A critical uncertainty is an uncertainty thats key to the decision you focused on from step 1. How to build scenarios we look out into the future, trying our best to make wise decisions, only to find ourselves staring into the teeth of ferocious and widespread uncertainties. A tool for strategic thinking among the many tools a manager can use for strategic planning, scenario planning stands out for its ability to capture a whole range of possibilities in rich detail. Pierre wack sums up the outcome that scenarios seek to change our mental maps. Providing insight for impact scenario planning is a management tool that is designed to allow organizations to evaluate the efficacy of strategies, tactics, and plans under a range of possible future environments. How to use scenario planning in your business experthub. It is in large part an adaptation and generalization of classic methods used by military intelligence. In software, the difference between freeware and freeopen source software foss is whether you can get access to the underlying instruction code for the application, which would then allow you go in and make modifications. Choose the target issue, scope and time frame that the scenario will explore.
This is where the liberating structure critical uncertainties proves its value. After trend analysis, we needed to identify the critical uncertainties step four. Identify two most critical uncertainties from the top right corner 2. The product of scenario planning is a set of stories describing a range of futures focused on the strategic issues facing a company. Analyses the relationships between the critical uncertainties and. Scenario planning is a process for businesses to think about and plan for the future. This could be complexity related to software development, product. Prediction markets integrate diffused knowledge using a market mechanism to derive a predicted likelihood, essentially market prices are assigned to various outcomes and are treated as analogs of their likelihood. Presentation material we use to introduce critical uncertainties.
Pdf scenario planning to address critical uncertainties for. Importantly, the point of scenario planning is not to predict. As much as we want to believe that trends will inform us and help us make better decisions, the only way to really improve decisionmaking is to embrace scenario planning. Reno, nv prweb january 12, 2009 with business owners and nonprofit directors alike feeling a sense of uncertainty about the extent of the current economic crisis, veteran strategic planning facilitator, erica olsen is advising her clients and others to develop scenarios in advance for the situations they are most likely to face in the looming economic uncertainty.
Scenarios are a powerful tool in the strategists armory. Scenario planning is thus about exploring alternative futures that can realistically emerge. Sometimes phrasing these uncertainties as questions can help you clarify them. Further, the engagement of various stakeholders is crucial for the pertinence of the. For caseconsult one critical uncertainty is whether or not the property market will pick up again within the next 12 months.
Using critical uncertainties to quickly respond to. The driving forces and critical uncertainties identified below are highly summarized, and would be presented and aggregated very differently in a real scenario project. The role of scenario planning in a world of uncertainties. Scenario planning scenario planning strategic management. Scenario planning involves several elements or components that together yield a composite, multifaceted view of the future. Although scenario planning approach is widely applied in different fields of. For any structured analysis of the future, we need to understand on the one hand trends and driving forces, and on the other critical uncertainties. Stretch them to their extremes mutually exclusiveness. Strategic planning, csfs, and scenario planning all require expertise in the particular method. He began by stating the assumption that in principle people really do treat scenarios as though they were forecasts or projections, and he asked how much detail is really needed and whether people would use it if they had it. Scenario planning, also called scenario thinking or scenario analysis, is a strategic planning method that some organizations use to make flexible longterm plans. Always work with someone highly experienced in the field most consultants that claim to do scenario planning are making it up. Foresight, scenariobuilding, scenarioplanning, future studies.
An interesting post by mike thicke over at cloud chamber on the potential use of prediction markets to predict the location of mh370. Using critical uncertainties to quickly respond to future. Strategic planning in a rapidly changing business environment. The ease of the cloud can help you get the buyin from your boss for planning software. Scenario sets do not arrive with a best before or expiration date. They are particularly useful in developing strategies to navigate the kinds of extreme. Our experience over the past six years shows how critical success factors and future scenarios can significantly improve the depth of thinking and analysis in strategic planning efforts.
Nov 19, 2018 for any structured analysis of the future, we need to understand on the one hand trends and driving forces, and on the other critical uncertainties. Strategic planning with critical success factors and future. The future is unknowable, yet we choose to devote a lot of resources and effort to discussing and studying possibilities before we make decisions about new directions or new investments. Demography is one of the most reliable sources of predetermined elements.
They are called critical uncertainties and they become a key component of a scenario planning exercise. The balance of strategies can succeed only in one scenario. The scenario planning approach bottom allows progress along a path of. This report explores the value of enhancing typical strategic planning techniques with the critical success factor csf method and scenariobased planning and presents an integrated framework for strategic planning.
If it does, the demand for the companys products and services is likely to increase. Critical uncertainties are unstable or unpredictable, such as consumer tastes. This happens because the uncertainties driving the matrix act not only as proxies for other critical uncertainties identified during a scenario project but as proxies for ideas outside of the domain of exploration. Driving forces, uncertainties, and four scenarios to 2025. This is what a world of open source scenario planning might look like. In short, it is a perfect tool for todays increasingly uncertain and volatile world. Scenario planning aims to define your critical uncertainties and develop plausible scenarios in order to discuss the impacts and the.
These critical uncertainties are also used to further design a new breed of indicators. Among the many tools a manager can use for strategic planning, scenario. Critical uncertainties here is the next thing that the scenario team needs to put more emphasis on. Instead of offering multiple scenarios as options, only one scenario is. Yet this optimal scenario would also still result in an 8fold higher peak demand on critical care beds over available capacity. Sep 29, 2014 the creation of the matrix is the most intellectually challenging analysis that takes place during a scenario planning project, and also the intuitive. The role of scenario planning in a world of uncertainties strategy. Combine as many of the uncertainties as possible into the two most impactful transformational themes lets call them a and b. Predetermined elements are relatively stable or predictable, like demographic shifts. Studying the future starts by accepting its uncertainties and convert them into.
