Scenario Building

In The Art of the Long View, Peter Schwartz discusses the use of scenarios as business tools. He defines a scenario as “a tool for ordering one’s perceptions about alternative future environments in which one’s decisions might be played out.” Scenarios are not predictions but rather tools for helping people learn. They use today’s trends, opportunities and challenges as the basis for alternative narratives about the future. Schwartz, who used scenarios at Royal Dutch Shell (oil) and other large corporations, says they help “make significant elements of the world scene stand out boldly” and help managers develop “a knowledgeable sense of risk and reward.” They can be helpful in developing alternative perspective and identifying assumptions that are limiting progress.

Briefly, the scenario process is as follows:

  1. Isolate the decision you want to make.
  2. Analyze key factors that would affect the decisions: both predetermined elements and more uncertain ones.
  3. Try out different plots and rehearsing the implications for your decision.
  4. Develop a range of two or three potential futures and discuss them.