The panda habitat and surrounding exhibits at the Zoo are closed. Learn more.
Elephant Cam
See the Smithsonian's National Zoo's Asian elephants — Spike, Bozie, Kamala, Swarna, Maharani, Trong Nhi and Nhi Linh — live on camera.
Now more than ever, we need your support. Make a donation to the Smithsonian's National Zoo and Conservation Biology Institute today!
Become a Member
Members are our strongest champions of animal conservation and wildlife research. When you become a member, you also receive exclusive benefits, like special opportunities to meet animals, discounts at Zoo stores and more.
Education Calendar
Find and register for free programs and webinars.
About the Smithsonian Conservation Biology Institute
Case Study: Scenario Planning in Northwestern Virginia
Challenge
How can scientists produce research on environmental topics impacting local communities that decision makers in those communities can trust? In August 2016, scientists from the Changing Landscapes Initiative collaborated with community leaders in Northwestern Virginia to answer that question. This case study shows how CLI researchers combined community knowledge with scientific data to create a set of future scenarios designed to help planners make important land use choices.
Approach
For the Changing Landscapes Initiative, combining research and community wisdom means working with stakeholders to:
- Assess and prioritize regional needs, values, goals, and factors driving change
- Envision future scenarios and what life would look like in each scenario
- Produce land-use models, maps, and visualizations for each scenario
- Analyze the impacts on biodiversity and ecosystem services
- Use results to guide local and regional planning efforts
While scenarios are not predictions of the future, they can help communities prepare for the unexpected. They also help people relate to science and planning through storytelling.
Scenario Planning Workshops
Scenario planning workshops allow stakeholders to build connections and identify shared conservation and planning goals. They also help scientists gain important insights for their research.
CLI’s approach to scenario planning includes six main steps:
- Ask stakeholders to brainstorm the “drivers” that lead to changes in land use
- Rank those drivers based on their impact, and choose the two most important
- Define the “range of intensity” for each driver. For example, if one driver is population growth, the range may be low to high.
- Define four future scenarios based on the extremes of each driver.
- Create narratives that illustrate a life in each future scenario
- Estimate where and how much the important land uses will change
For this pilot study in Northwestern Virginia, CLI researchers held two workshops with more than 40 decision makers, planners, conservation leaders and community members.
Participants were first shown a “business as usual” scenario, where historic trends continue. Then, they were asked to identify the two most influential drivers of change in Northwestern Virginia. They chose:
- Political will for coordinated land-planning decisions
- Population growth from a slow to significant influx of new residents
Participants then developed scenarios using the intersections of these two drivers of change. Their four different scenarios illustrate what Northwestern Virginia could look like in 2061.
Participants also wrote narratives for each scenario. These short stories connect events, thoughts and feelings to paint a picture of what a future Northwestern Virginia could look like with different planning strategies.
Results
Scenario 1: high population + strategic planning .
Population growth is high and the political will to coordinate land planning decisions that conserve the landscape is strong. New development is focused near existing city centers. This limits suburban sprawl and the environmental consequences that come with it. Family-owned and operated farms, orchards, vineyards, and ranches are maintained or increased. This scenario envisions a thriving local economy that does not sacrifice the region’s beauty and culture.
“Strong long-term planning and minimal climate impacts have led to the creation of new jobs, centralization of growth in urban cores, protection of natural environments and working landscapes, development of integrative transportation networks, dispersal of energy production, removal of power lines and pipelines, and creation of sustainable wildlife habitat.”
Scenario 2: High Population + Reactive Planning
Development sprawls along roadways and encroaches upon scenic rural areas. This increases forest loss and habitat fragmentation, impacting the landscape’s environmental health and character.
“With increased pressures on resources, ecological resilience has plummeted. Water has become incredibly expensive, costs of services have gone up, farmers have faced new challenges, and there has been an overall drop in the economy and industries.”
Scenario 3: Low Population + Reactive Planning
Younger generations move from rural areas to larger cities. Fewer people live in rural areas, and there is a low political will to coordinate land-planning decisions. This opens opportunities for harmful practices, such as intensive monoculture (large-scale farming operations of one main crop) and logging. This provides little return to the community and reduces water quality, scenic beauty, forest health, and agricultural productivity for generations to come.
