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Scenario Planning: What, When and Why?

Jerine Clarke- 620154474

Scenario Planning: What, When and Why?

Jerine Clarke- 620154474

“Startups don’t fail because they lack a product , they fail because they lack customers , a profitable Business Model and Scenario Planning ”

What is Scenario Planning

History Development and Application of Scenario planning

Methodology of Scenario Planning

Objectives

Approaches to Scenario Planning

Application of Scenario planning

Tools and other approaches to scenario planning / Benefits

Weaknesses and challenges to Scenario Planning

What is Scenario Planning? Scenario planning is a strategic method for preparing for an uncertain future by creating plausible, detailed scenarios based on key trends and uncertainties, then analysing how each scenario might impact an organisation. It also explores multiple potential futures to help businesses make informed decisions, identify risks and opportunities, and develop flexible strategies for long-term resilience.

Brief Overview of Scenario Planning

Brief Overview of Scenario Planning

The History development and Application of Scenario Planning

Over the course of decades Scenario Planning has evolved as one of the greatest strategic planning technique and tool to utilise within the business sector, However before the massive gain in popularity, it started off as military based.

Scenario Planning was Developed by Herman Khan at the RAND Corporation in the 1950s for military Strategy and the study of Futurology . However it gained massive attention due to corporation wide use. This all started with the Royal Dutch Shell oil company in the 1970s where oil crises was at its peak. Piere Wack utilised this tool to combat the oil crisis showing the true power of Scenario Planning and the importance of managing uncertainty within the business.

The shell Company utilised strategic foresight such as coining scenarios to prepare for at the time the potential decline in the oil supply and overcapacity.

METHODOLOGY OF SCENARIO PLANNING

The Methodology of Scenario Planning involves identifying a central strategic question, defining key driving forces and uncertainties related to that question, and finally, developing several plausible, detailed narratives of different potential futures. Though these scenarios are not predictions but rather imaginative, strategic tools ,that are used to prepare for various potential outcomes by analysing their potential impacts and formulating adaptive strategies.

Core Processes conducting Industry Scenario Planning

1. Define the focal question and Scope
2. Identifying key drivers and Uncertainties
3. Develop plausible scenarios
4. Explore Implications and identify Strategic Responses
5. Monitor and Adapt

• Focus on Uncertainty:

The fundamental goal is to manage uncertainty, not to predict the future.

Key principles

01.

Foster and Wilson (1998) Alluded to that There are several methodologies to constructing scenarios, from simple approaches to more elaborate and detailed ones. However The process should develop a list of key drivers and their interrelationships.

• Broad Perspectives:

The process benefits from a diversity of people and perspectives, drawing on data, insight, and experience.

02.

Approaches to scenario Planning

There are many approaches to conducting Scenario planning however Randal and Fahey (1998) categorises this into two main categories Future backward otherwise referred to as “ Normative” and Future Forward otherwise referred to as “Exploratory”.

• Future Forward involves envisioning a range of potential future scenarios and using them to develop more robust and adaptive strategies for navigating the present.

• Future Backward involves learning from the past and present to identify trends and uncertainties.

Backcasting: What , When & Why?

“When” & in “What” circumstances is Scenario Planning Applied ?

Scenario planning is useful when organisations face high uncertainty and long-term decision making challenges. Due to the fact that it prepares for possible futures rather than a single plan. Examples of circumstances where Scenario Planning is most useful:

1. Jamaica exploring climate adaptation strategies that depend on sea-level rise, tourism trends, migration, and trade.

Tools & other Traditional Approaches to Planning

Some Scenario Planning tools can be divided into templates and Frameworks that guides the creation of scenario narratives . These includes : the pestle, S.W.O.T Analysis and the Ghantt charts etc.

• There are also other traditional approaches to planning such as Foresighting and Forecasting.

• Forecasting -Predicts what is likely to happen based on trends and data
• Foresighting - Explores what could happen, including multiple futures

Benefits of Scenario Planning

• It can be used as a method of risk management.

• It democratises the process by involving the decision makers, thus improving the chances of understanding, owning, implementing and acting on the implications of the scenarios.

• · It can help to create more robust strategies that are better able to survive shocks (De Meyer, Loch and Pich 2002).

Weakness & Challenges to Scenario Planning

• It is therefore important to recognise that scenario planning merely a technique, and one that can be easily misunderstood and be difficult to use properly. This means that it is important to recognise when it is appropriate to use the technique, who should use it, and to identify the scope (Hawkins 2002), not making it too broad. Scenario planning can improve judgement, but it is not a panacea and cannot replace good judgement (Stauffer 2002; Wood 1997).

• Subjectivity and Bias- The process often relies on human judgment, which can introduce bias and Scenario selection may reflect the views of dominant voices in the room.

• confusion about roles

• failure to develop a clear road map

• developing too many scenarios

Thank You

Jerine Clarke-620154474

References

https://www.mona.uwi.edu/marcom/newsroom/entry/7669?utm_source https://www.monatechengineering.com/jm/ Liam Fahey, Learning from the Future: Competitive Foresight Scenarios.