A Review of Scenario Planning Literature

von: Katja Kirsch

Content

Introduction page 4

Definition of the term scenario page 4

Towards a change in paradigm page 5

Characteristics of scenarios and methods of scenario building page 7

Scenarios as a strategic planning tool page 11

Conclusion page 13

References page 14

Abstract

Scenarios are increasingly popular within both companies and non-profit organisations. A wide variety of scenario characteristics and approaches has developed. In this paper a definition of the term scenario is given before exploring the different underlying assumptions and characteristics of, and approaches to scenario planning. It then goes on and identifies lacks in scenario theory to conclude with a future outlook of further research.

Introduction

A vast amount of literature on scenario planning has been published at the latest since the successful Royal Dutch/Shell scenarios at the beginning of the 1970s, either in the form of case-studies, publications on scenario techniques or scenario typologies. The literature shows that scenario planning is used across many types of organisations and industries now, and that different approaches to the scenario building process have developed. Furthermore, the functions of scenarios have developed over time. Scenarios are now widely seen as a tool for strategic planning, instead of solely giving a future outlook. After a short definition of the term scenario as it is used here, I will show that the scenario approach is about to depart from a prevailing paradigm, before examining in more detail the scenario characteristics and methods. Finally, I will explore the notion of scenario planning as a useful strategic planning tool and its application in practise. In the conclusion I will summarise the main aspects of the scenario literature and indicate potential fields of interest for future research.

In my research I included a wide array of journals in an attempt to reflect a spectrum of different opinions. Those journals included both electronic journals and hard copies. Within these journals I looked for articles on the methodologies, characteristics, and typologies of scenarios as well as case studies. Hence, some of my search keywords were ‘scenario planning’, ‘strategic planning’, ‘futures research’, and ‘scenario methodologies’. In addition I searched the Internet for articles on the subject and for institutions and networks involved in scenario studies. I also followed up on references in some of those articles found. My research furthermore included two books. In order to achieve a deeper understanding of the topic I also read articles dealing with related topics. This included articles about organisational learning, methodological approaches in economy vs. psychology and decision making.

Definition of the term “scenario”

The term scenario is used in many different fields. Originally it comes from the world of theatre, where it describes the outline of a play. It is also used for movies, in military language, and the field of statistics. The Oxford Advanced Learner’s dictionary (1989: 1128) offers two definitions for the expression scenario: 1) “written outline of a film, play, etc. with details of the scenes and plot”, 2) “imagined sequence of future events”. The latter definition describes how the term scenario is used in the sense discussed here. Scenarios do not try to predict the future, rather they “present alternative images of the future.” (Schwartz, 1998: 6) Probably the first who used the term scenario in connection with planning was Herman Kahn. He gave the following definition: “Scenarios are narrative descriptions of the future that focus attention on causal processes and decision points”. (Kahn & Wiener, 1967)

However, there is no common, single definition as to what scenarios in strategic planning are. A series of definitions, often merely variations of one and the same, is available in the literature. Scenarios are “a script-like characterisation of a possible future presented in considerable detail, with special emphasis on causal connections, internal consistency, and concreteness” (Schoemaker, 1991: 549 – 550), “plausible descriptions of future conditions with which the organisation could be faced” (Becker, 1989: 41), “a tool for ordering one’s perceptions about alternative future environments in which one’s decisions might be played out” (Schwartz, 1998: 4), “a narrative description of a consistent set of factors which define in a probabilistic sense alternative sets of future business conditions” (Huss, 1988: 378).

Some authors (Becker, 1989; Jungermann & Thuring, 1987, Coates, 2000) make a distinction between scenarios as a picture of the future at a certain point in time (similar to a photograph), and scenarios showing the evolution of circumstances leading to a specific future (similar to a film). Those authors consider the latter as preferred with regards to the decision making in strategic management. Many others (Wack, 1985b, Schoemaker 1991, van der Heijden, 1996) see the description of pathways to different possible futures as an essential part of the scenario itself. “Good scenarios present more than an end-state description, but especially highlight the dynamics” (Schoemaker, 1991: 550) Here, I will draw on the latter definition of scenarios. However, all authors emphasise that scenarios need to be plausible and internally consistent to be accepted and useful. (e.g. Hamilton, 1981, Schoemaker, 1991, Millett & Randles, 1986)

Towards a change in paradigm

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