Using Scenarios to Plan for Tomorrow
Imagining the Great Unknowns
Authors: Rosenberg, Mike
Date: First Quarter 2012
Tags: future, scenario planning, forecasting, decision making, climate change
While business planners often resort to forecasting to estimate outcomes at some future point in time, the author believes forecasting has serious limitations and is not a reliable guide for the long-term future. Instead, he recommends scenario planning as a superior way of envisaging the future, in order to help managers see the business environment more clearly and make better strategic choices. Using the considerable experience of Shell in this area, he sets out a simple seven-step scenario planning process, which managers can use in one day or two half-day workshops. Doing this will bring organizational learning, challenge executive assumptions, broaden management perspectives and help everyone to see the business environment in which they operate as a complex, nonlinear system. This article includes an interview with Angela Wilkinson, who spent a decade as a leading member of Shell's global scenario team. She shares from her own personal experience of using scenario planning, suggesting who and how many should be on the team, and how often scenarios should be revisited. "In today's world of uncertainty, it's not enough just to analyze situations," she says, hinting at a new approach she calls "collaborative futures."
Tools and Frameworks:
> "The Failure of Forecasting" shows the limits of standard forecasting methods for oil prices.
> "Scenario Planning Process" proposes an exercise that can be done effectively in one day or two half-day workshops.
Intergovernmental Panel on Climate Change, Royal Dutch Shell, Yom Kippur War, Soviet Union, media industry, financial crisis
Based on the author's own professional background working in the automotive sector and offshore drilling industry, his consulting work, and his teaching of MBA students and Executive Education participants. Distills some concepts from Shell's well-developed work in the area of scenario planning.
About the Author:
Mike Rosenberg is an assistant professor of Strategic Management at IESE.