In a world that is becoming increasingly more unpredictable, planning for the future has become even more of a challenge than it used to be. This is where scenario thinking and scenario planning come into play. The two really go hand in hand.
Scenario thinking is the process of considering and planning for potential future outcomes. It’s about imagining various possible scenarios and brainstorming about how to deal with them or how to prepare for them before they ever happen. Basically, it’s thinking about and planning for the future, whatever it may be.
Of course, this isn’t to say that scenario thinking is just about dwelling on the future in general, or on one particular desired outcome. It’s a bit more complex than that, and today we’re going to discuss scenario thinking and provide practical examples of how it works and how it ties together with strategic thinking.
What is Scenario Thinking?
Scenario thinking is actually quite simple on the surface. It’s mostly just a practical usage of one’s imagination. Have you ever just sat down and pondered future possibilities? Not in the sense of daydreaming, but really considering likely future scenarios and how they may impact you? Congratulations, that’s scenario thinking.
It sounds pretty simple on the surface, and in reality, it is. In fact, some people might just assume that scenario thinking is just how all people normally think, but that’s not the case. For example, say that you are a business with a certain goal in mind. You are so focused on this goal that you refuse to even acknowledge that said goal has become unattainable.
Scenario thinking isn’t about assuming that your preferred outcome won’t happen, but it is about considering other possibilities. Maybe your product won’t sell well at all. Maybe your company’s launch fails and you have to rebrand. Maybe the product sells so well that you won’t be able to meet production.
Scenario thinking is just a matter of assessing the future from the standpoint of likely potential outcomes. You don’t have to ask yourself silly questions like “what if aliens invade” but you do consider outcomes that are actually likely to occur, not to mention likely to be a problem that will require special considerations.
Scenario Planning
Scenario planning is really just taking the next step in scenario thinking. Now, you don’t just determine some likely future outcomes, but you actually plan for the possibility that those outcomes actually occur. This can include preparations at the current time, or simply determining what would have to be done in order to respond to the imagined scenario in the future.
An excellent example of this is war games. War games are simulated potential combat scenarios practiced by militaries all over the world. The idea is simply to ask “what if?” What if the enemy managed to invade our home territory? What if the enemy developed a new countermeasure for our weapons? How do we handle it?
This is what scenario planning is all about. It’s about taking a possible future into consideration, and determining what impact it would have on you, what steps would need to be taken to rectify the situation, and what steps may need to be taken to stop the scenario from occurring at all, if so desired.
Technically, you can plan for good scenarios and outcomes as well, but most people use scenario planning to prepare themselves for bad things, so they can be ready for problematic situations. After all, everyone likes to imagine that things will go as intended, but nine times out of ten, the future unfolds in a way that presents obstacles to people.
A Fitting Example of Scenario Planning
Let’s say that you plan on making a trip in your car from one destination to another. In the most basic concept of planning, this trip is simple to prepare for: you have a map (or GPS!) directing you where you want to go and telling you how far the drive is. Traditional planning means all you have to do is determine when you want to leave.
It’s all quite simple on the surface: the trip is 200 miles, and your car can go 240 miles on one tank of gas. No planning is needed, right? But this type of planning assumes that all variables are constants, that there are no shifting aspects of the world to take into consideration. Scenario thinking and planning accounts for the possibility of unforeseen variables.
It accounts for the fact that your car might break down, that bad weather or traffic may increase your gas mileage, or that you may be forced to take a detour. It considers that your alarm may not go off at the time you intend, that you might miss an important turn, and other things that will affect your future actions.
Scenario planning also has you preparing for these possible outcomes. It means ensuring you have a spare tire, enough money to pay for another full tank of gas, and allowing enough leeway that you can still reach your destination on time even with a detour taken into account.
Scenario Thinking and Strategic Thinking
Scenario thinking isn’t really different from strategic thinking: it’s more of a subcategory of strategic thinking. Strategic thinking is really just about planning ahead, considering the big picture and all of the factors that affect it, and taking action with careful consideration for its consequences and implications.
Scenario thinking, as it stands, is just a way that one can think strategically. After all, considering possible future scenarios and planning for them is both seeing the big picture and planning ahead, and if you prepare for those outcomes or have plans in place to handle them should they arise, you will be acting with careful consideration.
In fact, scenario thinking and strategic thinking should never really be separate from one another. If you aren’t considering possible future scenarios and planning for them accordingly, are you really even thinking strategically in the first place?
How is Scenario Thinking Different From Other Types?
There are a few methods of strategic thinking that are very similar to scenario thinking but are not actually the same. These are contingency planning, sensitivity analysis, and computer simulations. Contingency planning only takes one particular scenario into account, such as ‘what if I get a flat tire?’ It offers only one case and one plan of action.
Sensitivity analysis planning only considers a situation if just one variable is altered. For example, ‘how much is the price of oil affected if exports from X country are halted?” This is similar to scenario planning, but because scenario planning focuses on a particular outcome, it considers many variables that lead to that scenario, not just how one variable affects the future.
Scenario thinking is also different from a mere computer simulation: it’s not just the outcome provided by a simulation model, it’s about identifying patterns, variables, and clusters among the many millions of outcomes that could be generated by a computer. Scenario thinking takes into consideration factors that either were not or cannot be modeled for a simulation.
This is why scenario thinking is an extremely vital part of strategic thinking: there is great value in considering all likely possible futures, as well as how you would choose to react to them.
References
https://sloanreview.mit.edu/article/scenario-planning-a-tool-for-strategic-thinking/
https://www.masterclass.com/articles/strategic-thinking-guide#:~:text=Strategic%20thinking%20is%20an%20organizational%20and%20pragmatic%20type,typically%20to%20gain%20a%20competitive%20advantage%20in%20business.
