What is Scenario Planning

7/27/2019 What is Scenario Planning

1/14

What is Scenario Planning?Predicting is difficult!

Future-gazing and making accurate predictions is notoriously fraught withdifficulty. Scenario planning, by using trend analysis as its base, keeping afocus and reigning in the prediction period to somewhere around the 10-yearmark, helps build tests of plausibility into the process.

The Evolution of Scenario Planning

Some Predictions

1901The world market for cars is 1 million

1943There is a world market for maybe 5 computers - Chairman, IBM

1968There is no market for Japanese cars in the USA

1977There is no reason why everyone should have a computer - CEO, DEC

1978All offices paperless by 1990

Scenario planning or scenario thinking is a strategic planning toolused to make flexible long-term plans. It is a method for learningabout the future by understanding the nature and impact of the mostuncertain and important driving forces affecting our world.

Many of the regular methods for strategy development assume thatthe world in three to ten years' time will not significantly differ fromthat of today and that an organisation will have a large impact on itsenvironment: they assume we can mould the future. Scenario planninghowever assumes that the future can differ greatly from what we knowtoday.

The method is based on creating a series of 'different futures'generated from a combination of known factors, such asdemographics, with plausible alternative political, economic, social,technical, legal and environmental (PESTLE) trends which are keydriving forces. The goal is to craft diverging worlds by extrapolatingthese heavily-influencing driving forces. The technique can also includeanticipatory thinking elements that are difficult to formalise, such as

7/27/2019 What is Scenario Planning

2/14

7/27/2019 What is Scenario Planning

3/14

2. Keep it simple3. Keep it interactive4. Plan to plan and allow enough time5. Don't settle for a simple high, medium and low6. Avoid probabilities or 'most likely' plots7. Avoid drafting too many scenarios8. Invent catchy names for the scenarios9. Make the decision makers own the scenarios10. Budget sufficient resources for communicating the scenarios

(from 'Plotting your Scenarios', Ogilvy and Schwartz)

...and traps to avoid: Some Do's and Dont's

Do make the scenarios global enough in scope

Do ensure you focus the scenarios in areas of potential impact on theenterprise

Do treat scenarios as an informational or instructional tool rather thanfor participative learning and/or direct strategy formation

Do ensure adequate process for engaging management teams in the

scenario planning process

Do use experienced, or at least well-briefed, facilitator(s)

Don't treat scenarios as forecasts

Don't construct scenarios based on too simplistic a difference - suchas optimistic and pessimistic

Don't stint on the imaginative stimulus in the scenario design

'How To...' : A Step-by-Step GuideThere are a number of approaches to scenario planning and the widerange of literature available covers a range of suggested steps whichvary in number and priority but there is a high degree of commonalitywhich we've incorporated into this step-by-step guide. There are arange of activities and techniques referred to that you can apply to the

7/27/2019 What is Scenario Planning

4/14

tasks, and we've covered some of the best ones in the subsequent'Applying Creativity' section. Some steps also include downloadableworkshop structures for you to take away, tailor and use.

Scoping

What is the question/issue you want to answer/address?

Before you launch into a scenario planning exercise it is vital that youscope the situation first. By going through a scoping exercise you willbe able to ascertain whether or not your situation and what you are

7/27/2019 What is Scenario Planning

5/14

trying to achieve are best suited to being applied to a scenarioplanning activity.

You may discover, for instance, that your issue involves only smallchanges or a few elements in which case it may be useful to apply a

method other than scenario planning - which traditionally considerssituations on a larger scale. The core issues and problems to beaddressed can be identified at this stage. Identify the key decisionfactors (what would you like to know about the future in order to makea decision?). You will also be able to identify the emphasis of theprocess on the testing of existing ideas, the generating of new ideas,or the integrating of elements into a coherent strategy.

Spending time from the outset on identifying where you are and whatyou are hoping to get out of an exercise such as this can bring benefitsat later stages. You may find it useful to stage a 'mini' workshop orconduct a small number of interviews within your organisation in orderto define what you want out of the situation and what your ambition isfor it. You can also identify what your playing field or solution space isgoing to be and set out the quality aims of the project. It is also usefulto agree on the overall assumptions that will be made for the basing of the scenarios.

