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Scenario Planning: A Tool for Strategic Thinking

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Paul Schoemaker at University of Pennsylvania
Paul Schoemaker
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Abstract

Among the many tools a manager can use for strategic planning, scenario planning stands out for its ability to capture a whole range of possibilities in rich detail. By identifying basic trends and uncertainties, a manager can construct a series of scenarios that will help to compensate for the usual errors in decision making—overconfidence and tunnel vision. Through case studies of Interpublic, an international advertising agency, and Anglo-American Corporation in South Africa, the author describes how to build scenarios in a step-by-step process and how to use the resulting stories to plan a company's future. INSETS: They believed it.;Three scenarios for the advertising industry.. [ABSTRACT FROM AUTHOR]
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Scenario planning: A tool for strategic thinking
Schoemaker, Paul J H
MIT Sloan Management Review; Winter 1995; 36, 2; ABI/INFORM Global
pg. 25
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... In project planning, scenarios can help to identify which uncertainties are most important for, say, a decision tree analysis. In strategic contexts, scenario planning can help set the agenda for deep dialogue and profound change within an organization and industry (Schoemaker, 1995) or even an entire country, as with the abolishment of apartheid in South Africa (Sunter, 1987). ...
... Finally, re-assess the ranges of uncertainty of the dependent (i.e., target) variables of interest, and retrace Steps 1 through 9 to arrive at decision scenarios that might be given to others to enhance their decision-making under uncertainty. Adapted from Schoemaker (1995) ...
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... Scenario planning merupakan alat perencanaan strategik (Schoemaker, 1995;Godet, 2000;Peterson et al., 2003). Scenario planning lebih merupakan proses berpikir strategik daripada proses perencanaan. ...
Uji Ketahanan Strategi Terhadap Transisi Energi Melalui Scenario Planning
Article
Full-text available
  • Feb 2022
Sektor energi merupakan suatu sistem yang kompleks. Berdasarkan teori kompleksitas, perencanaan jangka panjang merupakan suatu hal yang mustahil, sementara manfaat dari membangun model peramalan yang kompleks dan akurat adalah kecil (Levy, 2000). Rencana dapat menemui berbagai kemungkinan di masa depan. Dalam situasi transisi energi dan pencapaian target nol-emisi, berbagai kemungkinan dapat terjadi di masa depan. Kejadian-kejadian tersebut dapat menimbulkan risiko terhadap strategi. Dalam konteks transisi energi, TCFD menyebutkan sebuah risiko strategik yaitu risiko terkait iklim (climate-related risk). Risiko terkait iklim, yang dibagi menjadi risiko fisik dan risiko transisi, akan berpengaruh terhadap strategi jangka panjang perusahaan. Belum lagi saat ini peningkatan perbedaan kecepatan transisi energi dan cuaca ekstrem menyebabkan transisi energi tidak teratur (disorderly transition) yang salah satunya berisiko meningkatkan inflasi. Dengan adanya situasi tersebut, perusahaan tidak lagi cukup menyusun strategi dan menerapkan strategi dalam rencana jangka panjang. Risiko-risiko yang muncul dalam kompleksitas perlu difaktorkan ke dalam strategi dan dimitigasi dalam penyusunan strategi. Sebuah metodologi yang dapat digunakan untuk melakukan hal tersebut adalah scenario planning. Namun, manfaat terbesar dari scenario planning bukan dalam bentuk berbagai macam skenario yang dihasilkan, tetapi manfatnya dalam proses uji ketahanan (stress testing) strategi. Scenario planning dapat digunakan untuk memastikan kehati-hatian manajemen dalam penyusunan strategi, melalui pertanyaan "What if…?"
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... 24 So, how can organizations generally develop the requisite vigilance capabilities to Scenario planning is "a disciplined method for imagining possible futures" by simplifying "the avalanche of data into a limited number of possible states" that may ensue in the broader socioeconomic system. 26 A defining feature is its focus on weak signals, i.e., "seemingly random or disconnected pieces of information that at first appear to be background noise but which can be recognized as part of a larger pattern when viewed through a different frame or by connecting it with other pieces of information." 27 Strategic Planning approaches that foster vigilance are "flexible and adaptive, by adopting 'outside-in' and 'future-back' approaches." ...
