Scenario thinking

What are scenarios — and what they are not

Scenarios are not predictions — they are a thinking tool, designed to raise the quality of strategic conversations.

Shell began developing its scenario methodology in the late 1960s. When the 1973 oil crisis hit, most companies were caught unprepared. Shell wasn’t. They were mentally ready — not because they had predicted the crisis, but because they had already thought it through.

Scenarios help us imagine multiple possible futures, test our strategies in a safe “wind tunnel,” and challenge the assumptions that shape our thinking and guide our decisions. There are winners and losers in every scenario. By testing our strategies in different setups we improve our chances of becoming one of the winners.

Scenarios are not about what is likely to happen, but about what could happen — and what it would mean for us, our strategy, our organization, our business models, our products, and our people.

Scenarios give us permission to think about the unthinkable and ask “what if” questions that are often uncomfortable or even impossible to address through normal discussion channels.

Ultimately, scenario thinking doesn’t narrow our minds — it expands them. It strengthens our ability to sense weak signals, to see patterns in the seemingly random world, to understand change, and to stay adaptable. It is not about seeking certainty but turning uncertainty into a competitive advantage.

Scenarios help us to:

• raise the quality of strategic conversations,
• engage constructively with uncertainty,
• see the world through alternative lenses, and
• above all, make more conscious choices that shape our future.

That is the power of scenario thinking — a tool for leaders who dare to imagine, question, and prepare for what others dismiss as unthinkable.

Supporting strategic decision-making

Scenarios are often used to support strategic decision-making. They can be used as a set of “wind tunnels” in which existing strategies are tested and finetuned in different business environments and conditions:

• How well do our current strategies, operating models, channels, partnerships, products, and services work in each of the scenarios?
• How should we act now to improve our chances of success in each scenario?
• In which scenarios would we have the best opportunities to operate? How could we promote these scenarios?
• Which scenarios would be bad or even harmful to us? How could we mitigate those threats?
• How could we improve our opportunities to operate in all scenarios? What would be our “no regret” moves and actions?

The revised implementation plans are more robust and actionable, which helps you act quickly and effectively instead of scrambling at the last minute.

Monitoring early warning signals

Scenario planning is not a one-time exercise but an ongoing process. As none of the scenarios is likely to emerge exactly as envisioned, it is important to recognize and monitor early warning signals pointing to each of the scenarios. Typical business-related measures, like sales data, market size predictions, consumer sentiment surveys, or online search trends, are too slow, evidence of change that has already happened, not insightful, and do not give strategic advantage.

Once your early warning signals notice onethese indicators aligning with a specific scenario, you can begin implementing the strategies you’ve outlined for that situation.

Creating a common understanding

Scenarios can also be used for building engagement and creating common understanding on a complex matter. A famous example of this is the “Mont Fleur” scenario exercise, which took place in South Africa during 1991–1992. It brought together people with various backgrounds to discuss and think creatively about the future of their country as it was transitioning from apartheid to democracy. The final scenarios were presented to more than fifty groups, including political parties, companies, academics, trade unions, and civic organizations.

One of the key results of the intensive scenario work was the creation of informal networks and connections between the participants. These connections provided later the basis for more formal agreements. The Mont Fleur scenarios also created a common language and thinking model for tackling important issues that previously could be neither discussed nor addressed.

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Related links:

https://www.aaltoee.fi/en/aalto-leaders-insight/2022/five-tips-for-scenario-thinking