“I am so fed up. We are in a difficult situation, but we should be sticking together and the people should be protected. We don’t have access to clean water on a regular basis, and it is too expensive to go find it elsewhere. People are moving out of the region, but not everyone can afford to pack up their entire family and just leave. Since there are less people here, there’s also less revenue so we don’t have much advancement or upgrading going on.”
Scenario 4: Low Population + Strategic Planning
People are moving from rural areas toward city centers, which decreases the need for new infrastructure. Remaining community members have enough political will for strategic planning to conserve the landscape. As a result, Northwest Virginia keeps its open spaces, forests and family farms, and creates opportunities for ecotourism.
Narrative “The Shenandoah Valley region as a whole had not seen very much land conversion to development, allowing for continued green spaces and agricultural viability. A small portion of forest was converted to residential development to support commuters to Northern Virginia, but no agricultural land had been converted due to high demand.”
Co-developing the Future
After completing the workshops, CLI researchers created land-use models and visualizations based on the four scenarios participants developed. Together, these resources will help guide future planning efforts in Northwestern Virginia.
Scenario planning helps communities anticipate different futures, create resilient long-term plans, and quickly respond to unexpected changes. Scientific data without a relatable story is often overlooked, but effective scenario planning combined with strong science communication leads to relevant stories that can excite, inspire and move the public.
Continue Exploring
Case Study: Land Use Modeling in Northwestern Virginia
Changing Landscapes Initiative
Coral Biobank Alliance
Coral Cryopreservation Training Course
Coral Species Cryopreserved with Global Collaborators
Wildebeest Conservation
Protecting Piping Plovers in the Great Lakes
Swift Fox Recovery
Conserving the World’s Largest Working Wetland
- Data, AI, & Machine Learning
- Managing Technology
- Social Responsibility
- Workplace, Teams, & Culture
- AI & Machine Learning
- Organizational Culture
- Hybrid Work
- Big ideas Research Projects
- Artificial Intelligence and Business Strategy
- Responsible AI
- Future of the Workforce
- Future of Leadership
- All Research Projects
- Most Popular
- AI in Action
- Coaching for the Future-Forward Leader
- Culture Champions
- Measuring Culture
MIT SMR ’s fall 2024 issue highlights the need for personal and organizational resilience amid global uncertainty.
- Past Issues
- Upcoming Events
- Video Archive
- Me, Myself, and AI
Using Scenario Planning to Reshape Strategy
Rather than trying to predict the future, organizations need to strengthen their abilities to cope with uncertainty. a new approach to scenario planning can help companies reframe their long-term strategies by developing several plausible scenarios..
- Boards & Corporate Governance
- Developing Strategy
- Financial Management & Risk
In recent years, organizations have been caught off guard by economic volatility, unexpected political events, natural disasters, and disruptive innovations. In response, we are seeing increased interest in scenario planning. Rather than tying their company’s future to a strategy geared to a single set of events, many senior executives are coming to the view that smart management benefits from a richer understanding of the present possibilities afforded from multiple views about possible futures.
Scenario planning came to prominence following World War II and gained recognition in the corporate world in the late 1960s and 1970s, around the time when Royal Dutch/Shell used it to help address the turbulence 1 caused by the 1973 oil crisis. While several different approaches to scenario planning have emerged since then, this article focuses specifically on what we call the Oxford scenario planning approach. 2 This approach is intended to be collaborative in order to get individuals and groups at all levels and functional backgrounds within an organization to examine an array of factors that contribute to the future and, in the process, to reframe their collective understanding of the present. (See “About the Research.”)
Unlike approaches to scenario planning that take a probabilistic stance (that is, making predictions in percentage terms or as best-case/worst-case scenarios 3 ) or a normative stance (that is, envisioning what a future should look like), the Oxford scenario planning approach is based on plausibility . By recognizing the part of uncertainty that is unpredictable 4 and by actively exploring the sources of the turbulence and uncertainty, the goal is to iteratively and interactively generate new knowledge and insights to help organizations reperceive their circumstances. 5
During periods of turbulence, unpredictable uncertainty, novelty, and ambiguity (what the Oxford scenario planning approach refers to as TUNA conditions), organizations frequently experience serious challenges that threaten existing value chains, communities, and even whole fields of endeavor. Such conditions can be unsettling and destabilizing on many different levels. But they also present opportunities for organizations to reframe their strategies and innovate. 6
A core feature in the Oxford approach is making a distinction between the immediate business environment an organization inhabits (where business transactions take place) and the broader environment, or context, in which it operates. 7 In principle, our approach focuses on two layers. The first layer is the immediate business environment and includes a company’s suppliers, customers, competitors, partners, and other stakeholders. The second layer is made up of all the factors that are beyond the organization’s direct influence. Scenario planning is about exploring how the second layer might transform the first layer. (See “The Role of the Contextual Environment in Scenario Planning.”)