Trend Analysis

In order to make any kind of prediction of what might happen in thefuture it is important to have an understanding of what is happeningnow - within the sector, the country or globally. The best way to dothis is to monitor and analyse trends and scan the currentenvironment. There are a number of tools available to support you inthis activity - a particularly useful one is PESTLE (Political, Economic,Social, Technological, Legal and Environmental) analysis to help you toidentify the different forces in play in a particular situation.

We use PESTLE analysis in a number of our resources and furtherbackground is available in the tools catalogue.

Related resources

PESTLE Analysis

The PESTLE approach can be known by a number of differentacronyms including PEST, STEP and SEPTED (socio-cultural, economy,

7/27/2019 What is Scenario Planning

6/14

politics, technology, ecology, demographics) but generally they allfollow a similar framework and identify similar issues. The analysis canprove to be a very useful tool as it offers a wide ranging frameworkfrom which to build the scenarios.

It is important that the analysis and scanning activities are asthorough as possible in order to identify and measure the impactingfactors that need to be considered and to provide the best possibleconditions in which to generate the scenarios.

Hold comprehensive interviews/workshops about how participants seebig shifts coming in society, economics, politics, technology, etc.Assess to what degree these trends will affect your situation. Describeeach trend and how and why it will affect the organisation. You mayfind that using a technique such as brainstorming works well inrecording group thinking and generating quantities of ideas in this typeof analysis exercise.

Once the forces have been identified it is useful to rate them in orderto gauge their potential influence and impact - it may be that yourorganisation cannot influence what is happening but it may well feelthe impact when it does.

Building Scenarios

Once you have undergone all of the preparatory work you are in aposition to begin to build the scenarios.

In this case, you may want to use one of the various levels of detailalready presented here as the Scenario Sets, given they build from ageneric, well-accepted set of global scenarios, up through highereducation and ICT to lifelong learning and learning providers. You canuse them either as they stand or add further refinement or a particulartopical slant to them.

Workshop Plan

We recommend running a workshop-type event if you are developing orenhancing existing scenario sets. A suggested workshop plan is includedhere.

Download workshop plan

7/27/2019 What is Scenario Planning

7/14

If you are refining these, or building your own scenario set, you can atthis stage produce several examples of worst case and best casescenarios - it's often quantity rather than quality that is useful at theinitial stage as you can refine, amend and reduce as a result of discussions in your group as you go along. You may find that a

brainstorming or similar technique can help at this stage. There areseveral approaches to scenario building available; we find the followingapproach useful.

The scenarios are constructed by identifying the main driving forcesbehind the trends identified during the trend analysis stage. Eachdriving force has an opposing force, therefore effectively forming apair. The two most important pairs become the axes that carve out thescenarios resulting in 4 scenarios.

The trends are then mapped onto the scenarios. In order to give arealistic dimension to the scenarios, and help the participants feelactively engaged, you can apply a mix of storytelling, visualisation andenactment techniques. Immersion into the scenario by participants isthe best way for the potential impact and consequences of it to beexperienced.

The example below shows the 'Edinburgh Scenarios' - four globalperspectives that could inform the future of e-learning which weredeveloped by an international panel.

7/27/2019 What is Scenario Planning

8/14

Generate OptionsGenerate options to:

Define new services, courses, products Select new technologies Focus skills development Develop new strategies

In this stage options are generated for each of the identified scenarios.The team involved in the scenario planning activity can, depending onthe scope of the project, identify new and innovative services,technologies, markets, partnerships or processes that can be appliedto the scenarios.

There are a number of activities that can help support this exercise,the News Headlines activity can be an ideal way to stimulate ideas andthink about the issues involved and the potential influences andimpacts.

7/27/2019 What is Scenario Planning

9/14

7/27/2019 What is Scenario Planning

10/14

Test OptionsActivity Plan

Set up a workshop for participants to test the options generated in theprevious stage (new products, services, strategies, etc) against each of thescenarios.

