Tools & Techniques

Scenario Sketching

Scenario sketching is an artistic technique for decision making and should be in every manager's toolkit. This paper describes the technique of scenario sketching which examines important "What if...?" questions in the running of an organization. It shows that unlike any other technique, which postulates a single future, scenario sketching technique looks at several alternative versions of the future, any one of which may or may not come about. This paper explains the nine steps involved in scenario sketching. The steps include the first step as identifying the major issues all the way to step number nine, act in a timely and appropriate manner. (Werff, 1995)

Goals of Scenario Planning

The goal of scenario planning is to enrich management's thinking, perceptions of reality, and modes of decision making when addressing important issues in the face of uncertainties.

Scenario Planning Steps

Scenario development is as much art as science. It sounds easy when describing, but it is a bit messier to accomplish! First, specify the major issue or decision you are facing, for instance, sitting of a new plant, entering into a global alliance, developing the company's grand strategy, or revamping product distribution channels. Second, isolate the key drivers - those external forces affecting your company and industry. Drivers fall into two categories. Predetermined elements are relatively stable or predictable, e.g. demographics of the population.

Critical uncertainties are unstable or unpredictable, e.g. consumer tastes, government regulations, natural disasters, or new technologies or products (especially in the hands of competitors). Third, select the two most important drivers. Do not complicate scenarios by selecting too many drivers. Restrict yourself to formulating three or four scenarios with sharply contrasting futures: (1) the baseline, business as usual, world as it is, surprise-free scenario; (2) the scenario which driver A alone dominates; (3) the scenario which driver B alone dominates; and (4) perhaps one with both drivers present. Fourth, write a short internally consistent story of the future which highlights the key driver or drivers for each scenario. Fifth, give each scenario a "to the point name", e.g. High Road, Boom or Bust, Fortress Asia, or Lift Off. Names help participants keep the scenarios separate, provide common language for discussion, and give the scenarios some permanence within the company outside of the formal process. Sixth, within each scenario determine the implications for the issue or decision specified at the outset. Be precise. Seventh, with these implications in mind, discuss what your decision or business response should be. Remember that nothing you do is ever done in a vacuum. How might the government react under each scenario? Your clients or customers? Your competitors? Eighth, select indicators which suggest that a particular scenario is unfolding. Since there is a bias towards eventual action, choose those indicators which will precipitate action when a particular threshold is reached. Track and discuss these indicators regularly and update your scenarios accordingly. Finally, usually at some future date, make those decisions in a timely manner that is appropriate for the particular future that does unfold.

Future reality, of course, is unlikely to be exactly in harmony with any of your scenarios, but the flexible mindset developed during scenario planning enables you to react agilely to events that do occur. You don't choose amongst the scenarios. Rather, you use them all to help form hypotheses about the world and to recognize which ones are operative at any given time. (Schoemaker, 1995)

Teamwork

Developing scenarios is best done in a team setting. After all, you want to draw on the collective wisdom of your staff to outline the forces operating on your company and industry, to highlight the implications for you of these forces, and to tap the full range of their thoughts on appropriate responses to possible futures, none of which can be predicted with assurance.

Limitations

Never the less, the most known and seen limitation of scenario sketching technique is that since the technique allows ideas to be evaluated, it sometimes creates hostility and distortions that may occur in an open meeting. This does not mean that the technique does not function it is just a limitation that has been seen in some organization. Scenarios are short internally consistent narratives of possible futures; they are not predictions.

Real Life experience

"My own light bulb lit up when participants in my CEO seminars on scenario planning reported as much value in a few hours of sketching scenarios to make decisions as my consulting clients who had invested weeks or months developing scenarios, supposedly for planning, but in reality for decisions. So, what to do? I now advocate using scenarios as an aid to decision making, not as a planning method, and lead groups through the above steps