In recent years, the Oxford approach has been used to examine a variety of circumstances, including the future of retailing in India, the tourism industry in Mexico, the changing environment in global shipping, 8 and the future role of the European Patent Office. 9 Our experience shows that different organizations have gone about scenario planning in different ways — there is no cookie-cutter method. Nevertheless, we have found that there are a handful of best practices that the most effective scenario planning processes use. First, they draw on the knowledge and perspective of a broad cross-section of parties, both inside and outside the senior management team. Second, both the participants and the organization are willing to invest time and resources to gain insights.
And third, successful scenario planning processes are committed to examining and understanding plausible futures as opposed to probable futures. In turbulent and uncertain conditions, it is impossible to assign precise probabilities to possible scenarios. 10 As a result, the Oxford scenario planning approach eschews assigning probabilities to scenarios and instead focuses on identifying and developing scenarios that the group finds plausible, challenging, and useful. Each scenario consists of a story that relates to possible changes in the larger contextual system in which an organization operates. 11
In this article, we examine two cases in which the Oxford approach to scenario planning was used. The first case involves Rolls-Royce plc, a leading supplier of power systems for aircraft and the marine and energy markets; the second case looks at the Royal Society of Chemistry, a London, U.K.-based international organization involved in advancing the field of chemical sciences. In addition to showing how these organizations used scenario planning, we will discuss the challenges and opportunities of scenario planning more broadly. (See “Putting Scenario Planning to Work.”)
Scenario Planning at Rolls-Royce
Rolls-Royce was founded in 1906 to produce quality cars in the United Kingdom. Although Rolls-Royce Holdings plc is no longer in the auto business (that operation is owned by BMW AG), it is currently involved in the design, manufacturing, and distribution of power systems for aviation and other industries. With underlying revenue of £13.8 billion and about 50,000 employees, 12 the company has 50% of the wide-body airliner propulsion market. Rather than selling the equipment outright, it generates much of its revenue by selling power services by the hour to aircraft operators. 13
Rolls-Royce avoided the worst consequences of the 2008 financial crash, thanks to its substantial order book and the stability of its aftermarket service business, but in early 2014 the company ran into difficulties. These involved a cyclical decline in wide-body airliner orders, the slowdown in the growth rate of the Chinese economy, and the end of a commodities boom, which impacted the corporate jet business. Also, oil price declines affected both the marine and energy markets, and the company’s civil nuclear power business suffered in the wake of the accident at a nuclear power plant in Fukushima, Japan, in 2011. While these events were mostly unrelated, they affected every aspect of Rolls-Royce’s business. During 2014 and 2015, management issued five profit warnings, and the share price fell more than 50%. An activist investor bought just over 10% of the stock, and there were calls from some commentators to break up the company.
The arrival of a new CEO in July 2015 greatly intensified the company’s search for ways to improve its prospects. That summer, several dozen of the company’s top managers participated in an executive education course at Oxford University. One of the early sessions focused on scenario planning. Based on what the executives heard, some of them began to lobby internally within Rolls-Royce for a company-wide scenario planning process. The idea was to catalog significant factors that might affect Rolls-Royce by the year 2040 14 and to develop a set of strategic questions. Management agreed to pursue this course, and over the next few months, management, in conversation with board members, began working with some of the authors of this article to design and run a program for developing and reviewing a set of future scenarios.
To kick off the process at Rolls-Royce, about 25 mid- and senior-level Rolls-Royce executives were selected from different business units, functions, and locations. In preparation for a three-day workshop slated for early 2016, this group was asked to begin studying a wide range of topics deemed to have relevance to the company’s future. Among the topics: the future of Moore’s law; tools for detecting counterfeit parts (and the distinctions between fake and real); and how transportation needs are likely to change in response to factors such as environmental concerns and migration patterns.
