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Scenario Analysis/Planning Tool

Aim of the tool 
Make participants think about possible futures, as well as stimulate creative and forward thinking.

When to use it?
Situation analysis and planning

Description
Scenario planning uses the stories of what could happen in the future and how this can affect our organisation or development initiative and how people involved in the organisation or initiative decide jointly how they want to influence the future. It motivates people to challenge the status quo, or get better at doing so, by asking “What if?”. Asking “What if?” in a disciplined way allows you to rehearse the possibilities of tomorrow, and then to take action today, empowered by those provocations and insights.

The technique of scenario planning has been used by organisations for decades to prepare and adapt themselves for future scenarios outside their control. Here we use a shortened version, which emphasises that stakeholders should not just adapt to a future situation, but should be together instrumental in shaping their common future.

Scenario’s should not be mistaken for predictions. Scenarios are provocative and plausible stories about how the future might unfold. Scenarios consist of a range of multiple stories or hypotheses to capture a range of future possibilities, both good and bad. They include diverse external issues, which might evolve, such as the future political environment, social attitudes, regulations and the future economy. We call these ‘driving forces’. Scenario planning consists of the process through which scenarios are developed and how they are used to inform strategic planning.

The three guiding principles in scenario planning are:

  • A long term view: Scenario planning requires looking beyond immediate demand or urgent needs.
  • Outside – in views: It is important to not only consider those aspects which you can control – thinking from the inside- but considering external influences, which are out of your control but have a great influence in how the future for your development initiative or organisation or a particular situation might unfold. Framework for outside-in thinking. From Global Business Network Community (2004)
  • Multiple perspectives: Include diverse voices to shed a new light on the strategic planning. This will help to understand your own, and others’ opinions about the future better.

Steps to use the tool
Step 1: Identify and synthesise driving forces from your initial analysis (e.g. Rich picture). What are the key issues /driving forces affecting this particular issue?

Step 2: Prioritize the driving forces by two criteria:

  1. The degree of importance of the driving forces to the issue at stake;
  2. The degree of uncertainty surrounding those forces.

Continue by identifying the two driving forces which are most important to the issue at stake and most uncertain. These driving forces are your ‘critical uncertainties’. They will be the foundation for your scenario set.
The two forces should not be too closely dependent on each other, and have to be able to go in contrasting directions in the future.

Step 3: Make the ‘scenario matrix’ based on the two identified driving forces, your ‘critical uncertainties’. One force will constitute the X-axis and the other the Y-axis. Every quadrant of the matrix represents one scenario. Develop all 4 scenarios by discussing the following questions:

  • What happens in each scenario?
  • Which interventions are needed to prepare for each scenario?

How can you best prepare for the future looking at these four scenarios?

Scenario matrix:

Critical uncertainty A: worst-case scenario
Critical uncertainty B: best case scenario
Critical uncertainty A: worst-case scenario
Critical uncertainty B: worst case scenario
Critical uncertainty A: best case scenario
Critical uncertainty B: best case scenario
Critical uncertainty A: best case scenario
Critical uncertainty B: worst-case case scenario

Example

Critical uncertainty A: financial crisis
Critical uncertainty B: no conflicts
Critical uncertainty A: financial crisis
Critical uncertainty B: many conflicts
Critical uncertainty A: no financial crisis
Critical uncertainty B: no conflicts
Critical uncertainty A: no financial crisis 
Critical uncertainty B: many conflicts

Sources and further reading

Adapted from: http://www.mspguide.org/tool/scenario-planning

Methodology:

Examples:

Notes:

  • A regular scenario planning will last for 2-3 days. The above 3-hour session should be regarded as an introduction only, for situations in which 2-3 days are not available.
  • We have adopted the concept of ‘driving forces’ (following Global Business Network), where others use a distinction between ‘Drivers’ and ‘Trends’ for the same purpose. In shorter sessions, we found ‘driving forces’ to be adequate and less confusing. Groups tend to have difficulty in, for example, distinguishing between a driver and a trend.

Useful links