Visibility Isn’t Enough - Supply Chains Also Need Vigilance
Article
Full-text available
  • Jan 2022
Shardul Phadnis and Paul Schoemaker introduce the concept of supply chain vigilance. The crippling logistical bottlenecks occasioned by the COVID-19 pandemic, plus other supply chain challenges in the past, show that supply chain visibility is only half of the battle in gaining control over disruptions. The other half, far less recognized, is supply chain vigilance, which concerns the organization’s preparedness to anticipate and handle disruptions when they occur. Organizational vigilance rest on four key pillars as discussed by George Day and Paul Schoemaker in their MIT Press book See Sooner – Act Faster. They are leadership commitment, foresight capabilities, flexible strategic planning, and better coordination as well as clear accountability. Leaders need to make these four lynchpins integral components of their extended supply chain system. Two case studies reported by Shardul Phadnis and MIT colleagues, in their book Strategic Planning for Dynamic Supply Chains, offer examples of how investment in vigilance can enhance as well as complement leaders’ over-emphasis on resilience building and supply chain visibility.
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... In the presence of deep uncertainty, DMDU approaches typically focus on identifying decisions that perform well across a wide range of futures, though they may not be optimal in any particular one . These methods include scenario planning (Kahn, 1965;Schoemaker, 1995;Schwartz, 1991); Assumption-Based Planning (Dewar, 2002); uncertaintysensitive planning (Davis, 2003); Robust Decisionmaking (Lempert, Popper, and Bankes, 2003) and its variant, Multi-Objective Robust Decisionmaking (Kasprzyk et al., 2013); Info-Gap (Ben-Haim, 2006); and Dynamic Adaptive Policy Pathways (Haasnoot et al., 2013). All these methods, in one way or another, reverse the ordering of a traditional predict-then-act analytical approach. ...
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... The issues of improving economic growth by upgrading the socioeconomic systems are considered in the works of many scholars, including Porter (1990), Schoemaker (1995), Garifullin (2014), Malsagov and Mironova (2013), Malsagov (2013), Beerel (1998), Clemons (1995) and others. ...
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... Other methods for improving imagination include fault trees (multiple paths to failure based on all past cases) and the development of multiple scenarios of the future environment. ▶ scenario planning starts by identifying the biggest uncertainties in the proposed plan and then explores how different combinations of outcomes might result in scenarios quite different from those currently considered (Schoemaker 1995). ...
Decision-Making
Chapter
Full-text available
  • May 2018
This entry aims to connect behavioural research on decision-making over a number of decades to the field of strategic management. This intersection has not been as fully developed as it could be and hence presents rich opportunities for improving strategic decision-making in and by organizations. We shall cover both individual and organizational findings using our four-phased decision framework (Russo, J.E., and Schoemaker, P.J.H. Winning decisions: Getting it right the first time. New York: Doubleday, 2002), with special links to the domain of strategic decisions. These include corporate strategic choices as well as adopting a strategic approach to making tactical and even operational decisions in organizations.
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... Wack [45] defined scenario planning as a discipline for rediscovering the original entrepreneurial power of creative foresight in the context of accelerated change, greater complexity, and genuine uncertainty. Scenario planning captures the richness and range of possibilities to consider otherwise ignored changes [46]. ...
Supply Chain Resilience Roadmaps for Major Disruptions
Article
Full-text available
  • Nov 2021
Background: Unexpected events or major supply chain disruptions have demonstrated the vulnerability in which supply chains operate. While supply chains are usually prepared for operational disruptions, unexpected or black swan events are widely disregarded, as there is no reliable way to forecast them. However, this kind of event could rapidly and seriously deteriorate supply chain performance, and ignoring that possibility could lead to devastating consequences. Methods: In this paper, definitions of major disruptions and the methods to cope with them are studied. Additionally, a methodology to develop supply chain resilience roadmaps is conceptualised by analysing existing literature to help plan for unexpected events. Results: The methodology is introduced to create roadmaps comprises several stages, including supply chain exploration, scenario planning, system analysis, definition of strategies, and signal monitoring. Each roadmap contains the description of a plausible future in terms of supply chain disruptions and the strategies to implement to help mitigate negative impacts. Conclusions: The creation of roadmaps calls for an anticipatory mindset from all members along the supply chain. The roadmaps development establishes the foundations for a holistic supply chain disruption preparation and analysis.