On the first day of the workshop, the participants were asked to present posters summarizing their research. Then the group was divided into four subgroups and given the task of creating scenarios for Rolls-Royce for 2040. According to the assignment, the scenarios had to be plausible and relevant to Rolls-Royce’s circumstances, and also had to challenge some of the assumptions underlying the company’s current strategies.
On the second day, the subgroups shared their draft scenarios with the larger group. Based on the feedback, participants began to coalesce behind three draft scenarios. The first scenario envisioned a world of high connectivity, where efficiency and collaboration would be the norm. The second one saw the emergence of a new world order, where India and China leverage technology to rival the United States, and other countries are forced to adjust accordingly. And the third scenario anticipated a highly divided (and unequal) digital future that some groups would be able to take full advantage of and others would not.
On the third day of the workshop, participants held a final meeting to review and critique the scenarios, and to consider four strategic questions.
- What would digitization look like in the future? For example, in what ways would digital technology radically reshape society and the way business is conducted?
- What factors would affect relations between employees and companies in 2040? For example, how might changing employee expectations about long-term employment affect how organizations are structured?
- What conditions will determine the future of emerging markets? For example, to what extent would political factors and factors such as controls on immigration weaken the trend toward globalization?
- How might technology pathways develop? For example, how will future technologies change the power systems market?
Get Updates on Transformative Leadership
Evidence-based resources that can help you lead your team more effectively, delivered to your inbox monthly.
Please enter a valid email address
Thank you for signing up
Privacy Policy
Following the three-day workshop, Rolls-Royce management endorsed the scenarios as a new basis for the 2016 strategic planning process and began sharing them with the wider strategy community and the company’s senior executives. In practice, this meant that any investment proposal had to take into account how it would be affected by each of the three scenarios and what, if anything, should be done to mitigate or exploit the scenarios; investments that didn’t meet this qualification were rejected. The scenarios therefore became a determining factor in the selection of the investment initiatives that emerged from the 2016 strategy process. Already, outlines of the scenario futures have begun to become apparent. There is little doubt, for example, that the unfolding digital future provides advantages to some groups and disadvantages to others. According to Rolls-Royce, the scenarios provided the backdrop for the company’s 2017 strategy development process.
Scenario Planning at the Royal Society of Chemistry
In contrast to Rolls-Royce, where the objective of the scenario planning process was to envision future directions for one organization, the goal at the Royal Society of Chemistry (RSC) was broader: to understand how the chemical sciences might evolve over the next 10 to 20 years, and how the changes might impact industry, academia, and society at large.
Scientific, social, and technological trends are rapidly changing the way people live and work, and these changes have affected the nature and practice of chemistry as well as the roles of chemists. While chemistry is a mature discipline and forms the basis of our fundamental understanding of what happens at the atomic and molecular levels, it is also concerned with the creation of new matter and interacts with disciplines such as biology and astronomy. What’s more, it plays a key role in solving practical problems such as curing disease; developing sustainable energy, food, and water; and creating new industries. 15 As chemistry faces new opportunities and obligations, the fundamental question was: How should people think about the future of chemistry? 16
The mission of the RSC is to advance excellence in the chemical sciences for the benefit of science and humanity. Its roots go back to the 1840s, when a group of 77 scientists, who included doctors, academics, manufacturers, and entrepreneurs, founded the Chemical Society of London. Today, the RSC has more than 55,000 members worldwide and a reputation as an influential champion for the chemical sciences.
In December 2014, the RSC launched a long-range planning initiative with a broad set of goals. Although the initiative did not refer to scenario planning per se, its aim was to identify possible future directions for the chemical sciences and to anticipate, plan, and prepare for how the field might unfold over the next 10 to 15 years.
The RSC began by identifying some of the big questions its leadership wanted to consider: How might the identity of chemistry change? Could chemistry be facing a future in which academic chemistry departments disappear altogether? If public funding is not available to support the type of blue-skies research that has traditionally produced the next major advances, how will future research be funded? And how will increasingly sophisticated technology and computational techniques change the way new hypotheses are analyzed and tested? 17
The RSC convened a one-day workshop for the leadership team and selected senior managers to consider a wide range of factors. The workshop helped focus senior staff members from throughout the organization on the importance of taking a broad look at how the field was changing, and it set the stage for defining the new role the RSC could play.
