Reference no: EM133058585

Scenario Thinking

Introduction:

Scenario thinking is a powerful tool for building strategic thinking capability. At its most basic, scenario thinking is telling stories about possible futures to stimulate thinking about the present and the way our world of influence may unfold. Although it is often referred to as ‘Scenario Planning" this term is not really appropriate because it implies a sense of prediction, control or manipulation of the elements of the scenario. In most scenario thinking activities, it is not possible to control or manipulate the elements. Scenario thinking is more about responding to possible changes in the external environment by asking "what if....? questions.

The modern use of scenario thinking was strongly shaped by the work and practice of a small group of innovative thinkers and planners in the Royal Dutch Shell company during the 1960s. The story of this work is told in the paper by Wilkinson and Kupers in the "Readings" section of this topic. The authors make the important points that scenarios are not about prediction; they are about plausible but not probable futures. They try to find a balance between being relevant to current situations and challenging to current mindsets.

While there are many ways of developing scenarios, the methodology employed by Shell, and its subsequent evolution, continues to be popular and widely used. The main steps in a typical process are:

1. Develop a clear and concise statement of the critical issue or problem.

2. Gather as much relevant information as possible including trend data and projections.

3. Identify the driving forces in the environment that could impact on the issue.

4. Select a small number of driving forces (usually between 2 and 6) that have the greatest potential impact on the issue. These become the scenario logics.

5. Select a position on each of the logics.

6. Develop stories about what the world would look like with different possible combinations of position on the scenario logics.

7. Working backwards from each of the scenario stories, describe a series of events that could lead to the scenario coming about. This could the form of a series of newspaper headlines - one headline for each year between the year of the scenario and the present time.

8. Look for possible early signs or weak signals that the scenario is starting to develop.

9. Consider the implications of each scenario for current strategies.