Scenario Planning: A very useful tool

Scenario Analysis is generally used for strategic planning. With this tool, we can define flexible long-term strategies and not rigid goals that can become impossible (or even useless) to achieve in a constantly changing environment. The original idea was created in military intelligence and then migrated to organizations in general and businesses in particular. The pioneer corporation in the introduction of this method was Shell. The idea is to generate different possible future scenarios combining facts and assumptions in different dimensions (social, technical, economic, environmental, etc). The method is pretty formal and strict in the steps that you need to follow, but here we are only going to focus on the advantages and how can this method be useful towards sustainability within the business.

Where does the value of scenario planning reside? There are two main advantages associated with scenarios. To illustrate them, let’s assume that the presidential elections are approaching and our business depends a lot on the outcome. So, we did three possible scenarios and we have been working on the best strategies associated with each one. The first advantage is that when reality takes one of the three possible paths, we are already advanced in the learning curve of the strategy associated with it, which gives us an advantage in comparison with our competitors. The second advantage has to do with the fact that human beings find easier to manage the uncertainty between different possible paths compared to total ambiguity. This is to say, if I think “Oh no, the elections are coming, everything can happen!”, handling this would be much more difficult than saying “Ok, elections are coming, so this or this or this may occur, which will imply that or that or that consequences”.

Does scenario planning have something to do with sustainable businesses? Of course. Sustainable companies have strong values in which they are based, but flexible structures that can be modified according to the external changes. And scenario planning is a good way of achieving that flexibility!