What followed was the development of a multiphase scenario planning program. In phase one, which ran for three months, approximately 50 stakeholders from industry, government, and academia who had been selected by the RSC leadership team, were interviewed by phone to identify possible trends.
Next, there were a series of follow-up in-person interviews with some of the stakeholders in order to understand controversial viewpoints or, in some cases, to secure buy-in from key chemical industry leaders. During this process, several themes emerged. Some of the themes had a direct bearing on the chemical sciences (for example, new opportunities for funding research). Others raised questions about how technology might influence the chemical industry, and the effect of changes on intellectual property, the market, and social factors.
Based on the themes, the RSC ran three one-day scenario-planning workshops (two in London and one in Boston) as a vehicle for identifying weak signals that might emerge as important catalysts of future change. The goal was to spark conversations about the future in order to help executives, academics, and policy-makers make more proactive decisions. Each workshop was attended by about 10 people.
In an effort to challenge the assumptions of leaders in the chemical sciences, the RSC developed four scenarios.
- The first scenario focused on the benefits chemistry brings to the world — its ability to provide answers to global challenges, such as climate change, water shortages, natural resources scarcity, and providing health care for an aging population.
- The second scenario focused on changes in the way chemistry is done and how it is organized, envisioning a world where the chemical sciences are increasingly automated and decentralized.
- The third scenario spoke to the growing separation of chemistry into subdisciplines and how that might negatively impact the pipeline of future chemists.
- And the fourth scenario explored the impact of reduced public funding for the chemical sciences.
These scenarios helped to develop the RSC’s long-term strategy and to nudge leaders in the chemical sciences to move beyond conventional thinking and plan for the future. The RSC’s original long-range planning team continues to play a role in encouraging the chemical community to reflect on opportunities and challenges. The findings from the scenario planning process were issued in a 2016 report 18 aimed at broadening engagement with RSC communities. The organization’s leadership team has said it wants to initiate new activities based on the scenarios, including launching new programs to advance the future of chemistry education and scholarly communication consistent with developments in open-access publishing and the trends in open science; bringing the RSC “futures thinking” conversation to a wider audience (including the organization’s general assembly and meetings with international partners around the world); and preparing for the different possible futures through internal strategic conversations with senior management and the RSC’s external governing body.
Each element of the RSC’s new strategy, which the governing board is slated to approve in July 2017, has been tested against the opportunities and challenges identified by the scenario planning work. The next priority will be to amplify the voice of the chemistry community. This will involve the RSC management sharing success stories from the chemical sciences community not only with other companies but also with governments, funders of research, and society at large. In addition, the RSC has set a goal of improving how it listens to the broader community.
Reframing Strategy
As the Rolls-Royce and RSC cases show, scenario planning can help strategists look beyond their current circumstances — and with longer time horizons — to test existing strategies, make sense of the causes and effects of turbulent, uncertain, or ambiguous conditions; invent new options; open up or enhance the quality of strategic conversations; and pave the way for collaborative strategies.
So, what does this mean for strategists or policy-makers at companies and nonprofit organizations that want to consider future directions? Based on our experience, we have four recommendations.
1. Invest time and effort in preparing participants. First, it’s important to identify who the intended participants in the scenario planning process should be and how these participants learn. Typically, because the board’s role is to question and prod the executive team, scenario planning is easier to align with the board than with the executive team. But in cases where strategies have run into trouble or there is a new management team, senior leaders may welcome the opportunity to engage in scenario planning. We have found scenario planning generates the most value when it’s clear who the intended learners are and what they wish to learn. Indeed, as a rule of thumb, organizations should expect to spend twice as much time setting expectations and defining the intent and usability of their scenarios as they do producing the scenarios themselves. It pays to invest time and effort throughout the process — both in preparing the participants and setting expectations at the outset, as well as in using the scenarios in strategy development. Otherwise, the scenario planning exercise may become a waste of time.
2. Help participants identify the assumptions about the future that underpin their current strategy. You should be prepared to help the learners articulate their sense of the future and the set of assumptions they are using in their current strategy. In our experience, this part of the process depends heavily on gathering information and developing insights gained from internal and external interviews. Scenario planning that explores a limited number of scenarios (usually between two and four) helps to develop an alternative to the existing framing.
