Scenario Planning

Synopsis

As a decision-maker, you must react quickly and confidently in any type of situation, which means, you always have to have a plan, or better, several of them. This Scenario Planning presentation includes customizable slides to help you gain insights into schedules, budgets and forecasts, key growth factors and potential threats of upcoming events. With this presentation, you can calculate and document every action to gain a competitive advantage.

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Slide highlights

Use this slide to create a scenario planning map. This map can consist of different parts with the purpose to illustrate and balance different strategic dimensions in a realtable way.

Utilize [bold]Scenario Planning Matrix[bold] to develop an agile response strategy. Include as many details as possible to evaluate the likelihood of the success or failure of various strategic alternatives.

The idea behind "funnel model" is that the farther we look from today's viewpoint into the future, the higher is the number of probable developments. Use this slide to make predictions for many possible future scenarios rather than just one.

Overview

In his book "Scenario Planning: A Field Guide to the Future," Woody Wade said: "The problem with the future is that it is different. If you are unable to think differently, the future will always arrive as a surprise."

To train yourself to think differently about the future, you can use scenario planning. Scenario planning is a tool that considers hypothetical stories in order to change the thinking, actions and processes of teams so that they are better equipped for tomorrow. Scenario planning aids leaders in defining scenarios of potential outcomes and risks, examining responses and managing in advance for positive and negative possibilities.

When businesses visualize the bigger picture, taking into consideration potential risks and opportunities, they become more proactive rather than reactive to future events. In fact, a survey of 77 large companies conducted by René Rohrbeck of Aarhus University and Jan Oliver Schwarz of Germany's EBS Business School, discovered that formal "strategic foresight" efforts add great value through an enhanced capacity to perceive change; an enhanced capacity to interpret and respond to change; influence on other actors and an enhanced capacity for organizational learning.

Here are some key questions to ask, while working on your scenario planning:

• What is the issue that we are evaluating?
• How far into the future are we looking?
• What major external factors are likely to impact our probable scenarios?
• What major internal factors are likely to impact our probable scenarios
• What are the possible threats to the scenarios?
• Do we have the talent and skills, data, technology and equipment and other resources to build and keep up our scenario plans?

Statistics

A recent study from a strategic planning firm, On Strategy, showed that:

• 95% of a typical workforce doesn't understand its organization's strategy
• 90% of organizations fail to execute their strategies successfully
• 86% of executive teams spend less than one hour per month discussing strategy
• 60% of organizations don't link strategy to budgeting

Case studies

Royal dutch shell

Things have really picked up for a British-Dutch oil and gas company, Royal Dutch Shell, commonly known as Shell, when in 1965, Shell's head of economics and planning for exploration and production division, Jimmy Davidson, and the company veteran, Ted Newland, launched the "Long-Term Studies" initiative.

Newland recalls being put in a cubicle on the 18th floor of the company's London headquarters and asked to think about the future. "With no real indications of what was required of me," he told "Harvard Business Review." This strange appointment, however, gave birth to the still ongoing experiment of implementing scenario planning to predict risks and opportunities.

Today, Shell has a whole dedicated Scenarios team with expertise in a wide range of fields including economics, politics, energy analysis, climate policy, socio-cultural change and competitive intelligence. "The team's work helps explore possible versions of the future by identifying drivers, uncertainties, enablers and constraints, and unearthing potential issues and their implications," according to the company's website.

Shell's Scenarios team periodically releases publicly-accessible scenarios. Thus, for example, in 2013, Shell published new scenarios that explored two possible ways the 21st century could unfold, with dramatically different implications for society and the world's energy system. "One scenario sees cleaner-burning natural gas becoming the most important energy source globally by the 2030s and early action to limit carbon dioxide emissions. The other sees solar becoming the top source by about 2070, but with slower action to address the threat of climate change," Shell's website states.