How to Make Scenario Planning Stick

Developing future scenarios can deepen leaders’ strategic insights. Establishing scenario planning as an ongoing capability and reaping its full benefits require linking it to other processes.

- By Paul J.H. Schoemaker and Shardul S. Phadnis

WITH MANAGERIAL ANXIETY RISING IN step with economic, geopolitical, and technological uncertainty, scenario planning is of increasing interest to executives seeking to be prepared for what they cannot yet see. But while there is much to learn by envisioning a wide range of possible external scenarios, many organizations fail to fully absorb and integrate these lessons into strategic decision-making.

Scenario planning is a good starting point for navigating uncertainty in business. As one of us (Paul) explained in these pages 30 years ago, the strength of scenario planning is that it goes beyond extrapolating known key trends to contemplate major uncertainties that companies do not fully understand yet.¹ Scenario planning assumes that an organization's future environment may be markedly different from what it is today due to external forces, including political, economic, social, technological, environmental, or legal developments. The art and science of scenario development involve examining the most important of these drivers, exploring their potential developments, and modeling how they might interact to create vastly different futures. Testing multiple scenarios lets leaders assess the robustness of their strategies and prepare the organization for new threats and opportunities. As Louis Pasteur put it, “Chance favors the prepared mind”; mentally mapping out future-scenario narratives positions managers and organizations to benefit from as yet unseen developments.