3. Be prepared to invest significant amounts of time and resources in the scenario planning process. Although every situation is different, the amount of time and resources required will depend on what the organization is trying to achieve and its goal. Scenarios that will be presented broadly or publicly tend to require much more detail and peer review (and, as a result, more time and budget) than less formal scenarios involving small teams who are used to working together.
4. Remember that scenario planning is an iterative process. In our experience, this point cannot be overemphasized. It’s important to recognize that the initial set of scenarios that organizations develop may not be sufficient. Often, additional insights are gathered in a second iteration. Rolls-Royce, for example, began with a total of 12 scenarios before multiple iterations led it to focus on three.
Organizations need to have criteria for assessing whether the scenarios they develop are plausible. (By plausible, we mean that they should be neither too improbable nor too familiar.) At the same time, executives and board members need to ask themselves whether the scenarios are sufficiently challenging, easy to communicate, and capable of being adopted.
As we have worked with organizations, we have noticed that considerable value can be extracted from reconsidering and reperceiving the immediate business environment that each of the different scenarios implies. In reconsidering how the roles of one actor change from one scenario to another, managers can gain new perspectives and see how new actors begin to emerge. The scenario planning approach we have described helps organizations assess the kinds of threats and opportunities that might occur in turbulent, unpredictable, and ambiguous settings. By freeing the mind from the current framing, strategists can use the process to envision and begin to implement a new set of options.
About the Authors
Rafael Ramírez is a professor of practice and director of the Oxford Scenarios Programme at the Saïd Business School at the University of Oxford in the United Kingdom. Steve Churchhouse was the director of digital for Rolls-Royce plc until April 2017. Alejandra Palermo is manager of external relations for the London, U.K.-based Royal Society of Chemistry. Jonas Hoffmann is an associate professor at Skema Business School’s campus in Sophia Antipolis, France.
1. F.E. Emery and E.L. Trist, “The Causal Texture of Organizational Environments,” Human Relations 18, no. 1 (February 1965): 21-32; and R. Ramírez, J. Selsky, and K. van der Heijden, eds., “Business Planning for Turbulent Times: New Methods for Applying Scenarios” (London: Earthscan, 2008).
2. R. Ramírez and A. Wilkinson, “Strategic Reframing: The Oxford Scenario Planning Approach” (Oxford, U.K.: Oxford University Press, 2016).
3. “Best-case” and “worst-case” scenarios are not seen as true scenarios for the purposes of the Oxford scenario planning approach; instead, they are disguised forecasts.
4. F. Knight, “Risk, Uncertainty, and Profit” (Boston: Hart, Schaffner, and Marx Prize Essays 31; Houghton Mifflin Co., 1921).
5. R. Ramírez and C. Selin, “Plausibility and Probability in Scenario Planning,” Foresight 16, no. 1 (2014): 54-74; E. Eidinow and R. Ramírez, “The Aesthetics of Story-Telling as a Technology of the Plausible,” Futures 84, part A (November 2016): 43-49; and R. Ramírez and J. Ravetz, “Feral Futures: Zen and Aesthetics,” Futures 43, no. 4 (May 2011): 478-487.
6. R. Ramírez and J. Selsky, “Strategic Planning in Turbulent Environments: A Social Ecology Approach to Scenarios,” Long Range Planning 49, no. 1 (February 2016): 90-102; and R. Ramírez and U. Mannervik, “Strategy for a Networked World” (London: Imperial College Press, 2016).
7. This distinction was first introduced by Emery and Trist in “The Causal Texture of Organizational Environments” and was more fully developed in K. van der Heijden, “Scenarios: The Art of Strategic Conversation” (New York: John Wiley & Sons, 1996).
8. See “Shipping Scenarios 2030,” www.shippingscenarios.wartsila.com.
9. See S. Elahi and R. Ramírez, “Appendix E: European Patent Office Case Study,” in Ramírez and Wilkinson, “Strategic Reframing: The Oxford Scenario Planning Approach.”
10. Probability involves possible deviance from trajectories established from past facts and their distribution. In turbulent conditions, these facts and their distributions are either irrelevant or nonexistent.
