Scenario Planning - How Scenario Planning Works, The History Of Scenario Planning, The Future Of Scenario Planning

Throughout most of the 20th century, business moved at a relatively slow pace. By the early 2000s, however, the business climate had changed significantly. The widespread adoption of the Internet and other communication devices allowed information to travel more quickly, and enabled consumers and companies to do business with one another across the globe. Along with the brisker pace came greater complexity. Combinations of many different factors impacted the success or failure of a company or industry in a short period of time. Among these factors were pressure from investors, the demands of customers, the impact of new technologies, domestic and international government regulations, legal issues, the environment, and even the cost of shipping products. In this more complex, uncertain environment, it became increasingly difficult for corporate executives to make important decisions and position their companies for success.

While it is not possible for executives to totally predict what impact factors such as these will have, it is possible for them to develop simulations or scenarios that paint pictures of what future conditions might be like if certain things were to happen. This approach is known as scenario planning. The purpose of scenario planning is to identify several different stories about, or visions of, how large-scale forces will have an impact over time. It is not used to predict specific future events. It is in this regard that scenario planning differs from other kinds of forecasting or trend analyses that companies use to assist them in the decision-making process. Instead of forecasting only one version of how things might evolve or develop, scenario planning involves painting several different pictures and takes into consideration the fact that the future is uncertain and can't be predicted.

Because of its large-scale focus, scenario planning often is used to study issues surrounding entire industries or nations. However, the approach also can be used to focus on smaller issues that are important to specific companies or organizations. Among those who have used scenario planning are the United States Postal Service, Levi Strauss, National City Corp., General Electric, Ericsson Inc., British Airways, IBM, Motorola, AT&T, United Distillers, Royal Dutch/Shell, and numerous retailers.