1 What Do You Do with Scenarios?

The fundamental purpose of this book is to provide practical guidance on how to use and apply scenarios for improving organizations.

Introduction and the Problem

What do you do with scenarios? The common product of scenario planning is a set of alternative futures. The lack of clear guidance on what to do with scenarios results in an incomplete process. It also leaves decision makers unsatisfied with the results because they cannot see the benefit. Existing scenario planning methods cover the various approaches for creating, developing, and writing scenarios but neglect approaches for how to use them. This book fills that void by describing different and precise ways of actually using scenarios. There is currently a serious lack of detailed guidance on the possible uses of scenarios, their intended outcomes, their benefits, and exactly how to facilitate scenarios as a change management process. Using Scenarios is intended to fill a very important need in the scenario and strategy fields by focusing on the use and implementation of scenarios.

Scenario planners often say that one-third of the time should be spent creating scenarios and two-thirds of the time should be spent using them. Yet, the available guidance focuses almost entirely on different ways to create scenarios. There is little, if any, guidance on how to use them. To be fair, some of the available resources do refer to ways of using scenarios but do not provide enough detail to show you how to do it. Precisely how that two-thirds of the time should be spent is vague and impossible to apply.

To deal with fast-changing environments, most organizations rely on strategy. Strategy and strategic planning have a mixed performance record, often relying on old tools that produce vague and nonactionable outcomes. Strategy and scenario planning professionals are often in a difficult position because the tools they use generally do not deliver the expected results. It is obvious that uncertain environments are difficult to navigate, and most people agree that it is impossible to predict the future. In practice, however, it is easy to fall back on the assumption that the future can be predicted when what CEOs, executives, and managers want most is steady organizational growth and returns to shareholders. Stability remains the unstated, unreachable goal. The problem, then, has two parts:

1. There is no practical guidance on what to do with scenarios once you have them.

2. The lack of using scenarios has prevented widespread adoption of scenario planning and integration with strategy.

The potential role for scenarios has exploded owing to increasingly uncertain business environments. There is now more interest in scenarios than ever. The COVID-19 pandemic was a serious turning point for attention to scenario planning, and the result is an opportunity.

The Opportunity

Organizations need help. With interest in scenarios at an all-time high, there is a real opportunity to demonstrate their value, integrate them with strategy, and adopt them more widely. This requires going beyond interesting stories. Detailed guidance for using scenarios is needed.

The solution should be obvious. To solve the problem and its two parts, scenarios need to be used, and they need to be integrated with strategy. This book presents seven approaches for applying and implementing scenarios for different outcomes:

1. Connecting scenarios to a purpose

2. Generating strategies

3. Creating and stress-testing strategic plans with scenarios

4. Testing decisions and options with scenarios

5. Assessing the financial benefits of scenarios

6. Modeling financials with scenarios

7. Developing scenario signals and critical uncertainty dashboards

Using Scenarios gives you the details you need to put scenarios into practice. Based on extensive experience and research, it is highly practical, and the logic is that if scenarios are put to use, they stand a much better chance of becoming a standard organizational planning activity. Corporate decision making is often very shortsighted, and with the tools provided in this book, you will be able to help leaders make more careful, thoughtful, and long-term decisions.

The content is intended as a follow-on to my previous work on scenario planning, Scenario Planning in Organizations, although it could easily be “bolted” onto any other scenario building method. It does not matter which method you have used to create scenarios.

The goal of this book is to advance scenario planning practice through detailed descriptions of seven different ways of using scenarios. Each is designed for achieving specific purposes and outcomes. Scenario planning has been slow to evolve, and one reason for the lack of development is a failure to explicitly show how to put scenarios into action. This book provides the necessary details and tools to improve current scenario planning practices. Exercise descriptions, templates, workshop structures, and guidance on how to apply the seven approaches are included.

If we continue to ignore the importance of what happens after a set of scenarios is created, we do nothing more than present interesting stories. Interesting stories do not support decision making or allow decision makers to consider the risks and benefits of potential actions. Interesting stories do not convince decision makers of the value of an investment or allow them to analyze the potential outcomes of substantial investments. If we continue to ignore the importance of showing how to use scenarios, the risk is a lost opportunity, a stagnated practice, and a discipline that does not advance.

Summary

This chapter has described the need for Using Scenarios and explained its major premises. Scenario planners have choices for how to go about improving organizations and how to most effectively deliver their work. Instead of understanding the fundamental need to link scenarios to strategy work, many scenario planners have been satisfied with delivering a set of plausible scenarios. No matter how good they may be, scenarios will not have an impact unless they are connected to decision making and, ultimately, results. In most organizations, strategic work that doesn’t have an impact is dismissed and certainly not adopted. Demonstrating the value of scenarios and going beyond thinking tools are critical to advancing the field and improving organizations.