11. Ramírez and Wilkinson, “Strategic Reframing: The Oxford Scenario Planning Approach,” 42-43.
12. Rolls-Royce Holdings plc Annual Report 2016, www.rolls-royce.com.
13. The “power by the hour” concept was introduced in the 1960s for the Viper engine developed by Armstrong Siddeley (which later became Bristol Siddeley and then Rolls-Royce). It was conceived as a tool to provide maintenance cost assurance. The company contracted with customers for the total in-service cost of the product, not only providing airline customers with predictable operating costs but also aligning Rolls-Royce’s commercial incentives with those of the customer.
14. The year 2040 was chosen because it was beyond Rolls-Royce’s long-range technology scanning horizon of 20 years and beyond the planned introduction dates for any products under consideration.
15. S. Matlin, G. Mehta, and H. Hopf, “Chemistry Embraced by All,” Science 347, issue 6227 (March 13, 2015): 1179.
16. G. Whitesides, “Reinventing Chemistry,” Angewandte Chemie International Edition 54, issue 11 (March 9, 2015): 3196-3209.
17. Researchers at Johns Hopkins University recently developed a “map” to predict the safety of untested chemicals, using data collected by the European Chemicals Agency.
18. “Future of the Chemical Sciences,” www.rsc.org.
i. R. Ramírez, “What Might Decision-Making Be in a Complex World?” invited lecture coauthored with J. Ravetz, T. Lang, and A. Wilkinson, International Risk Assessment and Horizon Scanning Symposium 2010, March 2010, Singapore.
More Like This
Add a comment cancel reply.
You must sign in to post a comment. First time here? Sign up for a free account : Comment on articles and get access to many more articles.
Comment (1)
Jeff meunier.
- SUGGESTED TOPICS
- The Magazine
- Newsletters
- Managing Yourself
- Managing Teams
- Work-life Balance
- The Big Idea
- Data & Visuals
- Case Selections
- HBR Learning
- Topic Feeds
- Account Settings
- Email Preferences
Living in the Futures
- Angela Wilkinson
- Roland Kupers
How scenario planning changed corporate strategy
Reprint: R1305K
In 1965, a time when quantitative, computer-driven planning was very much in vogue, Royal Dutch Shell started experimenting with a different way of looking into the future: scenario planning. Shell’s practice has now survived for almost half a century and has had a huge influence on how businesses, governments, and other organizations think about and plan for the future. The authors interviewed almost every living veteran of the Shell scenario planning operation, along with top Shell executives through the years. They identify several principles that both define the process at Shell and help explain how it has survived and thrived for so long.
For instance, Shell scenarios are stories, not predictions, and are designed to help break the habit, ingrained in most corporate planning, of assuming that the future will look much like the present. They must above all be plausible, with a logical story line, in order to encourage intuition and judgment. They create a safe space for dialogue and for acknowledging uncertainty.
They must also be relevant, not simply disruptive and challenging. And they need some quantification to be credible—but the numbers must flow from the stories, rather than the other way around. Otherwise, there’s always the danger that quantitative models will hide assumptions and constrain thinking rather than refine it.
Because scenarios follow a rhythm distinct from the annual strategy cycle, they allow an organization to see realities that would otherwise be overlooked.
In 1965 Royal Dutch Shell put into service what it called the Unified Planning Machinery (UPM), a computer-driven system meant to bring more discipline to the company’s cash flow planning. This kind of rational, model-based financial forecasting was very much in vogue in the 1960s. But before long, Shell’s top executives realized that many of the commitments they had to make extended well beyond UPM’s six-year time horizon—and that even within that horizon, UPM tended to get a lot wrong. In the early 1970s they shut it down.
- AW Angela Wilkinson is secretary general and CEO of the World Energy Council. She spent nearly a decade on Shell’s corporate scenario team and is the author of Strategic Reframing and Realistic Hope , as well as the coauthor, with Roland Kupers, of The Essence of Scenarios: Learning from the Shell Experience .
- RK Roland Kupers is an adviser on complexity, resilience, and energy transition; a professor of practice at Arizona State University; and an associate researcher at the Institute of Advanced Studies at the University of Amsterdam. He was formerly a senior executive at Shell and at AT&T and is the author of A Climate Policy Revolution and the coauthor, with Angela Wilkinson, of The Essence of Scenarios: Learning from the Shell Experience .
