The Business Strategy Pendulum Is Swinging Back on Scenario Planning

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Visit this group WSJ.com article titled “Pendulum Is Swinging Back on ‘Scenario Planning’” provides anecdotal evidence highlighting that the use of Scenario Planning as a tool for Strategic Planning is making comeback because of this recession.   The use of scenario planning rose following the 2001 terrorist attacks, to about 70% of executives surveyed by consultants Bain & Co. in 2002, up from 30% in 1999. Since then, Bain’s surveys have found fewer executives using the tool according to the article.   But the WSJ article speculates that the terrorist attack on New York in 2001, spooked the companies into planning for those kind of events.  Similar devastating economic collapse of 2008 has pushed organizations to be prepared for events like this. What is Scenario Planning?  According to Wikipedia: Scenario planning [or scenario thinking or scenario analysis] is a strategic planning method that some organizations use to make flexible long-term plans. It is in large part an adaptation and generalization of classic methods used by military intelligence.  According to WSJ.com article, this practice was pioneered by the U.S. military in the 1950s and gained popularity among companies. Scenario planning is not about predicting the future. It is about exploring the future. If you are aware of what could happen, you are better able to prepare for what will happen according to BREFI group. Oddly, organizations play out the ‘bad’ situation only after that situation has happened.  As the WSJ article pointed out once a ‘normal’ condition is back organization throw out their scenario planning tool out.   I think Scenario Planning is important part of Strategic Planning.  Not only that I think scenario planning works in tandem with disaster planning.  Preparing responses to imagined changes in conditions, allows organizations to educate themselves about the probable risks.