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How ‘scenario planning’ will help you make a decision in the future

October 27, 2020

10 min read

The opinions of the employees of You are personal.

  • The key to success lies in the decision.
  • Scenario stories help to make and convince decisions.
  • No setting is perfect.
How ‘scenario planning’ will help you make a decision in the future
How ‘scenario planning’ will help you make a decision in the future

Imagine Lara Croft (Wave Captain Marvelor whoever you want) is the heroine of a new RPG and at some point finds herself in front of a mysterious cave that she can (or cannot) explore.

Suppose you only find one of three things in the cave: some fabulous treasure, a terrible dragon, or nothing at all. Finally, imagine the protagonist has three tools: a wheelbarrow, a “dragon slayer” sword, and a flashlight. However, you can only select two of them for input.

The dilemma and the decision

Our heroine, of course, can refuse to enter, or she can do so with just two of the three tools. Every tool has its advantages: If there is a treasure, the trolley will help you with the transport. If there is a dragon, the sword is useful in facing it. If there’s nothing at all, the flashlight will get it on and off quickly.

His problem is that nobody knows exactly what is in the cave. Maybe just the treasure, or just the dragon, or maybe the dragon and the treasure. It can also be that there is nothing. The choice of tools depends on this incomplete information.

Image: Joshua Sortino via Unsplash

She steps in as a good adventurer, but knows that her move can lead her to total success (millionaire if she finds the treasure), serious danger (attacked by the dragon), or an anodyne situation (lost in the dark if not). There’s nothing in the cave and he doesn’t have a flashlight. In short, there are three possible scenarios.

This may seem like a no-brainer, but it symbolizes something that is comparable to real life. Every day heroes and heroines (you, me, everyone …) are forced to make critical decisions in very VUCA environments (you know: fleeting, insecure, complex and ambiguous). Getting stuck in front of the cave is not a good option. And when we do choose to, our limited resources and information do not help us very much in anticipating every possible circumstance.

The key to success lies in the decision: take a sword or a chariot? Invest in one or the other company? Starting a Masters in Marketing or Finance? Are you starting our startup or will you stay connected to the company that pays us our salaries? To marry or not to marry? …

I’ve never been a great role-player. But they always caught my attention because they can challenge creativity and teach us: you need to take responsibility for decisions and gather the best possible information before you make them.

The methodology of strategic scenarios

Since the 1950s, when the Cold War and the nuclear threat emerged, some military strategists have spent considerable time and resources thinking about what would happen if the enemy attacked them first or if they started the war. Expert groups discussed each option in detail and analyzed the effects and consequences of each option under certain conditions. There, Herman Kahn and the RAND Corporation appeared, who designed a method for creating “strategic scenarios” for the US Department of Defense. And it worked for them for years.

Image: Daria Nepriakhina via Unsplash.

The Royal Dutch / Shell Oil Company later adopted and expanded this method to optimize their long-term decisions in the business world. And it wasn’t bad at all. It has also been adopted by generations of academics, business people, and public organizations. Currently, very reputable consultants define it as “the construction of a story based on the analysis (…) of current and historical events and trends” and as “a detailed description of possible future situations”. The aim of the tool is definitely to help people identify courses of action in the likely future and anticipate the best possible decision-making.

And here is the context: A “strategic scenario” is nothing more than a story that guides us and shows us how to act in the face of the complex future. The method, despite its criticism and limitations, is still taught at prestigious universities such as Oxford.

How do I create strategic scenario stories?

The narrative form is up to you: a story, a descriptive script … Whatever you want. Also the amount of time: You can imagine situations for the next month, the following year or five years from now. In any case, a strategic scenario is the most complete description possible of a number of likely situations that will affect your project at some point in the future. If you want, I’ll share a really basic way of building them.

First, take as many sheets of paper as you want to examine. On each sheet, write the title of a likely situation and a brief description of what happens on it. For example, in the case of our heroine, we could suggest four scenarios: “Do not enter the cave”, “Enter and find treasure”, “Enter and find a dragon”, and “Enter without finding anything”.

Image: Hugo Rocha via Unsplash

Then, on another sheet, develop a brainstorm to list all the tools, options, and resources that are within your reach (whether budgetary, technological, or human …). You can also think of exogenous factors that are beyond your control. For example: will the virus vaccine be out soon? Will there be enough stimulus for the country’s economy? What you think affects your project.

Finally, imagine that you are using each resource in each scenario and describe what will happen when you use them. In our example, I can think of at least 24 alternative stories about our heroine (see table below) depending on what is in the cave and based on her decision about the tools she will use.

When you feel able, you can even assign probabilities to each of the 24 events to determine which situations are easier and which are more distant. Nobody guarantees which scenario will occur, but at least for each scenario you know a likely outcome, which situations to avoid, and which tools will best help you in each case.

5 keys to good stage construction

It is good to consider some tips about work.

1. Scenario stories help to make and convince decisions

Unless you are playing an RPG, the scenarios are not for fun. They are designed to make it easier for you to make a decision when needed. They also give you reasons to convince your employees to follow you.

As you create scenarios, you find that it is a “mental training” where you and your team work towards a possible future and from now on decide what to do in each situation. If you don’t create the scenario now, you may not know what to do in due course.

2. No setting is perfect

We are human and we have limits. We don’t know the future. So nothing happens if our scenarios are not fully or partially fulfilled. Wilkinson and Kupers have already discussed us in an article for the Harvard Business Review. However, if we do a good job right from the start, it will be easier for us to adjust our scenarios regularly. And in the end we’ll get it right.

3. One scenario is not enough: build a few

Thinking a single story about what the future might look like is not enough to develop good strategies and decisions. In addition, we usually imagine the most desired scenario and forget about other options. If the exercise is to be worthwhile, you will need to create more than one story. I recommend these three: the least favorable, the most likely, and the most favorable to your interests. Either way, ask yourself: what results would you get? What tools would you need to enter the cave? What should you pay attention to once inside?

4. Create it with more people

Although one person can create scenarios, it is advisable to have a group of co-workers on the task as this will cover many other possible aspects. You know: two see better than one.

5. Add numbers to the narration

Scenario stories should be assigned some numbers that will help us understand how much more important one scenario is than another, or how much more likely it is to happen. This also helps other people connected to the project to better understand the relevance of each thing. The more sophisticated your calculations, the more likely it is that you will make a good decision.

The heroine enters

After thinking about it, Lara Croft decides to enter the cave with the dragon slayer sword and chariot. It’s not that he isn’t worried about the dark, but when he encounters the dragon he will know how to counter it and surely the fire he spits will light up the cave and the flashlight will not be necessary do. If, in the end, there is no dragon, he will orient himself by the reflection of the sword, regardless of whether he finds the treasure or not. It’s about rationalizing probabilities and prioritizing options.