Scenario Planning for Organizations
Scenario planning is the creation of multiple story plots of plausible futures for a particular organization’s range of issues.
These stories or scenarios simplify volumes of organizational data by weaving them into narratives that are easier to understand. The relationships among the key external forces (social, technological, economic, environmental, and political) that could influence the organization’s future are also carefully factored into the stories to explore the relationships and the possibilities, stimulating the quality of decisions about how things might work in the future. These stories help decision makers to reframe their mental models and consider changes they would otherwise ignore. The shift in how they look at what is going on around them makes scenario planning a powerful tool for strategic thinking.
Royal Dutch/Shell is the most famous organization that has used scenarios since the early 1970s. Pierre Wack and other planners at Shell wrote up two scenarios one of which was an oil price crisis sparked by OPEC. The rest is history but the breakthrough was the change in organizational behavior among managers at Shell. Scenario planning is now part of Shell’s organizational process for generating and evaluating strategic options.
First, contingency planning examines only one uncertainty, such as “What if we don’t get the patent? ” Scenarios explore the joint impact of various uncertainties.
Second, sensitivity analysis examines the effect of a change in one variable, keeping all other variables constant. Scenarios change several variables at a time, without keeping others constant.
Third, scenarios are more than just the output of a complex simulation model. Scenarios go beyond objective analyses to include subjective interpretations.”
“Scenario planning differs from other planning methods such as contingency planning, sensitivity analysis, and computer simulations.”
CIVIC SCENARIO PLANNING (www.generonconsulting.com)
The purpose of a civic scenario project is to build the leadership to change the course of a country’s history. A group of influential leaders—a microcosm of the society, representing all the principal stakeholders—works together to uncover what has happened, is happening, might happen, and should happen in their country, and what they must do and cannot not do, to enact that vision.
Through a structured process of action and reflection, with each other and with other societal leaders, they build the shared understanding and commitment necessary to bring forth a better future.
FOUR TYPES OF PROJECT RESULTS CAN BE SEEN:
1. REFRAMED MENTAL MODELS
All of us operate from maps or models in our heads about how the world works. Sometimes these maps are accurate and helpful representations of reality, but they can also be woefully incomplete, inaccurate, and misleading.
Scenario thinking helps us improve the quality of our models by articulating them, sharing them with other people who have different perspectives and models, and together trying out new models by developing alternative stories (scenarios) about how things have worked, do work, and might work in the future. A primary result of scenario work is therefore a “reframing” of our pictures of the world—a shift in how we look at what is going on around us.
- One of the major reframings at Mont Fleur involved the recognition that a successful move away from apartheid would require navigating not only the political, military and constitutional transitions that were receiving most of the attention at the time, but also an economic one, which was not.
The Icarus scenario specifically pointed out that the obvious economic solution—quickly redistributing wealth from rich whites to poor blacks—could not work.
- A significant reframing of Vision Guatemala was that understanding the country’s past, present and future required understanding the reality of the country’s indigenous majority. This enlarged perspective put the previously marginal issue of multi-culturality into the center of the national strategy conversation.
The Vision Guatemala scenarios showed that development of such shared understandings in the society at large is a prerequisite to Guatemalans being able to construct a better future together. One government participant said, “I believe the greatest contribution of the project is that the country now has a group of persons who have the capacity to see things from a different perspective and can therefore help others do the same. ”
2. SHARED COMMITMENT TO CHANGE DEVELOPED THROUGH DIALOGUE
No one person or institution alone can effect societal change. Yet for collective action there must be some measure of shared perspective: a common mental model, a shared vision, a jointly-told story. Scenario processes that are organized as open and constructive conversations among stakeholders help build the mutual understanding, trust, and sense of community that make this possible.
- In South Africa, the Mont Fleur process—together with countless other projects, workshops and meetings—built the foundation of relationships on whicH the “miraculous” 1994 shift to majority rule could be built.
- In Vision Guatemala, the team members were able to see and listen to each other with empathy, and this opened the door to honest and open dialogue, including about areas of wrenching disagreement. Out of that dialogue emerged the shared imperatives that inform the scenarios. The team has also become an important symbol and model of cross-sector networking and collaboration in Guatemala.
3. REGENERATED ENERGY AND OPTIMISM
Achieving collective forward movement requires energy, which in turn requires hope.
In the fearful and confused South Africa of the early 1990s, the Mont Fleur Scenario team’s message that a positive Flight of the Flamingoes future was possible had a strong impact. One of the team members said, “We mapped out in very broad terms the outline of a successful outcome, which is now being filled in. We captured the way forward of those of us committed to finding a way forward”.
The Vision Guatemala team went further in explicitly developing a preferred scenario or vision in Flight of the Fireflies. They were conscious of constructing these stories as a tool not merely to study or anticipate the future, but to contribute to shaping the future by engaging in dialogue with their fellow citizens.
4. RENEWED ACTION AND MOMENTUM
Ultimately change requires not only new thinking and relationships and energy but also the new action that these developments allow and catalyze.