Unpacking Scenario Methods: Battle of 6 Approaches

 Understanding and navigating your organization's complex and rapidly shifting environment requires a strategic approach—one key component of which is the creation of multiple, distinct scenarios. Rather than relying on a single, implicit or explicit scenario, it's vital to explore various outcomes to fully prepare for unexpected changes.

Think of it this way: we live in a world full of unpredictability, where new technologies, emerging social movements, and global events are continually reshaping our future. Your organization might be set to launch a revolutionary product based on today's trends, but what if a competitor surprises the market? Or a sudden regulation changes the game? Or a disaster impacts your supply chain? Each of these instances could dramatically influence your product and organization's future.

It's clear that today's decisions significantly shape our future. So, we must consider the possibility that our actions could alter that future. For instance, an investment in a promising technology may later reveal negative impacts on employee health or the environment, which could, in turn, affect your organization's future and reputation.

Develop Multiple Independent Scenarios

To be better prepared for these situations, it's crucial to create and analyze a variety of independent scenarios. Best-case scenarios illuminate our goals, worst-case scenarios help us avoid pitfalls, and wildcard scenarios prepare us for surprises.

Let's break down these scenario types:

**Best case scenario**: Here, you focus on the most positive potential developments and trends. This scenario serves as a roadmap, guiding you towards your ideal future. For example, an organization looking to expand market share might envision a loyal customer base, innovative products, and strong partnerships.

**Worst case scenario**: This scenario, conversely, focuses on the most negative potential trends. It's a warning, showing what could go wrong and how to avoid those pitfalls. In our market expansion example, losing customers to competition, failing to innovate, or dealing with legal issues could be potential threats.

**Wild card scenario**: These scenarios deal with unexpected events or developments that could greatly influence the future. For a market-expanding organization, a wild card could be discovering a game-changing technology or dealing with a global pandemic.

Remember, these scenarios are just possibilities. The future isn't set in stone, and any of these scenarios could become reality. However, we can better understand our challenges and opportunities by exploring these scenarios and making informed decisions.

How to Create Scenarios

There are roughly 6 different types of scenario planning methods. The best scenario planning method depends on your organization's specific needs. However, all methods follow the same basic steps:

1. Determine what you'll use the scenarios for (be as specific as you can);
2. Do a wide sweep of the information on expected change in your organization's context, relevant to the scenario's aims;
3. Analyze the information and synthesize it into two crucial developments
4. Extrapolate the two developments to possible extremes and use that to build a matrix
5. Create a scenario for each of the matrix cells

Comparing Scenario Planning Methods

Here's an overview of the six types to help you pick the one that best suits your needs. It's also handy information for briefing your scenario planning team or facilitating consultant on your scenario requirements.

I've excellent results with type 1 (intuitive logic), 5 (soft systems), and 6 (critical uncertainties). So, if you have questions about those types, feel free to ask them in the comments.

Scenario Planning - Who Has Time for That? 

Exactly. Scenario planning takes a lot of time and effort from you and your stakeholders. So:

• Only start a full scenario planning exercise when your organization really needs it. Use the free resources to design and facilitate it (see overview of posts).
• Or find out if you'd like my help. Read more here.
• Do the Scenario Planning Sprint when you have little time. Taking these steps will give you a good sense of possible futures, without the hassle. Plus, it won't break the bank: it costs €15,-.
• If you have scenarios, but they need updating or scaffolding, download Prediction 101 for free.
• Critique the scenario's of your competitors and substitutes in all other situations. Notice how they structure their scenarios, identify variables, and interpret the results. Understanding how others approach scenario planning can help refine your process and ensure you're better prepared for the future.