Editing Scenario planning (section)

==Process==
The part of the overall process which is radically different from most other forms of long-range planning is the central section, the actual production of the scenarios. Even this, though, is relatively simple, at its most basic level. As derived from the approach most commonly used by Shell,<ref name="Scenarios: An Explorer's Guide">{{cite web|last1=Shell|title=Scenarios: An Explorer's Guide|url=http://s05.static-shell.com/content/dam/shell/static/public/downloads/brochures/corporate-pkg/scenarios/explorers-guide.pdf|website=www.shell.com/scenarios|publisher=Shell Global|access-date=15 July 2014|year=2008}}</ref> it follows six steps:<ref>{{cite book|last1=Meinert|first1=Sacha|title=Field manual - Scenario building|date=2014|publisher=Etui|location=Brussels|isbn=978-2-87452-314-4|url=http://www.etui.org/content/download/13953/114820/file/2014_Scenario_Building_DEF.pdf|access-date=15 July 2014}}</ref>
 
#Decide drivers for change/assumptions
#Bring drivers together into a viable framework
#Produce 7–9 initial mini-scenarios
#Reduce to 2–3 scenarios
#Draft the scenarios
#Identify the issues arising

===Step 1 – decide assumptions/drivers for change===
The first stage is to examine the results of environmental analysis to determine which are the most important factors that will decide the nature of the future environment within which the organisation operates. These factors are sometimes called 'variables' (because they will vary over the time being investigated, though the terminology may confuse scientists who use it in a more rigorous manner). Users tend to prefer the term 'drivers' (for change), since this terminology is not laden with quasi-scientific connotations and reinforces the participant's commitment to search for those forces which will act to change the future. Whatever the nomenclature, the main requirement is that these will be informed assumptions.
 
This is partly a process of analysis, needed to recognise what these 'forces' might be. However, it is likely that some work on this element will already have taken place during the preceding environmental analysis. By the time the formal scenario planning stage has been reached, the participants may have already decided – probably in their sub-conscious rather than formally – what the main forces are.
 
In the ideal approach, the first stage should be to carefully decide the overall assumptions on which the scenarios will be based. Only then, as a second stage, should the various drivers be specifically defined. Participants, though, seem to have problems in separating these stages.
 
Perhaps the most difficult aspect though, is freeing the participants from the preconceptions they take into the process with them. In particular, most participants will want to look at the medium term, five to ten years ahead rather than the required longer-term, ten or more years ahead. However, a time horizon of anything less than ten years often leads participants to extrapolate from present trends, rather than consider the alternatives which might face them. When, however, they are asked to consider timescales in excess of ten years they almost all seem to accept the logic of the scenario planning process, and no longer fall back on that of extrapolation.  There is a similar problem with expanding participants horizons to include the whole external environment.

{{Further|Strategic assumptions}}

'''Brainstorming'''
 
In any case, the brainstorming which should then take place, to ensure that the list is complete, may unearth more variables – and, in particular, the combination of factors may suggest yet others. 
 
A very simple technique which is especially useful at this – [[brainstorming]] – stage, and in general for handling scenario planning debates is derived from use in Shell where this type of approach is often used. An especially easy approach, it only requires a conference room with a bare wall and copious supplies of 3M [[Post-It Notes]].
 
The six to ten people ideally taking part in such face-to-face debates should be in a conference room environment which is isolated from outside interruptions. The only special requirement is that the conference room has at least one clear wall on which Post-It notes will stick. At the start of the meeting itself, any topics which have already been identified during the environmental analysis stage are written (preferably with a  thick magic marker, so they can be read from a distance) on separate Post-It Notes. These Post-It Notes are then, at least in theory, randomly placed on the wall. In practice, even at this early stage the participants will want to cluster them in groups which seem to make sense. The only requirement (which is why Post-It Notes are ideal for this approach) is that there is no bar to taking them off again and moving them to a new cluster.

