Summery
Scenario-type planning is a designed plan to show what the future will look like and how the business environment will develop and improve in light of that future. (Mariton, 2016b) Fig 1 shows a quick view of how scenario-type planning works. Scenario-type planning is the essential tool to find uncertainties and different realities of the future of business. In other words, scenario-type planning is to "way to assert control over an uncertain world by identifying assumptions about the future." (Rami, et., 2020b) So, what happens when there is no scenario-type planning on the table is the purpose of this article. This article will answer some critical questions and concerns, including how scenario-type planning supports the planning and innovation for change (CTU, 2022). This article also has some thoughts about how we will use scenario-type planning for future innovation efforts and how it for the social impacts of changes. (CTU, 2022)
Scenario-type planning
Scenario-type (Scenario-based) planning is not some assumptions about the future. It is "refining forecasts and explaining differences against initial budget. The company just refers to the relevant scenario and focuses on achieving its objectives." Scenario-type analysis has several types, including Quantitative scenario-type planning (QNS), Quantitative simulation modeling (SM), and Strategic management scenarios-types. (Rami, 2020b)
Qualitative scenario-type planning (QLS)
QLS is the most common type of scenario planning, and it focuses on organizations with actual data and analysis and relies on the existing historical/experimental data. For example, NPS conducted a QLS analysis from the Global Business Network (GBN) data to predict the future of climate changes in park planning in 2009. (Symstad, 2017, p. 7)
Seventeen climate experts were the initial team to use a qualitative scenarios (QLSs) method with a "nested" approach. (Symstad, 2017) Their primary vital inputs were a table of projections, including nine climate variables, existing data on climate influences on WCNP's natural resources and ecosystems, and a list of climate-sensitive items. (Symstad, 2017) The team found "Drought Severity" and "Precipitation Patterns" with significant uncertainty in the "direction or magnitude of change and potential impact on natural resources" (Symstad, 2017) in the future.
Quantitative simulation modeling (SM)
Quantitative scenario-type analyses are "financial models that allow for the presentation of best- and worst-case versions of the model outputs" (Rami, 2020b). It is the best approach for annual business forecasts. For example, on the same above research with QLS, the team of researchers in NPS conducted a quantitative scenario planning to understand the impact of ecosystems dynamics on climate change interacting with management interventions. (Symstad, 2017, p. 8) The first step of this approach was a "meeting between the science team and WCNP managers to exchange information, align expectations with model capabilities, and jointly determine the focal questions to address with the simulations." (Symstad, 2017, p. 8) It revealed that "park managers' data specific to the WCNP area valuable for calibrating MC1 to address other questions about ecosystem dynamics.." (Symstad, 2017)
Strategic management scenarios-types
This scenario-type approach focuses on resource management for future forecasting. To reach the goal of this scenario-based planning, we need to identify the objectives, find competition, evaluate the internal structure and model, and ensure the C-Level of the organization well understands the importance of change and future implementations. (Synario, 2021, p. 2) For strategic management scenario-type, we need to be open to debates, not assuming for the future but measuring things, and avoid biases and overconfidence about the future.
What if the organization did not do proper scenario-type planning and only relied on standard forecasting
Bankruptcies, the massive firing of employees, lost customers, lost reputations, and many other consequences cause not having proper scenario-type planning and just relying on the standard forecasting. Fig 2 shows the differences between using scenario-type planning against standard forecasting of the future. It shows that we can have a plausible prediction of the future instead of a possible estimation. We can analyze future forecasting with both Qualitative and Quantitative methods in scenario-type planning against just Quantitative analysis in regular forecasting of the future. However, there can be a test for accuracy in the standard forecasting model, while it is complicated to test the accuracy of predictions in scenario-type planning. Standard forecasting is subjective-fact-based with a short-term horizon on an expert analysts' level. At the same time, scenario-type planning is based on the relationships and causality of events and data and C-Level perspectives and concerns with a long-term horizon. Lastly, normal forecasting results can be replicated, while scenario-based planning is a unique representation. (Leadershipnow, 2021)
References
Al Saeed, Adeghe, I. J. (2016). Scenario-type Planning. Futuring and Innovation. Retrieved 2022, from http://insight-to-the-future.blogspot.com/2016/02/scenario-type-planning.html
CTU, (2022). Colorado Technical University. Student’s restricted panel. Retrieved 2022, from Colorado Technical University restricted area of assignments.
Leadershipnow. (2021, May 12). Scenario Planning vs. Forecasting: 6 Questions to Ask to Prepare for a Post-Pandemic Future. Retrieved 2022, from https://www.leadershipnow.com/leadingblog/2021/05/scenario_planning_vs_forecasti.html
Mariton, J. (2016b). What is Scenario Planning and How to Use It. Smestrategy.Net. Retrieved 2022, from https://www.smestrategy.net/blog/what-is-scenario-planning-and-how-to-use-it
Rami, Luther, A. D. (2020b). Scenario Planning: Strategy, Steps and Practical Examples. NetSuite. Retrieved 2022, from https://www.netsuite.com/portal/business-benchmark-brainyard/industries/articles/cfo-central/scenario-planning.shtml
Symstad, A. J., Fisichelli, N. A., Miller, B. W., Rowland, E., & Schuurman, G. W. (2017). Multiple methods for multiple futures: Integrating qualitative scenario planning and quantitative simulation modeling for natural resource decision making. In Climate Risk Management (Vol. 17, pp. 78–91). Elsevier BV. https://doi.org/10.1016/j.crm.2017.07.002
Synario. (2021, September 23). Scenario Planning in Strategic Management. Retrieved 2022, from https://www.synario.com/scenario-planning-in-strategic-management/
Tables & Figures
Fig 2, forecasting vs. scenario-type planning (Leadershipnow, 2021)
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