Scenario Planning

In organizations dealing with the uncertainty in one form or another, the strategies are based on forecasts of its own managers or, on the assumption that the past will be repeated. Often not considered or, at least, underestimate the radical or discontinuous changes that could greatly alter the structure of the sector. 

A simplified definition of scenario planning considers the scenario as the description of potential or possible future, including details of how to get there. However, in everyday language, a forecasting formulates a probable knowledge of a future event. In the language of business, it is usually understood as an early prognostic to estimate the value of a variable.

To analyze future scenarios are built, which are provisional and exploratory descriptions of a probable future. A scenario is a significant and detailed portrait of a plausible (approvable), permissible, recommended, consistent, future world. In it, you can clearly see and understand the problems, threats, and opportunities that such circumstances may occur. It is not a prediction or a specific forecast, is the description of events and trends that may occur. (Schmalbach, 2010).

Porter (1985) asserts that the purpose is to understand the combination of strategic decisions that will give maximum benefit, despite the uncertainties and challenges of the external environment. A scenario, in addition to plausibility, must have internal consistency, usefulness for decision-making and provide a description of the causal processes.

According to Selsky (2008), the scenarios are constructed from conjecture. They are hypothetical statements, and its role is to identify a range of options and probable situations. They are hypothesis based on diagnoses of forces shaping events and the possible linkages of these forces, which can be assigned probabilities.

Scenario planning is not interested in determining the probable date of an event, but the likely linkages between them. A scenario will not occur as anticipated, but suggests a probable sequence in order to sensitize those who must make decisions about what can happen.

Finally, the scenarios are, therefore, situations that have not happened yet but have a certain probability of occurrence. And it is not impossible to occur, the business, the organization must be prepared for it. Otherwise, you may be surprised by the future.

References

Porter, M. (1985). Competitive advantage: creating and sustaining superior performance. The free Press, New York.

Selsky, J. (2008). Business Planning for Turbulent Times: New Methods for Applying Scenarios. Cromwell Press.

Schmalbach, J. (2010). Scenario Planning: Review of concepts and methodological proposals