Scenario Planning

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Scenario Planning Axes of
Uncertainty

Scenario Planning is an integral part of the Scenario A Scenario B

Strategic Planning Process. This document
describes a robust 9-phase process for Axes of
Uncertainty
Axes of
Uncertainty

proper scenario planning analysis and
Scenario C Scenario D
shows how to integrate it into a Scenario
Axes of
Planning Workshop environment. Uncertainty

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Contents

• Overview 4
• Scenario Planning Process 6
- Process Overview 7
- 9 Phases 8
• Scenario Planning Workshop 21
- Facilitation Tips 22
- Suggested Layouts 24

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Scenario Planning is a method used in strategic planning to help
business think through and make long-term plans
Scenario Planning Overview

Scenario Planning—also called Scenario Thinking or Scenario Analysis—is a method used in the strategic
planning process to help businesses make flexible long-term plans.
This document describes a 9-phase process for Scenario Planning, and shows how to apply this process to a
workshop environment. Many organizations conduct off-site Scenario Planning Workshops as part their
annual strategy development process.

Axes of
Uncertainty

Scenario A Scenario B

Axes of Axes of
Uncertainty Uncertainty
THIS IS A PARTIAL PREVIEW
You can preview the full PowerPoint document and
Scenario C Scenario D
download it at http://learnppt.com/powerpoint/
Axes of
Uncertainty


Identify Rank Generate

Phase 5:
Define scope of Determine Outline Checked for Describe
axes of critical outcome
scenarios outcomes scenarios robustness scenarios
uncertainties uncertainties combinations

Generate plausible combinations of outcomes
Phase 5 – Overview

KEY ACTIVITIES EXECUTION METHODOLOGIES

 Create strawman models for each scenario by
selecting internally consistent combinations of  Facilitated group discussion
outcomes for critical uncertainties
– Check for and discuss possible conflicts among  Breakout groups
outcomes selected
– Where the most important critical uncertainties are
evident, make sure to include all identified outcomes in
the selected scenarios
– Target to create around 4 scenarios—don’t create too
many scenarios!
– Ensure the scenarios you have created are distinctly
different

TIP
Don’t try to over-think the process of
generate every possible outcome—use
sound judgment to evaluate whether the
scenarios selected represent the broad
range of possible future states



Use the top 2 uncertainties to

create a scenario map for the initial 4 scenarios to work on
Phase 5 – Scenario Map Example

Harsh Regulatory
Environment
• In this example, the top 2
uncertainties selected are
“Regulatory Environment” and
Scenario A Scenario B “Brand Premium”
• The underlying assumption in
this exercise is that by defining
the extreme corners of any
given environment, one does
Brand Brand explore the correlation among
Premium Premium all relevant uncertainties—this
Erodes Maintains implies that reality will be
somewhere in the middle
• Defining scenarios is not meant
to describe the most likely case
THIS IS A PARTIAL PREVIEW —it purely explores uncertainty
Scenario C Scenario D correlation and leads to
You can preview the full PowerPoint document and states to better
potential future
download it at http://learnppt.com/powerpoint/ path forward risks
understand associated
with any
Liberal Regulatory
Environment



Use the top 2 uncertainties to

create a scenario map for the initial 4 scenarios to work on
Phase 5 – Scenario Map Example

Scenario A Scenario B Scenario C Scenario D

2 PRIMARY AXES OF UNCERTAINTIES

Regulatory environment Harsh Harsh Liberal Liberal These values
defined by the
Scenario Map
Brand premium Erodes Maintains Erodes Maintains
(from previous
slide)
REMAINING AXES OF UNCERTAINTIES

Price of oil Increases Drops Increase Drops

Technology breakthrough Yes Yes No Yes

Threat of digitization High Low High High

…
… … … …

… You can preview the full PowerPoint document and
… … … …
… … … … …



Phase 6:

Outline the emerging scenarios


 Develop a detailed qualitative description of future
state envisaged under each scenario  Facilitated group discussion

 Complete the outcome matrix for other critical
uncertainties  Breakout groups

 Describe the outcomes of critical uncertainties for
each scenario in headlines
 Name the scenario

Pick a short, catchy label




Phase 7:

Check scenarios for robustness


 Test the stability of the end state described
 Facilitated group discussion
– Will stakeholders in the industry intervene to prevent
this end state from occurring?
 Test the relevance of the scenarios described
 Breakout group presentations

– Do the outcomes relate to the decisions facing the
business?  Validation with external industry reports

 Test the internal consistency of the scenarios
– What contradictions do the scenarios contain?
 Test whether the scenarios are distinct and unique
– Try to avoid developing scenarios that are variations of
the same theme



Phase 8:

Create detailed scenario descriptions


 Develop a detailed storyline for each scenario
 Facilitated group discussion
 Highlight the high-level implications for strategy under
each scenario
 Breakout groups
– Strategies include: strategies for leadership,
competitive strategies for survival
– Winners and losers  Validation groups

 Describe the indicative key economic parameters Economic parameters are estimates of what the world would
be like if a scenario became a reality, in terms of key macro-
conceived under each future state economic statistics
 Identify the leading indicators and leading contra- • e.g. population size, GDP, exchange rates, inflation
indicators that will signal whether this future is
starting to emerge Leading indicators inform us on when a
particular future state is starting to become a
– Is it as important to identify future stats that can be
eliminated from strategy development, as IS A PARTIAL PREVIEW
THIS it is to reality

identify the prevailing state A leading contra-indicator inform us when a
 Identify the competitive competencies that would be
particular scenario be discounted from our
future strategies and plans
required download it at http://learnppt.com/powerpoint/
– Includes key strategic business partnerships



It is important to document all

leading (contra-)indicators and economic parameters
Phase 8 – Key Indicators

Scenario A Scenario B Scenario C Scenario D

KEY INDICATORS … … … …
… … … …

KEY CONTRA-INDICATORS … … … …
… … … …

The tracking and monitoring of these indicators will help determine any
strategic changes in the future.


Successful scenario planning workshops are usually conducted offsite
over a 2- or 3-day period with involvement beyond just top management
Scenario Planning Workshop – Facilitation Tips

• Each breakout group exercise can open up
 Allow plenty of time for the group to wide ranging debate around deep questions
bond and for the discussions provoked which will affect the future of the business
• Schedule evening work to create the
by the scenarios opportunity for an open-ended discussion

 Go offsite • It is difficult to engage senior management’s
captive attention if they are accessible to deal
with current business “crises”

• Don’t allow the management to delegate the
 Be sure to involve the top team … exercise—they oftentimes won’t buy in to
scenarios unless they have been through the
learning involved in exploring the future

 … but also consider includingA PARTIAL PREVIEW
THIS IS other • Involve people from further down the
organization—especially people capable of
“expert” resources preview the full PowerPoint document and
You can creative, out-of-the-box thinking about the
future of the industry
• Invite academics, industry experts, regulators,
and even partners (e.g. suppliers, alliance) to
enrich the breadth of the discussion


END OF PARTIAL PREVIEW


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