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Ignorance in organisations – a systematic literature review
Article
Full-text available
  • Jan 2023
This study is linked to previous research that approaches organisations as systems of shared meaning where ignorance is created and sustained, either unintentionally or deliberately, through various social interactions,symbolic processes, and organisational structures. While previous studies have touched upon organisational ignorance, there is a lack of systematically conducted research on its many forms and its many sources. This study analyses the causes, characteristics, and consequences of organisational ignorance. By reporting a systematic review of the literature, the paper contributes to the theory of organizational ignorance by developing a framework of organisational ignorance comprising the manageability (intentional or unintentional) and dynamics (bounded or expanding) of ignorance. Instead of framing ignorance as something that should be avoided, the study adopts anuanced approach to the organisation of ignorance.
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Bilim ve Teknoloji Alanında Senaryo Planlaması
Article
Full-text available
  • Jan 2023
z Senaryolar, zihnimizi gelecekte meydana gelebilecek bir dizi değişiklik, sürpriz ve bunların etkileri hakkında düşünmeye teşvik eder. Senaryo, bir topluluğun kontrolü dışında değişikliklerin meydana geldiği durumlarda özellikle değerlidir. Senaryo planlama, belirsizlik altında karar verme sürecini bilgilendirerek ve gelecekteki olası durumların açıklamalarını sağlayarak bilgi entegrasyonunu iyileştirme yöntemidir. Sosyal, teknolojik ve politik faktörlerdeki değişiklikleri öğrenmenin bir yoludur. Ekolojik çevrenin durumu ve geleceği hakkında çeşitli hipotezlerin gelişimini tanımlar. Sosyoekonomik sistemleri etkiler ve böylece yeni teknolojilerin benimsenmesini ve yayılmasını sağlar. Toplumun yenilikçiliğinin ve riskleri anlama ve etkili mekanizmalar geliştirme kapasitesinin üstesinden gelmek anlamına gelir. Ayrıca, yeni ve gelişmekte olan teknolojilerin risklerine ilişkin kamuoyu algısını da ele alır. Senaryo planlamasının amacı gelecekteki gelişmeleri tahmin etmek veya tahmin etmek değil, çeşitli olası ve makul gelecekleri hayal etmektir. Geleceği planlayarak ve gelecekteki belirsizlikleri ortadan kaldırarak, gelecek senaryoları oluşturmak mümkün olacaktır. Bu makale, senaryo planlamanın sosyal, bilim ve teknoloji üzerindeki etkisi üzerine literatür araştırması içermektedir. Bilimsel araştırmalarda elde edilen sonuçların teknoloji kullanımında gerçekleştirilmesi, olumlu ve olumsuz etkilerinin farkındalığı, yeni teknolojilerin toplum için önemi ve sosyal açıdan yeri vurgulanmıştır. Bağlantılar, stratejik yöntemin uygulanmasını ve kriz yönetiminin entegrasyonunu sağlayan stratejik araçlar aracılığıyla yapılacaktır. Abstract Scenarios encourage our minds to think about a series of changes, surprises and their effects that may occur in the future. The scenario is particularly valuable when changes occur outside the control of a community. Scenario planning is a method of improving information integration by informing the decision-making process under uncertainty and providing explanations of possible future situations. It is a way of learning about changes in social, technological and political factors. It defines the development of various hypotheses about the state and future of the ecological environment. It affects socioeconomic systems and thus enables the adoption and dissemination of new technologies. It means overcoming society's innovation and capacity to understand risks and develop effective mechanisms. It also addresses public perception of the risks of new and emerging technologies. The purpose of scenario planning is not to predict or predict future developments, but to imagine various possible and plausible futures. By planning for the future and eliminating future uncertainties, it will be possible to create future scenarios. This article contains literature research on the impact of scenario planning on social, science and technology. The realization of the results obtained in scientific research in the use of technology, awareness of its positive and negative
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