February 17, 2016

Scenario Planning and Alternative Futures

Peter Kennedy
Partner

In recent years, another term for scenario-based strategic planning has come into popular use in the strategy and planning world.  The term is “alternative futures planning.”  If there are substantive differences between the more traditional “scenario planning” and “alternative futures planning” they are probably too subtle to make much difference.  FSG uses both terms interchangeably.

In some ways, alternative futures is a more descriptive and discriminating term, partly because of the baggage that has grown around scenarios and the word’s many variations. For example, it is common to talk of best-case and worst-case scenarios. Excel has a Scenario Manager function (which enables what-if analysis of a numerical nature).  And of course, looking closer at root meaning, the outline or synopsis of a play is known as a scenario.

In the professional practice of strategic planning, many types of scenario planning have evolved: scenario modeling, normative scenarios, event-based scenarios and even war gaming is often thrown into the scenario mix.  Our colleague, Charles Thomas, has written a detailed and comprehensive breakdown of the various types of scenario planning, including the strengths and weaknesses of each.

One egregious and regrettable misuse of scenarios is the oversimplified 2x2 matrix approach, in which all future uncertainty is boiled down to two mega-variables that are given the impossible job of explaining all important sources of future change and variability. This often leads to blunt and sometimes cartoonish depictions of, for example, a “high-tech world” or a “big box world.” More often than not, these lack complexity, nuance and credibility.  In one recent FSG case, a client that had previously been through a frustrating and unproductive 2x2 scenario-planning experience implored us not to refer to our process as scenario planning – so bitter was the taste left behind.  So we applied our usual rigorous methods to create not scenarios, but “alternative future worlds.”  That works for us.

Ultimately, all scenario-consulting jargon aside, scenario (alternative futures) planning is about explicitly recognizing and exploring plausible ways in which the future could unfold.  We exhort our clients to be as expansive as their imaginations and business judgment allow.  And then we help them apply the insights gained from this exploration to make decisions that will stand the test of time no matter what the future brings. Whether this is called scenario planning or alternative futures planning we’re convinced that it is the most rigorous and effective way for managing the vast, complex uncertainty that surrounds today’s business environment.

Thoughts?