FUTURE101
scenario planning controversy: does it really work?

Scenario Planning Controversy in Research

controversy scenario planning Sep 08, 2023

Probably all practitioners have their own version of the scenario planning method. They will have added to, removed from, or changed the method to fit their clients' aims best. It's the same in academia. Whenever scenario planning effectiveness is studied, its characteristics differ slightly to accommodate the study participants and the researcher's aims.

Find out if controversy on the merits of scenario planning can be resolved:

 

Scenario Confusion

Scenario methods vary between simple and very complex recipes. There are so many that the collection (or cookbook) is lovingly likened to a Swiss army knife. Unfortunately, the variety of methods has prevented rock-solid claims on scenario planning effectiveness, despite over 50 years of research.

In 2013, three researchers wanted to clarify things and find out whether the usual scenario method did make strategy better [1] So, instead of arguing about the perfect method, they analyzed testimonials of users for the results and benefits of the scenario method family.

 

(Image: scenario planning controversy in an artistic metaphor, by Dall-e)

 

Scenario Controversy

This is what they discovered:

  1. Improves Understanding. Because scenario planning provides a framework for understanding and evaluating groups of trends, the participants became better observers and so saw more changes emerge.
  2. Challenges Shared Logic. Scenario planning also requires participants to make explicit assumptions and challenge them. Assumption testing protected participants from making big mistakes and minimized blind spots in their decision-making.
  3. Manages Uncertainty. The method helps you deal openly and explicitly with unknowns and uncertainties, reducing the likelihood of underestimating uncertainty.
  4. An Easy Way to Communicate Complexity. The scenarios are a deliberate, non-threatening means of rallying people inside and outside the organization.
  5. A Safe Place. Scenario planning is a safe method for organizational learning because all participants, bosses or not, can't predict the future and are equally clueless.
  6. But Only With the Right People. The one condition determining the quality of scenarios is: deploying an open-to-challenging diverse team.
  7. There is No Alternative. Scenario planning stands on two legs: informal, intuitive, and formal quantitative techniques. It's the only method combining these data types into one useful framework.

 But they also concluded:

No Evidence for Goal Attainment. There is no evidence that Scenario Planning informs strategy development and improves decision-making. So, we don't know if there is a causal link between scenario planning and better decisions or that it only provides a potent stimulus...

Ouch.

As you can imagine, other researchers could not let this rest. So, this is what happened:

 

Scenario Consensus

In 2015, Philip Meissner and Thorsten Wulf showed that you could integrate scenario planning into decision-making. If you did that, scenario planning would improve decisions [2].

And then, in 2022, Pri Hermawan found out that scenario planning aligned subsidiaries with the strategy of their parent company [3]. So there was the causal link but in a slightly different way.

Evidence of the direct causal link between scenario planning and decision competence will surely follow as researchers are still working to find ways to help executives manage strategic surprises.

 

Find out about the best scenario planning method by subscribing to the Canary Blog! I will publish a post on it shortly. You'll find the subscription form at the bottom of this post (or click here). 

 

                          Reference List

1. Wright, G., Bradfield, R., & Cairns, G. (2013). Does the intuitive logics method – and its recent enhancements – produce “effective” scenarios?. Technological Forecasting and Social Change, 80, 631-642. https://doi.org/10.1016/J.TECHFORE.2012.09.003.

2. Meissner, P. and Wulf, T. (2015). The Development Of Strategy Scenarios Based On Prospective Hindsight. Journal of Strategy and Management, 2(8), 176-190. https://doi.org/10.1108/jsma-01-2015-0004

3. Hermawan, P. (2022). Aligning Ptci Strategies To Global Corporate Strategies Using Scenario Planning. International Journal of Current Science Research and Review, 01(05). https://doi.org/10.47191/ijcsrr/v5-i1-29 

Fresh Foresight Insights Directly in Your Inbox

JoinĀ Barbara's mailing list to receiveĀ her latestĀ Canary and updates about her research into managerial foresight and blind spots.

I hate SPAM too, so know that I won't spam or have others spam you!