Scenario Planning…
Learning From A Frenchman and Embracing TUNA
In today’s business world, marked by rapid and unpredictable changes, scenario planning is an indispensable strategic tool. The concept, which uses alternative stories about the future to develop strategies, was pioneered by Pierre Wack at the Royal Dutch/Shell Group of Companies. His innovative approach helped Shell navigate turbulent times by foreseeing events like the 1973 energy crisis and the fall of the Soviet Union.
Pierre Wack and the Art of Scenario Planning
Pierre Wack was not just a planner but a visionary whose ability to detect subtle signs of change was akin to "hunting in a pack of wolves," where he served as the eyes of the pack, signalling back to the rest. This analogy beautifully encapsulates the essence of scenario planning—it’s about leading the pack, identifying potential threats and opportunities that others might miss, and preparing the organisation for whatever the future holds.
Wack’s work demonstrated that scenario planning could do more than predict changes; it could transform a company’s approach to the future. Despite its benefits, the practice has not always been embraced fully, including within Shell itself, due to the challenges of changing managerial mindsets and integrating foresight into daily decision-making.
Why It Matters More Than Ever
The business environment today is often described using the acronym VUCA, which stands for Volatile, Uncertain, Complex, and Ambiguous. The terms gets used and abused and no doubt sounds quite glib…. But it underlines the need for robust strategies applicable to a broad range of future scenarios. Pierre Wack’s insights are particularly relevant in this context, as the political and economic uncertainties he foresaw have not only materialised but intensified.
To complement the VUCA model, a newer framework known as TUNA, which stands for Turbulence, Unpredictable uncertainty, Novelty, and Ambiguity, offers further insight. Developed at Oxford's Saïd Business School, TUNA emphasises the social sciences' role in strategic planning, moving away from the military origins of VUCA and offering a nuanced understanding of modern business challenges.
Implementing Effective Scenario Planning
Implementing scenario planning effectively requires adopting several of Wack's principles:
Deep Research and Rigorous Analysis: Engage in thorough research and analysis to understand the forces shaping your industry, as Wack and his team did.
Continuous Learning and Adaptation: Recognise that scenario planning is not a one-off event but a continuous process requiring agility and adaptability.
Engagement with Unconventional Insights: Cultivate a network of individuals offering unconventional insights into global trends and challenges.
Emotional Engagement: Ensure scenarios are not only intellectually compelling but also emotionally engaging, enabling managers to feel the urgency and reality of potential futures.
Understanding The Methodology
Scenario planning is a strategic method that involves imagining several distinct futures based on different assumptions and variables. The goal is not to predict the future accurately but to prepare for it effectively by understanding possible variations and their impacts. Here’s an overview of the core methodology:
Identifying Driving Forces: Start by identifying the external and internal factors that could significantly impact the organisation. These include economic conditions, technological changes, regulatory landscapes, and cultural trends.
Exploring Critical Uncertainties: From the list of driving forces, pinpoint those that are both highly uncertain and highly impactful. These are the elements that could most likely lead to divergent futures.
Developing Scenarios: Construct several plausible scenarios around the critical uncertainties. Each scenario should tell a coherent story about how the future might unfold, including the interactions between different driving forces. Typically, scenarios are crafted as narratives or stories to make them vivid and engaging.
Implications and Strategic Options: Analyse each scenario to understand its potential implications for the organisation. Consider what strategic options would be viable in each scenario, and how current strategies might need to adapt.
Monitoring Indicators: Once scenarios are developed, identify indicators that would signal which scenario is becoming more likely. This ongoing monitoring is crucial as it allows the organisation to adjust its strategies in real-time.
Periodic Review and Update: Scenario planning is a dynamic process. Regularly review and revise scenarios as new information emerges and as the business and its environment evolve.
Looking Ahead with Scenario Planning and TUNA
The legacy of Pierre Wack and the introduction of the TUNA framework teach us that the real power of scenario planning lies in its ability to change how leaders perceive their environment. It reshapes strategic thinking to be more forward-looking and insightful.
As we confront a future where the only certainty is uncertainty, embracing the principles of scenario planning and TUNA can equip businesses with the strategic foresight needed to navigate the complexities of the modern world. Just as wolves need to be aware of their terrain to hunt effectively, companies need to understand the landscapes they operate in to thrive amidst volatility and change.
Incorporating these strategic planning tools into your toolkit is not just an option but a necessity for those aiming to lead their organisations to a prosperous future. By fostering a culture that values proactive and strategic foresight, businesses can not only survive but also seize the opportunities that arise from the inevitable changes of our times.
Tools To Help Better Understand The Future
At mostly, we are currently developing a Scenario Planning tool that incorporates the methodology outlined above, complemented by the power of a Large Language Model (LLM) to accelerate and broaden data gathering. This tool will be open for everyone to use. We believe that Scenario Planning should not be exclusive to C-suite executives, management consultants, and academics. Our goal is to democratize access to these powerful strategic planning techniques
mostly consulting January 2025©