A similar technique – using 5" by 3" index cards – has also been described (as the 'Snowball Technique'), by Backoff and Nutt, for grouping and evaluating ideas in general.<ref>Backoff, R.W. and P.C. Nutt. "A Process for Strategic Management with Specific Application for the Non-Profit Organization," ''Strategic Planning: Threats and Opportunities for Planners''. Planners Press, 1988.</ref>
 
As in any form of brainstorming, the initial ideas almost invariably stimulate others. Indeed, everyone should be encouraged to add their own Post-It Notes to those on the wall. However it differs from the 'rigorous' form described in 'creative thinking' texts, in that it is much slower paced and the ideas are discussed immediately. In practice, as many ideas may be removed, as not being relevant, as are added. Even so, it follows many of the same rules as normal brainstorming and typically lasts the same length of time – say, an hour or so only.
 
It is important that all the participants feel they 'own' the wall – and are encouraged to move the notes around themselves. The result is a very powerful form of creative decision-making for groups, which is applicable to a wide range of situations (but is especially powerful in the context of scenario planning). It also offers a very good introduction for those who are coming to the scenario process for the first time. Since the workings are largely self-evident, participants very quickly come to understand exactly what is involved. 
 
'''Important and uncertain'''
 
This step is, though, also one of selection – since only the most important factors will justify a place in the scenarios. The [[Pareto principle|80:20 Rule]] here means that, at the end of the process, management's attention must be focused on a limited number of most important issues. Experience has proved that offering a wider range of topics merely allows them to select those few which interest them, and not necessarily those which are most important to the organisation.
 
In addition, as scenarios are a technique for presenting alternative futures, the factors to be included must be genuinely 'variable'. They should be subject to significant alternative outcomes. Factors whose outcome is predictable, but important, should be spelled out in the introduction to the scenarios (since they cannot be ignored). The Important Uncertainties Matrix, as reported by Kees van der Heijden of Shell, is a useful check at this stage.<ref name="vanderheijden1996">van der Heijden, Kees. ''Scenarios: The Art of Strategic Conversation''. Wiley & Sons, 1996.</ref>
 
At this point it is also worth pointing out that a great virtue of scenarios is that they can accommodate the input from any other form of forecasting. They may use figures, diagrams or words in any combination. No other form of forecasting offers this flexibility.

===Step 2 – bring drivers together into a viable framework===
The next step is to link these drivers together to provide a meaningful framework. This may be obvious, where some of the factors are clearly related to each other in one way or another. For instance, a technological factor may lead to market changes, but may be constrained by legislative factors. On the other hand, some of the 'links' (or at least the 'groupings') may need to be artificial at this stage. At a later stage more meaningful links may be found, or the factors may then be rejected from the scenarios. In the most theoretical approaches to the subject, probabilities are attached to the event strings. This is difficult to achieve, however, and generally adds little – except complexity – to the outcomes.
 
This is probably the most (conceptually) difficult step. It is where managers' 'intuition' – their ability to make sense of complex patterns of  'soft' data which more rigorous analysis would be unable to handle – plays an important role. There are, however, a range of techniques which can help; and again the Post-It-Notes approach is especially useful:
 
Thus, the participants try to arrange the  drivers, which have emerged from the first stage, into groups which seem to make sense to them. Initially there may be many small groups. The intention should, therefore, be to gradually merge these (often having to reform them from new combinations of drivers to make these bigger groups work). The aim of this stage is eventually to make 6–8 larger groupings;  'mini-scenarios'. Here the Post-It Notes may be moved dozens of times over the length – perhaps several hours or more – of each meeting. While this process is taking place the participants will probably want to add new topics – so more Post-It Notes are added to the wall. In the opposite direction, the unimportant ones are removed (possibly to be grouped, again as an 'audit trail' on another wall). More important, the 'certain' topics are also removed from the main area of debate – in this case they must be grouped in clearly labelled area of the main wall.
 
As the clusters – the 'mini-scenarios' – emerge, the associated notes may be stuck to each other rather than individually to the wall; which makes it easier to move the clusters around (and is a considerable help during the final, demanding stage to reducing the scenarios to two or three).
 
The great benefit of using Post-It Notes is that there is no bar to participants changing their minds. If they want to rearrange the groups – or simply to go back (iterate) to an earlier stage – then they strip them off and put them in their new position.

===Step 3 – produce initial mini-scenarios===
The outcome of the previous step is usually between seven and nine logical groupings of drivers. This is usually easy to achieve. The 'natural' reason for this may be that it represents some form of limit as to what participants can visualise. 
 
