User:Dr. Max Nyiri

An introduction in Strategic Scenario Planning, by Dr. Max Nyiri, Institute for Strategy and Complexity Management

What Is Scenario Planning? Before we get into the strategic planning aspect, it is useful to clearly define what scenarios mean within our context. Simply put, scenarios are stories about a possible future, based on the knowledge we have today, and taking into account the uncertainty of tomorrow. Uncertainty is at the root of scenario planning, for if the future were certain, forecasts would be a sufficient means on which to build strategic plans. The premise of scenario planning acknowledges that the future is never certain, that it is very much like a moving target where no single ‘accurate’ prediction can be inferred based on historical behavior.

Scenario planning is about exploring trends and providing an informed understanding of how things may develop in the future. This leads to better decision-making, more robust and creative strategies, and most importantly it provides a greater ability to minimize risk.

Changing Mindsets Another use or benefit of scenario planning is its ability to ‘open the eyes’ of people that have become rigidly set in their beliefs and behaviors, this is as important, if not more so than purely plotting scenarios. As illustrated in the earlier example, it did not matter that the authorities of Thailand were informed beforehand about the possibility of a tsunami hitting the coast of Phuket, no action was taken simply because they were too fixed in their mindsets. There was no precedent of a tsunami ever hitting the coast of Phuket, and therefore they refused to accept that such a possibility might occur, much to their own peril. Scenarios are not complex nor are they exclusive to the intellectual elite, the idea behind them is actually very simple, scenarios are used as tools to establish foresight with the ultimate effect of changing the mindsets of the people who use them. Therefore, the ultimate goal of scenario planning is not to predict every plausible future, but to highlight a number of possible futures to change the mental models of the people who use this tool. [www.viewpointmodel.org]

Scenario planning is all about being more constructive, to explore all the major issues that could affect your organization in this current climate, how these issues might play out and how to adequately respond. A direct result is that you will become more familiar and comfortable with how the future might unravel, far more sensitive to changes in the environment, which will enable you to read the signals early, and to act more quickly and effectively.

Why Employ Scenario Planning Many managers in organizations have a tendency in their planning to behave somewhat naively. They generally assume one future and plan their strategies to cater only to that one scenario. When that future does not happen, they usually react with shock and panic, and consequently their capacity to change, adapt and improvise is weakened. This single view of the future, whether it is a forecast or an expectation of continuity on the present, is a trap that many organisations and plans fall into. [www.corporatestrategies.org]

There are two central benefits to the development of scenarios. The first is that practitioners can examine strategic options against the various scenarios and Pre-View the possible effects of those initiatives and to better prepare themselves against possible complications. The scenarios plotted could also be used for the stress testing of possible strategies. The second benefit is that managers can examine the implications of scenarios so as to challenge the assumptions about the environment in which they operate. This point illustrates how scenarios can change the mindset’ of those who use them. This mindset of being open to future possibilities is important as it prevents managers for neglecting to consider long-term changes.

The use of scenarios allows an organization to be more likely to recognize changes in the environment and to adapt to them quickly. Quick adaptation to change is the result of being prepared for the change, through the use of scenarios. By quickly adapting to change, an organization can gain significant competitive advantage.