Partner Center
- ERM Resource Center
- Full Resource Center Archive
- ERM Fundamentals
- ERM Leadership and Governance
- ERM and Strategy
- Risk Identification and Assessment
- Risk Appetite and Response
- Risk Monitoring and Communications
- ERM Frameworks and Best Practices
- ERM Expert Insights
- Emerging Risks
- ERM Roundtable Summit
- Training and Events
- Advanced ERM
- ERM in Higher Ed
- ERM in Non-Profits
- Risk Governance Research Symposium
- ERM Fellows
- ERM Custom Training
- Master of Management, Risk & Analytics
- Master of Accounting, ERM Concentration
- ERM Initiative Team
- ERM Advisory Board
- Contact ERM
New Case Study: Using Scenario Planning to Consider Emerging Risks
Downloadable Case Study
Looking for how organizations use scenario planning to address risks and capitalize on opportunities?
The case study focuses on the use of scenario planning as part of an Enterprise Risk Management (ERM) process, by examining the objectives for scenario planning, the development and evaluation of scenarios, and the ways that outcomes from scenario planning are used.
Examples of Scenario Planning
The case study is based on input from 20 companies covering 12 different industries including healthcare, financial services, pharmaceuticals, apparel, personal products, beverages, utilities, and others. In addition, the study identifies critical success factors, areas targeted for improvement, common barriers, and the use of technology in the process.
Tips for Effective Scenario Planning
The case study addresses these topics:
- Identifying and defining the purpose of the scenario planning workshop:
- Planning the scenario planning activities and how the sessions will be structured and facilitated.
- Pinpointing both internal and external inputs to the process, such as subject matter experts, risk owners, senior management and ERM leaders.
- Summarizing and aggregating outcomes from the various scenario planning activities.
- Managing critical factors for a successful scenario planning workshop, including common barriers to the process
- Leveraging technologies tools to help facilitate scenario planning activities.
The case study ends with a summary of several best practices.
Original Article Source: “A Look into The Future with Scenario Planning: A Survey of ERM Practices”, Kiersten Woodring, Carson Chrismon, Justin Yim, and Danny O’Dirling, NC State University ERM Initiative, February 2020
Download the case study
- Operational Risk
- Risk Assessment
- Case Studies
- Tools and Templates
More From Enterprise Risk Management Initiative
What is enterprise risk management (erm), report: executive perspectives on top risks for 2024 and a decade later, integrating erm with other risk and assurance functions.
IMAGES
VIDEO
COMMENTS
Our focus for the case study was on the use of scenario planning as part of an Enterprise Risk Management (ERM) process. We examined the use of scenario planning at twenty different organizations, and covered each company’s objectives for scenario planning, the development and
Produce land-use models, maps, and visualizations for each scenario. Analyze the impacts on biodiversity and ecosystem services. Use results to guide local and regional planning efforts. While scenarios are not predictions of the future, they can help communities prepare for the unexpected.
Scenario planning: how to navigate multiple crises – Peter Schwartz, author of the highly influential book The Art of the Long View, explains to David Bach what needs to be done – and why he remains optimistic about the future.
July 28, 2020. Peter Scoblic, cofounder and principal of the consultancy Event Horizon Strategies, says that too many companies are short-sighted in their strategy-making and don’t effectively plan...
Using Scenario Planning to Reshape Strategy. Rather than trying to predict the future, organizations need to strengthen their abilities to cope with uncertainty. A new approach to scenario planning can help companies reframe their long-term strategies by developing several plausible scenarios.
by Angela Wilkinson and Roland Kupers. From the Magazine (May 2013) Summary. Reprint: R1305K In 1965, a time when quantitative, computer-driven planning was very much in vogue, Royal Dutch Shell...
August 25, 2022. Scenario planning helps decision-makers identify ranges of potential outcomes and impacts, evaluate responses and manage for both positive and negative possibilities. By visualizing potential risks and opportunities, businesses can become proactive versus simply reacting to events.
Case Study Scenario Planning at Southern California Edison. By focusing on plausible uncertainties and postulating alternative futures, scenario planning emphasizes the unpredictability of future events and their impact on operations, sales, prices, demand, and so forth.
The case study focuses on the use of scenario planning as part of an Enterprise Risk Management (ERM) process, by examining the objectives for scenario planning, the development and evaluation of scenarios, and the ways that outcomes from scenario planning are used. Examples of Scenario Planning.
Scenario planning has helped us develop an understanding of what those future business models will be and has stimulated us to consider opportunities in areas that are not yet established and well-defined.