Scenario Development

Eidesstattliche Versicherung

Hiermit versichere ich an Eides Statt, dass ich die vorliegende Arbeit selbständig und ohne Benutzung anderer als in den Fußnoten und im Literaturverzeic hnis angegebenen Quellen angefertigt habe.

Kiel, 19.06.2003

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  Scenario Development  

Contents

  EIDESSTATTLICHE VERSICHERUNG  3

  CONTENTS  4

  LIST OF ABBREVIATIONS  5

ILLUSTRATIONS   6

TABLES 6   

1.  INTRODUCTION  7

2.  WHAT IS SCENARIO ANALYSIS  8

2.1.  TERM “SCENARIO  8

2.2.  THE CONCEPT OF SCENARIO ANALYSIS  8

2.3.  ACCURACY  10

3.  HOW TO DO IT  11

3.1.  THE SCENARIO MODEL  11

3.2.  EIGHT STEP PROCEDURE  12

3.3.  NUMBER OF SCENARIOS TO GENERATE  14

3.4.  TIME HORIZON  15

4.  SHELL´S SCENARIO EXPERIENCE  16

5.  SUMMARY  17

  REFERENCES  19

  BOOKS  19

  WEBSITES  20

APPENDIX 1  :  22

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List of Abbreviations

$ Dollar cf. confer Corp. Corporation e.g. for example, for instance fig. Figure IBM International Business Machines ICI Integrated Complexity Management Instrument i.e. that is Ltd. Limited O Opportunities OECD Organization for Economic Cooperation and Development OPEC Organization of the Petroleum Exporting Countries Prev. Preventive R Risks SBU Strategic Business Unit t Time US United States USA United States of America

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Illustrations

Fig. 1: The Scenario Model 10

Fig. 2: Eight Step Procedure 13

Fig. 3: Scenario Planning Success at Shell 16

Table

Table 1: Evolution of Scenario Building and Use at Shell 21

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1. Introduction

There are many different methodologies for assessing the future environment of an enterprise. But it is quite difficult to anticipate the future development successfully. Three examples illustrate this problem:

• “In 1943 Thomas Watson, who was then chairman of IBM, forecast a world market for about five computers.

• In 1970, Ken Olsen, founder of Digital Equipment Corporation, said no one needed to have a personal computer at home. (Of interest is that Ken´s company was purchased by Compaq - one of the leaders in home computers).

• In 1981, Microsoft´s founder Bill Gates said that 640K would be enough memory for anyone. (Microsoft was also slow to take advantage of the early Internet - releasing Internet Explorer in August 1995, well after Netscape Navigator, which had taken a dominant lead in the early browser market.)” 1

These examples show that it can have disadvantageous consequences to rely on one apparently safe forecast. Scenario planning is a technique that allows to operate in planning with more than one possible future. This treatise describes the very interesting methodology of scenario development and demonstrates how to use it in an eight step procedure. Concluding, it shows how the oil company Shell had a remarkable success in the 1970s by using scenario planning and gives an assessment of this remarkable technique.

¹ http://www.marketing-intelligence.co.uk/aware/services/scenario.htm

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