Problem: If companies only plan for one future, they might be unprepared for big changes.

Solution: Use scenario planning to create multiple "what if" situations, so the company can handle different possible futures and stay flexible.

Intro:

Scenario planning, as outlined in The Art of the Long View by Peter Schwartz, is a strategic planning technique that involves creating detailed, plausible future scenarios to help organizations navigate uncertainty. Rather than predicting a single likely future, scenario planning encourages exploring multiple potential futures, fostering flexibility in decision-making and resilience against unexpected changes. This process doesn’t aim to pick a "most likely" future; instead, it equips decision-makers with the ability to act across diverse outcomes, making strategies robust and adaptable to various potential circumstances

Tool:

1. Identify the Core Decision:
• Begin by defining the central decision or issue the organization faces. This focal point should guide the scenario-building process and be relevant to long-term goals.
• Formulate this as a clear question, such as "What will happen if our main market faces disruptive competition?", or "How will climate change impact our organization in the next 20 years?"
2. Set the Time Horizon:
• Determine the most appropriate timeframe for the scenario. Scenarios often span 5 to 10 years, but this can vary based on the context of the issue being explored​.
3. Research Key Factors and Driving Forces:
• Key Factors: Identify internal factors crucial to the decision, like market position, resources, and technological capabilities. Analyze internal and external factors impacting the issue. This includes STEEP:
• Social
• Technological
• Economic
• Environmental
• and Political forces that could influence the focal issue.
• Some people include “Legal” as well
4. Rank by Importance and Uncertainty:
• Assess each driving force based on its impact on the decision and its uncertainty level. This step helps focus the scenarios on high-impact, high-uncertainty areas to highlight the most critical issues. Do this by plotting them on a 2x2 square.
5. Develop Scenario Logics:
• Define the basic framework or "logic" for each scenario. This involves selecting two key uncertainties as axes to create a matrix, resulting in four distinct scenarios.
6. Construct Detailed Scenarios:
• Build out each scenario with narrative detail, considering how the world might evolve under each set of conditions. Flesh out each quadrant to tell a story about a plausible (but distinct) future. Include a timeline, key events, potential challenges, and outcomes for each scenario. Describe how key factors interact within each scenario and consider the logical progression of events.
7. Analyze Implications and Rehearse Responses:
• Assess each scenario in terms of strategic implications. Evaluate how the core decision looks in each scenario, identifying vulnerabilities, potential adaptations, and opportunities. Assess how each scenario impacts the focal issue. This analysis helps organizations think through actions that would be beneficial across different futures.
8. Identify Leading Indicators and Signposts:
• Develop a set of indicators to monitor, signaling which scenario might be unfolding in reality. Define signals that can alert the organization if one scenario is beginning to unfold. These indicators are early warning signs that allow for timely adaptation. Regularly reviewing these indicators enables the organization to adapt strategies as trends clarify, providing early warning for significant shifts.
9. Engage in Strategic Conversations:
• Use the scenarios as a framework for strategic dialogue within the organization, promoting shared understanding and continuous learning. This collaborative process should inform decision-making at all levels, fostering alignment on long-term objectives