04.Aug.2009 Scenario Planning … a must for effective business development

Strategic planning and risk assessment are arguably two of the most important aspects of business development. The

difficulty with such planning is identifying exactly how the business, social and political environment will change and frequently the assumption is made that there will be no significant change in the next 3 to 5 years, possibly longer. It is at this point that Scenario Planning comes into its own.

Scenario Planning is the technique for developing a range of views concerning different possible futures. The aim is to paint a series of pictures that cover a wide range of possibilities with the view to subsequently modifying strategic planning and risk assessment in a way that covers the maximum range of probability.

Theoretically it is possible for an individual to create scenarios, however to do so would be to lose one of the major advantages of the technique, and that is diversity. In other words, a key parts of scenario planning require group input in order to harvest the greatest spread of views and hence create a range of, sometimes diametrically opposed, scenarios.

It is important to understand that a scenario will is not merely a series of events but rather a story with a definite plot. The “Actors” in the scenarios, just like real people, reach various points where they may make a selection of choices. That, concisely, is the key difference between Scenario Planning and traditional Strategic Planning, which tends to take a single view of the future possibilities even though multiple options may have been considered initially.

There are whole ranges of ways in which Scenarios can be constructed. For example:

• Three scenarios are constructed: first the middle ground and then two more, one 15% “above” and on 15% below. This is perhaps the simplest approach and while acceptable in some circumstances, runs the risk of missing opportunities as the end result is a variation of the start point rather than representing a wide and diverse range of potential options.

 Four widely diverse Scenarios are constructed that are not related to one another as in the previous case. This is much more difficult to construct but has the potential to  provide the most complete picture prior to commencing the main planning excercise.

  Uses for Scenario Planning

It is difficult to think of a planning exercise that would not potentially benefit from this approach. For example:

• Strategic planning and subsequent risk assessment are obvious candidates
• Product development becomes much more focussed when a range of possible market directions is considered
• HR policies require a clear view of the possible growth patterns of the company
• Training and development plans clearly are needed to support the planned innovations

Those few examples are just focussing on a pure business environment, however other broader areas include:

• Educational Planning
• Policy development
• Research and Development Strategies
• Urban Growth
• Climate Change

The list is endless and in a simpler format makes complete sense even for the “Corner Shop”.

Of course there is much more to Scenario Planning than included in this article. I am currently preparing a detailed Amode Solution to Scenario Planning, so if you would like a copy when it is finished please drop me a line at jce@mindsystems.com.au . If you do not have a copy of Amode your can always download a trial!

PS. A great resource for information On Scenario Planning is the JISC Infonet.