it:

  • have the opportunity to be better prepared for a wider range of commercial opportunities
  • are better positioned to mitigate new, unfamiliar categories of risk
  • can realistically develop more flexible and more competent business continuity plans

How it works:

The scenario planning process is best undertaken in a facilitated, collaborative, workshop format. The process comprises four principal steps once clarity on the focal issue and any relevant precedents have been examined :

  1. Identifying the driving forces in the general socio-economic environment 
  2. The critical uncertainties being faced are identified.
  3. Scenario development
  4. Work out and understand the implications and action steps for your business.

By conducting scenario planning you can expect 

  1. To emerge with a set of plausible business scenarios that you can use for detailed planning
  2. To gain important insights about future changes and adaptations to your business 
  3. To effectively engaging in strategic conversations between key executives, managers and advisors
  4. To have the confidence that your business is best prepared for the future

A scenario planning workshop for your organisation can be conducted in person or virtually; there are pros and cons to both. It will take 4-6 hours to complete and there may be some preliminary work required by either the facilitator or the client organisation or both, depending on specifics.

What To Do Next

Get in touch for more information and to explore the specifics of a Scenario Planning Workshop for your organisation.

“If I could use an analogy, it’s taken the fog off the windscreen and allowed us to see with much more clarity the choices in the road ahead”

John Downie, Endura Light

“Evan’s Scenario Planning session was crucial in helping us navigate through the COVID-19 situation, helping us see a wider picture of what we need to be prepared for.
“I would recommend this for any small business owner to help with their strategic thinking and not make knee-jerk reactions.”
Ephraim Ritikos, Web Design Market