There has been extensive discussion of the forces shaping the future of work, but i dont believe there has. Also referred to as scenario mapping, scenario development or scenario analysis, the process typically involves identify external trends and disruptive innovations, exploring how the future could unfold, what the consequences would be for the business, and how to respond with alternative strategic plans. See figure a for an overview of the process and the relationship among components. Scenario planning turning critical uncertainties into.
Future studies, foresight and scenarios as basis for better strategic. Its practical value is that, by helping you foresee different ways your. Discuss resulting scenarios and give them telling names. The onedimensional planning approach top is appropriate when the scope is welldefined and the range of future uncertainty is limited. Use critical uncertainties with the scrum masters in the organization to create transparency about the scenarios they might face while trying to change to the organization in order to be successful with scrum. For organizations, scenario planning provides an invaluable opportunity to have a strategic discussion around key drivers and critical uncertainties in your operating environment. There has been extensive discussion of the forces shaping the future of work, but i dont believe there has been sufficient critical analysis of the uncertainties. Learning from the future through scenario planning michael j blyth four scenes pty ltd march 2005 decisions made today are usually for an uncertain future.
Scenario matrix is arrived at by assuming that the 2 critical uncertainties chosen may develop in one direction, or its exact opposite. Imagination also comes into play as managers use scenario analysis to determine or invent possible courses of action to take so the organization can reduce its overall risk and maximize its value. His professional practice is the assurance of safety, software and cybersecurity, and he writes. Shell, the pioneer in scenario planning, described these as predetermined. Because of this dual nature, it is also the most difficult to teach because the process uses and combination of implicit and tacit knowledge. The four groups share their debriefs and the whole group makes firststeps decisions about their now what. How to use scenario analysis to manage in uncertain times. Scenario planning is a creative, very practical technique to foresee and better. Develop strategies to quickly respond to future challenges. Scenario planning turning critical uncertainties into strategies for the future by karl rose, senior fellow, scenarios, world energy council t he desire to know the future is as old as mankind itself, one only has to look at ancient greece and the stories around the oracle of delphi to be reminded of this. What is scenario planning and how to use it sme strategy. Pdf training manual for scenario planning researchgate. Scenario planning to address critical uncertainties for robust and resilient waterwastewater infrastructures under conditions of water scarcity and rapid development.
Although it is surprisingly hard to create good ones, they help you ask the right questions and prepare for the unexpected. Once you have identified your scenarios, and the critical uncertainties that will. The most critical and uncertain factors of the ecocycle are used for defining the scenarios and strategies. Scenario planning is an integral part of the strategic planning process.
Scenario planning and strategic forecasting forbes. Scenario logic abc xyz issue issue high low abc xyz high low scenario a scenario b scenario c scenario d 1. Jan 12, 2009 reno, nv prweb january 12, 2009 with business owners and nonprofit directors alike feeling a sense of uncertainty about the extent of the current economic crisis, veteran strategic planning facilitator, erica olsen is advising her clients and others to develop scenarios in advance for the situations they are most likely to face in the looming economic uncertainty. This exploration results in a broader, more innovative view about future growth opportunities and risks. Scenario planning a tool for navigating strategic risk. This process requires investments of people, time, and money.
Dont complicate scenarios by selecting too many drivers. This report explores the value of enhancing typical strategic planning techniques with the critical success factor csf method and scenario based planning and presents an integrated framework for strategic planning. The most significant trends likely to affect the larger world are those forces that are the big what ifs the driving. Critical uncertainties make planning for the future a little bit easier. For the unpredictable remainder, the critical uncertainties, scenarios will capture the alternatives in coherent bundles. This document describes a robust 9phase process for proper scenario planning analysis and shows how to integrate it into a scenario planning workshop environment. Rate critical uncertainties according to two factors. Granger morgan spoke on the role of driving forces in scenarios. Scenario planning free download as powerpoint presentation. Liberating structures are a collection of interaction patterns that allow you to unleash and involve everyone in a group. Develop strategies for operating in a range of plausible yet unpredictable futures 100 min. Howard olsen we at onstrategy, like many businesses across the country, had our eye on the august 2nd deadline to raise the national debt ceiling. Identify your critical uncertainties after youve make a list of your key business drivers, you should pick critical uncertainties that will have the most profound impact on your organization.
Practice scenario planning to develop a strategy in a world of uncertainties by dr. If there are three critical uncertainties the scenario space has three dimensions such as green culture, green innovation and the economy, as shown below, which were derived for the european agency for safety and health at work, when looking at scenarios for. Economic downturn underscores importance of scenario planning. Discover what, why, and how with scenario planning. Historically, scenario analysis arose out of military planning during world war ii. Key to agility and anticipation are your plans flexible enough to manage through the next ten years of disruption.
There are however other scenarios where some form of lesser ai would be of use. The uncertainties are represented as axes of a matrix, which then defines 4 quadrants, or scenarios, each one a unique combination of how the 2 uncertainties may turn out. In the strategic planning world, scenario planning is a way of simplifying a complex future by providing the opportunity to ask the whatif questions and to rehearse how you may respond should a certain event or trend happen in the future. The outcome of the scenario planning process is a portfolio of future. Oct 22, 2018 this happens because the uncertainties driving the matrix act not only as proxies for other critical uncertainties identified during a scenario project but as proxies for ideas outside of the domain of exploration. Try critical uncertainties with a development team to define strategies on how to build the product. Develop strategies to quickly respond to future challenges with. This could be complexity related to software development, product development or. Critical uncertainties making decisions about technology in an uncertain world. We cannot plan the outcomes of each scenario, but we use accurate scenario simulations.
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