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In his best-selling book, 'The Art of the Long View', Peter Schwartz advocates a basic eight-step process for those embarking upon a scenario planning process. This article outlines that process.
1. Identifying the Focal Issue or Decision
Begin with the specific decision or issue then build out toward the environment. The best way is to begin with important decisions that have to be made and the mind set of the management making them.
2. Key Forces in Environment
Listing key factors influencing the success or failure of that decision is the second set. Facts about: customers, suppliers, competitors, etc. What will decision makers want to know when making key choices? What will be seen as success or failure?
3. Driving Forces
Listing driving trends in the macro-environment that influence the key factors identified earlier. Social, economic, political, environmental, technological forces. What are the forces behind the forces identified in step 2? Some forces are predetermined and some are highly uncertain.
4. Rank by Importance and Uncertainty
Ranking of key factors and driving trends on the basis of two criteria.
- First: Degree of importance for the success of the focal issue or decision identified in step 1.
- Second: degree of uncertainty surrounding those factors or trends. The point is to identify the 2 or 3 factors or trends that are most important and most uncertain.
Scenarios cannot differ over predetermined elements because bound to be the same in all scenarios.
5. Selecting Scenario Logics
The goal is to end up with just a few scenarios whose differences make a difference to decision-makers. For the purpose of selecting scenarios it is important that, firstly, there are not so many that all the facts cannot be stored in the minds of the planners. Secondly, that there are enough to capture the range of possibilities and finally, that the selected scenarios are diverse enough to merit their individual standing.
6. Fleshing out the Scenarios
Each key factor and trend should be given some attention in each scenario. Then weave the pieces together in the form of a narrative.
7. Implications
Once the scenarios have been developed in some detail, then it is time to return to the focal issue identified in step 1 to rehearse the future.
- How does the decision look in each scenario?
- What vulnerabilities have been revealed?
- Is the decision or strategy robust across all scenarios?
Remember:
- If a decision looks good in only one scenario, it is a big gamble.
- How could the strategy be adapted to make it better?
8. Selection of Leading Indicators and Signposts
It is important to know as soon as possible which of several scenarios is closest to the course of history as it actually unfolds. Sometimes direction of history is obvious, especially with regard to factors like the health of the overall economy but sometimes the leading indicators can be subtle.
Spend time identifying a few indicators to monitor in an ongoing way.
ReferencesSource: Peter Schwartz, The Art of the Long View (John Wiley & Sons, 1998).
