Using Scenarios - The Key to Effective Planning in an Uncertain World
by Craig Hibberd
Scenario planning done well, is about action and moving forward in times of uncertainty when traditional planning has limited use.
More and more we find ourselves planning for the future in a highly uncertain world, with a large number of diverse interests to be satisfied. The pace of change, increasing flow of information, and complexity of decisions brings about an almost certain planning gridlock. Asking for more information compounds the problem rather than making decisions easier. "Scenario planning" is well suited for this kind of planning environment.
However, the focus is on making good decisions rather than predicting the future accurately. By developing a few logical, realistic scenarios about the future, we have a way test test alternatives. These future scenarios are stories about the future that are realistic, logical, and plausible under the right circumstances.
Royal Dutch/Shell developed scenario planning during the oil crises of the early ‘70’s. Shell planners saw the beginnings of fundamental changes occurring in the industry, and were able to position Shell to take advantage of a very chaotic and uncertain situation. Scenario planning challenged corporate assumptions and allowed Shell to deal with these uncertain times and move from the smallest of the seven major oil companies to the number two position in the industry. 1
Peter Schwartz, head of Group Planning for Royal Dutch/Shell and a Rocky Mountain Institute (RMI) board member, explains scenarios this way:
"You can tell you have good scenarios when they are both plausible and surprising; when they have the power to break old stereotypes; and when the makers assume ownership of them and put them to work. Scenario making is intensely participatory, or it fails." 2
Peter’s GBN associate, Lawrence Wilkinson wrote the following about scenario planning for Wired Magazine:
“To find that ‘robust' strategy, scenarios are created in plural, such that each scenario diverges markedly from the others. These sets of scenarios are, essentially, specially constructed stories about the future, each one modeling a distinct, plausible world in which we might someday have to live and work.” 3
"Futures Workshops" based on scenario planning have been held for three electric utilities, one in Texas, and two in New Mexico. Scenarios were used to develop various plausible futures, strategies that make sense across all futures were developed, and actions plans were put in place.
The Electric Power Research Institute (EPRI) also offers scenario planning for its utility customers. This use of scenario planning has been specifically adapted for electric utilities who are moving from a regulated to a competitive environment.4
1 "The Fifth Discipline - The Art and Practice of the Learning Organization" Peter M. Senge, Doubleday, 1990p 178.
2 "The Art of the Long View" Peter Schwartz, Currency Doubleday, 1996
3 "How to Build Scenarios - Planning for ‘Long Fuse, Big Bang’ Problems in an Era of Uncertainty" p77, by Lawrence Wilkinson, Special Edition, Wired Magazine, November, 1995
4 "Windows on the Future - Using Scenarios to Envision the Impact of Future Uncertainties on Utility Markets" Electric Power Research Institute, September 1993, Report # TR-102567
