Scenario planning

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General principles

Scenario planning was invented in the 1960s by Shell. Its most famous application was its anticipation of the massive increase in crude oil prices by the OPEC countries in the early 1970s, and therefore of the future viability of exploiting North Sea oilfields.

There are many complex ways of doing scenario planning, but a simple process is based on creating alternative visions of the future and then developing a long term marketing plan for 2-3 scenarios, using “robust strategies”.

The scenarios are best developed by teams to ensure buy-in to the final results. People outside the organisation should also be “tapped”, either by direct involvement or through research.

The most important part of the process is to spend 50% of your time keeping top management informed of the progress of the scenario planning process. The biggest danger is that the scenario planning team becomes enthused about its visions of the future, but the top management considers them off-the-wall and unrealistic. As with all consultancy projects, the golden rule is therefore “no surprises”.

Scenario planning is most safely viewed as less trying to foresee alternative futures, and more challenging the validity of the current strategy from different perspectives.

The process

The three stages are:

1. general scenarios for 10-15 years
2. industry/topic specific scenarios for 5-10 years
3. long term marketing plan for 2-3 scenarios

Stages 1 & 2 (general/specific scenarios)

1. Define the scope of the scenario:
• clarify with creative problem solving techniques, such as word replacement, word diamonds etc.

2. Conduct general research:
• desk
• interviews
• focus groups/Delphi

3. Identify current trends (almost everything to happen in the next 20 years can be identified today in embryonic form, the so-called “weak signals”):
• use Post-it ® note brainstorming
• reverse key assumptions
• pick out most far-fetched ideas and get people to champion them/make them more realistic

4. Apply trends to a matrix of impact vs. likelihood:
• discuss each issue as to whether it is important or not, and whether it is certain to happen or may happen – split ideas if parts of an idea fall into different boxes
• be aware that those trends that are certain to happen will form the basis of any scenario; those that may happen will group into different scenarios
• discard those trends that are considered unimportant
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5. Work up 8-9 mini scenarios (aspects of the larger alternative scenarios to follow):
• identify 6-10 “key drivers” – the major themes that underpin all the trends
• get each member of the team (or sub-teams) to write up one mini scenario based on one of the 6-10 key drivers

6. Identify 3 major scenarios:
• the mostly likely scenario
• the scenario that offers the greatest opportunity
• the scenario that offers the greatest threat

7. Work on each major scenario:
• elaborate each scenario by defining the major issues
• test each scenario by suggesting the sorts of events that would have to happen for the scenario to be realised
• write up each scenario
• critique each scenario with a wider audience

8. Identify issues arising from each major scenario:
• what implications does each scenario have for the business?

Stage 3: long term marketing plan

1. Summarise the scenarios
2. Identify turning points:
• identify the main events/trends that will impact the organisation
• identify issues arising from each event/trend

3. Identify the robust strategies:
• identify strategies that are necessary to address the key turning points
• identify issues arising from each strategy

4. Compare robust strategies with current strategies:
• identify strategic gaps
• identify issues arising from the strategic gaps

5. Identify strategic actions required:
• identify specific actions
• prioritise actions
• allocate resources
• allocate timelines
• track to action

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