What are Scenarios? by Michael Clinton

“The only sustainable competitive advantage is an organization’s ability to learn faster than the competition.”  ― Peter M. Senge

In short, the answer to the question is scenarios are an approach to resilient strategies in changing times. But why is this needed?

Strategic planning is generally a process of defining an organisation’s strategy and direction, as well as determining the allocation of its resources to enable it to get there. Strategy is, therefore, often seen as a matter of choice – albeit based on experience.

In the past it has been possible to make informed decisions based on a shared common experience of a growth based economy, taking into account disturbances such as natural disasters or the odd market crash. However, there is an increasing awareness that the old resource, growth-based certainties are becoming ever more problematic. The future is clouded with complexity and uncertainties with factors such as climate change, resource depletion and austerity driving economic turbulence, making a workable long term strategy for any organisation more difficult to envisage.

Dealing with complexity and uncertainty is a challenge. The two are, however, related as the more complex a situation, the harder it is to understand and predict– leading to uncertainty. To mitigate these inevitable difficulties in long-term strategic planning, more organisations are turning to “scenarios.”

Scenarios create a projected “storyline” for an identified system of interest, e.g.  a supply chain or related set of services. This process uses horizon scanning to ascertain the contextual factors that are likely to impact this system. The resulting range of informed insights and assumptions about what the future may hold enable decision makers to think about the constraints and opportunities that they may face and make informed choices about how to act.

This set of agreed assumptions can then be monitored and evaluated against actual trends and events as they unfold. When kept under review and refreshed regularly scenarios can act as an early warning system for organisations, enabling them to update their strategy and operational practice in a manner that prepares them for change, rather than reacting to it.

Scenario development can therefore provide an effective route into informed long-term thinking, proving a useful tool for adaptable and resilient organisations.

The Schumacher Institute runs a strategic planning service called Scenarios +. For more information contact Michael Clinton, MSc, Schumacher Institute for Sustainable Systems or call +44(0)776 357 7125