Depending on time, number of participants, scope, number of optionsto test, etc, there are a number of options you have about how to organisethe group. For smaller groups they could work as one collective team testingeach option against each scenario in turn. For larger scale, you could dividegroups into scenarios, so they test each option against their given scenario,or into options, where they test their given option against each of thescenarios (this does require knowledge of each scenario as a pre-requisite).

The intended outputs of such a session are to have created an OptionsMatrix (or equivalent, such as the Boston Matrix) for each option against thefour scenarios. Added value is achieved if you can also improve thedefinition and detail of the best options along the way.

Download a more detailed workshop plan here

Identify and discuss potential implications and impacts of scenarios.

Having generated new or existing strategy elements, services,technologies, markets, partnerships or processes to link to thescenarios it is then important that they are tested (or 'wind-tunnelled')

for robustness. The central question to be answered is 'how well willthese ideas work out in the four scenarios'.

This is an iterative process and can often offer a better understandingof the way that ideas can be further developed and implemented. Asuggested approach for establishing this is to first brainstorm theissues and possibilities and then follow this up with structureddiscussion within the team or group in order to ask appropriatequestions and seek answers in order to identify and rate enabling andconstraining factors. The results can then be summarised in an 'optiontable'. This example shows the use of a 5-point grading scheme, using

+ and - to denote positive or negative consequences (i.e. the scale is++, +, 0, -, --).

An alternative approach to the 5-point scale is the use of the BostonMatrix .

7/27/2019 What is Scenario Planning

11/14

Household consumption savings option :

Example summary of a test options debate.

Cautious World:

Consumers willing to save energy because they're sensitive to ecologicalconsequences but they don't have that much money to spend. A majority(80%) will respond to government energy promotion campaigns if theinvestments are small and payback time is short.

Future Unlimited:

Energy bills for most households no big issue. Energy saving can only be soldif the design is consistent with the consumer's lifestyle. Governmentcampaigns will only reach a limited group of consumers (eco-consumers andthe poor). In this world, integrated energy systems will have more successbecause they deliver a more comfortable living environment.

Satisfied Citizens:

7/27/2019 What is Scenario Planning

12/14

Consumers are also very willing to save energy because they are sensitive toecological consequences of energy use. A majority of consumers (70%) willrespond to messages from energy promotion campaigns.

Challenging World:

Almost all consumers are open to ways to save money, although savingstrategies for households that need big investments and long paybackperiods are unpopular because of the economic situation.

Action Plan

What should we do (or not do) to be successful in thisscenario?

Having worked your way through the other steps it should now bepossible to establish an action plan in order to move forward. Theaction plan will be defined based on the test results, the internalambitions of the organisation, as well as the strengths and weaknessesthat have been identified.

Typically, your scenario planning activity fits neatly in the overlapbetween organisational strategy, environmental analysis (your

7/27/2019 What is Scenario Planning

13/14

PESTLE) and more definite elements of forecasting (such as plannedstudent numbers or likely grant allocations), although there may beless obvious connection with these if using the technique for a morelocalised issue or project.

If you have undertaken Scenario Planning as a strategic tool, you cantherefore use your resultant action plan as a mechanism to influenceyour operation towards achieving your strategy - this is an area thatJISC infoNet will be addressing over the coming months; more aboutthis in the 'Moving Forward' section.

Action Plan

What should we do (or not do) to be successful in this

scenario?Having worked your way through the other steps it should now bepossible to establish an action plan in order to move forward. Theaction plan will be defined based on the test results, the internalambitions of the organisation, as well as the strengths and weaknessesthat have been identified.

7/27/2019 What is Scenario Planning

14/14

Typically, your scenario planning activity fits neatly in the overlapbetween organisational strategy, environmental analysis (yourPESTLE) and more definite elements of forecasting (such as plannedstudent numbers or likely grant allocations), although there may beless obvious connection with these if using the technique for a more

localised issue or project.

If you have undertaken Scenario Planning as a strategic tool, you cantherefore use your resultant action plan as a mechanism to influenceyour operation towards achieving your strategy - this is an area thatJISC infoNet will be addressing over the coming months; more aboutthis in the 'Moving Forward' section.