The Need for Organisational Resilience - Chapter 2

While scenario planning has its origins in military strategy studies, it was transformed

into a business tool by, among others, Wack (1985) and Schoemaker (1995). In contrast to

risk management that drives the anticipation of individual risks, scenario planning caters to

multiple future realities and encourages thinking to the extremes of what is possible and

plausible. The aim of scenario planning is the definition of a group of possible and plausible

(not necessarily probable) futures that should constructively challenge each other. In

comparison with traditional risk management, this approach does not aim to focus attention

on quantifying a single future; rather, it provides multiple, more abstract projections of

alternative futures.

Scenario Planning is a powerful tool if applied in a ‘safe’, non-threatening environment.

The culture of an organisation needs to be ‘open-minded’ for the effects of Scenario

Planning to take effect. It requires:

• receptiveness to multiple, sometimes divergent, perspectives;

• openness to having one’s views questioned and challenged;

• the use of a leader or facilitator who can manage the process of Scenario

Planning in a controlled but non-threatening manner;

• willingness to provide resources to deal with important scenarios that may occur;

• acknowledgement that Scenarios are uncertain in their predictive power and that

the ‘truth’ will not be forthcoming through this technique.

There is much written about Scenario Planning, so we will provide just a brief overview

here of the key stages to work through.

Identify the drivers in your industry (or project) that are uncertain. Some future trends

can be forecast with reasonable accuracy, for example demographics and population

growth. Others, though, are far more unclear. These can include, for example the future oil

price (a major issue in determining investment choices in the petroleum industry), anticipated

or unknown changes in the regulatory or political environment (upcoming elections create

uncertainty and often business investment is delayed until the outcome is known), regional

geopolitical uncertainty, future interest rates, or the impact of technological innovation.

Work out a response for each of these scenarios. This simple matrix allows a group to

understand the implications of each, and how they differ. The matrix shows the options, and

this can help facilitate decision-making. For example, if sales are low, we could respond by

increasing advertising, consider a pricing change or even a rapid redesign if customer

feedback indicates that some aspect should be modified. If sales are high, might we perhaps

even need to consider expanded factory capacity? A competitor product introduces different

challenges. How close is their alternative, and how does its performance and price

compare? This can lead to a wide range of response options. So, even with just two

23 | P a g e