“Nobody understands how the world will change. The only way you can plan for the future is to have scenarios. You must have the courage to leap of faith in one of them”.
Anand Mahindra
Introduction
Since the 1970s, Royal Dutch Shell has been a significant player in scenario planning, a method that can aid in making accurate forecasts of the future. Shell’s unique way of planning for possible futures comes from the work of Pierre Wack, a French futurist who worked for Royal Dutch Shell in London in the 1970s.
Wack’s perspective on scenario planning was more about preparing scenarios and reducing the uncertainty of events that might occur in foreseen futures than making predictions for a future that he saw as fundamentally unpredictable. Scenario planning aids in the development of three solid foundations for those in charge of making decisions:
- Acknowledge uncertainty
- Attempt to understand the uncertainty
- Make uncertainty part of the reasoning process
Additionally, scenario planning can help businesses make better decisions by providing a range of possible outcomes by thinking through different possible consequences.
But what are the advantages of scenario planning?
There are many benefits to scenario planning. One of the main benefits is that it allows businesses to consider possible events and how they could impact their organizations. It also helps companies identify potential risks and opportunities, which can help them make better future decisions.
How to conduct scenario planning sessions
The first step in conducting a scenario planning session is identifying potential scenarios that could impact your organization. Once you have a list of scenarios, you can begin to develop possible responses. The next step is to simulate how each response would play out in each scenario to help you determine your organization’s best course of action.
What are some common pitfalls in scenario planning?
There are a few common pitfalls that can occur during scenario planning. One is that the scenarios may be too optimistic or pessimistic and not reflect the most likely outcomes, or the scenarios may need to be more realistic. They may not reflect the current state of the business or the industry. Finally, the scenarios need to be more achievable or practical to achieve the business goals.
Finally, after weighing the pros and downsides of adopting scenario planning, the advantages far exceed the negatives, allowing businesses to develop projections that can provide insights to manage better any unforeseen occurrences that may occur in the near future.
About the Author:
Loay Dirar, educates, writes, and advises on strategy development and implementation, as well as change management and risk management for major regional organizations in the Middle East and North Africa. He has 19 years of management experience, including ten years as a manager in multinational subsidiaries of organizations based in the Middle East and North Africa (MENA).
