The Secrets to Successful Scenario Planning  

What Is Scenario Planning? [1]

'Scenario planning' is a form of strategic foresight in which organisations consider a variety of possible or probable futures.
Scenarios are not forecasts or predictions. Rather, they are descriptions of potential events and their likely impact on an organisation. 
Scenarios are typically used as a basis for long-term strategy development.    
The principles of scenario planning have long been used in military intelligence, but it is only since the 1970s that they have been widely applied to the world of business. 

Why Use Scenario Planning? [2] 

"Uncertainty today is not just an occasional, temporary deviation from a reasonable predictability; it is a basic structural feature of the business environment." - Pierre Wack [3]

Scenarios encourage you to think outside the box, helping organisations anticipate sudden, potentially unforeseen changes. 
The process of developing multiple scenarios leads to the identification of inevitable or near-inevitable future events.. 
Scenario planning creates an environment in which staff feel comfortable challenging the status quo, reducing the risk of 'groupthink'.   

Stages of Scenario Planning [4]
 
1.       Approaching the Topic and Time Horizon: What is the focal issue? What is the scope of the project?
2.       Identifying Major Uncertainties: What are the factors that will influence the future of the chosen topic?
3.       Naming the Alternatives: What paths can these factors take and what would be the outcome? For instance, what would be the effect of a sudden rise/drop in energy prices?
4.       Calibrating a Future Compass: Identify the two most significant uncertainties and map out quadrants to represent alternative outcomes.
5.       Creating Scenario Narratives: Sketch out a scenario for each of the four quadrants.
6.       Reflecting on the Outcomes: Consider the plausibility of each scenario and use this as the basis for strategy development.      

Tips for Effective Scenario Planning

A set of scenarios should contain four or five distinct narratives. [5]
The focal issue needs to be clearly identified from the outset. 
Concentrate on the scenarios that seem most probable, but don't ignore the more extreme possibilities. 
Choose catchy, evocative names for your scenarios. Trivial as it may sound, this will help you remember them at a later date. [6]   
Revisit previous scenarios to see how they could have been improved and what lessons can be learned with the benefit of hindsight.  

From Scenario to Strategy

"Think of scenarios as different hands of cards you might be dealt; think of strategies as the way you would play those cards." - Jay Ogilvy [7]

A good set of scenarios does not automatically lead to a good strategy. 
Rather than developing a strategy around the most probable scenario, leaders should try to develop one that takes account of all the scenarios identified in the planning process. [8] 
If a strategy is already in place, scenarios can be used to identify weaknesses and areas where a contingency plan may be required.


References
1. Michael J. Bloom and Mary K. Menefee. 'Scenario Planning and Contingency Planning'. Public Productivity & Management Review. Vol 17, No 3 (Spring 1994). pp223-230. 
2. Charles Roxburgh, 'The use and abuse of scenarios'. Available at: http://www.mckinsey.com/insights/strategy/the_use_and_abuse_of_scenarios (accessed 1 December 2015).
3. Pierre Wack, 'Scenarios: Uncharted Waters Ahead'. Available at: https://hbr.org/1985/09/scenarios-uncharted-waters-ahead (accessed 3 December 2015). 
4. Sascha Meinert, 'Field Manual: Scenario Building'. Available at: http://www.etui.org/content/download/13953/114820/file/2014_Scenario_Building_DEF.pdf (accessed 2 December 2015).
5. Jay Ogilvy, 'Scenario Planning and Startegic Forecasting'. Available at: http://www.forbes.com/sites/stratfor/2015/01/08/scenario-planning-and-strategic-forecasting/ (accessed 1 December 2015).
6. Jay Ogilvy & Peter Schwartz, 'Plotting Your Scenarios'. Available at: http://www.meadowlark.co/plotting_your_scenarios.pdf (accessed 1 December 2015).
7. Jay Ogilvy, 'Scenario Planning and Startegic Forecasting'. Available at: http://www.forbes.com/sites/stratfor/2015/01/08/scenario-planning-and-strategic-forecasting/ (accessed 1 December 2015).
8. Ibid.


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