Having placed the factors in these groups, the next action is to work out, very approximately at this stage, what is the connection between them. What does each group of factors represent?

===Step 4 – reduce to two or three scenarios===
The main action, at this next stage, is to reduce the seven to nine mini-scenarios/groupings detected at the previous stage to two or three larger scenarios
 
There is no theoretical reason for reducing to just two or three scenarios, only a practical one. It has been found that the managers who will be asked to use the final scenarios can only cope effectively with a maximum of three versions! Shell started, more than three decades ago, by building half a dozen or more scenarios – but found that the outcome was that their managers selected just one of these to concentrate on. As a result, the planners reduced the number to three, which managers could handle easily but could no longer so easily justify the selection of only one! This is the number now recommended most frequently in most of the literature.   
 
'''Complementary scenarios'''
 
As used by Shell, and as favoured by a number of the academics, two scenarios should be complementary; the reason being that this helps avoid managers 'choosing' just one, 'preferred', scenario – and lapsing once more into single-track forecasting (negating the benefits of using 'alternative' scenarios to allow for alternative, uncertain futures). This is, however, a potentially difficult concept to grasp, where managers are used to looking for opposites; a good and a bad scenario, say, or an optimistic one versus a pessimistic one – and indeed this is the approach (for small businesses) advocated by Foster. In the Shell approach, the two scenarios are required to be equally likely, and between them to cover all the 'event strings'/drivers. Ideally they should not be obvious opposites, which might once again bias their acceptance by users, so the choice of  'neutral' titles is important. For example, Shell's two scenarios at the beginning of the 1990s were titled 'Sustainable World' and 'Global Mercantilism'[xv]. In practice, we found that this requirement, much to our surprise, posed few problems for the great majority, 85%, of those in the survey; who easily produced 'balanced' scenarios. The remaining 15% mainly fell into the expected trap of 'good versus bad'. We have found that our own relatively complex (OBS) scenarios can also be made complementary to each other; without any great effort needed from the teams involved; and the resulting two scenarios are both developed further by all involved, without unnecessary focusing on one or the other.
 
'''Testing'''
 
Having grouped the factors into these two scenarios, the next step is to test them, again, for viability. Do they make sense to the participants? This may be in terms of logical analysis, but it may also be in terms of intuitive 'gut-feel'. Once more, intuition often may offer a useful – if academically less respectable – vehicle for reacting to the complex and ill-defined issues typically involved. If the scenarios do not intuitively 'hang together', why not? The usual problem is that one or more of the assumptions turns out to be unrealistic in terms of how the participants see their world. If this is the case then you need to return to the first step – the whole scenario planning process is above all an iterative one (returning to its beginnings a number of times until the final outcome makes the best sense).

===Step 5 – write the scenarios===
The scenarios are then 'written up' in the most suitable form. The flexibility of this step often confuses participants, for they are used to forecasting processes which have a fixed format. The rule, though, is that you should produce the scenarios in the form most suitable for use by the managers who are going to base their strategy on them. Less obviously, the managers who are going to implement this strategy should also be taken into account. They will also be exposed to the scenarios, and will need to believe in these. This is essentially a 'marketing' decision, since it will be very necessary to 'sell' the final results to the users. On the other hand, a not inconsiderable consideration may be to use the form the author also finds most comfortable. If the form is alien to him or her the chances are that the resulting scenarios will carry little conviction when it comes to the 'sale'. 
 
Most scenarios will, perhaps, be written in word form (almost as a series of alternative essays about the future); especially where they will almost inevitably be qualitative  which is hardly surprising where managers, and their audience, will probably use this in their day to day communications. Some, though use an expanded series of lists and some enliven their reports by adding some fictional 'character' to the material – perhaps taking literally the idea that they are stories about the future – though they are still clearly intended to be factual. On the other hand, they may include numeric data and/or diagrams – as those of Shell do (and in the process gain by the acid test of more measurable 'predictions').

===Step 6 – identify issues arising===
The final stage of the process is to examine these scenarios to determine what are the most critical outcomes; the 'branching points' relating to the 'issues' which will have the greatest impact (potentially generating 'crises') on the future of the organisation. The subsequent strategy will have to address these – since the normal approach to strategy deriving from scenarios is one which aims to minimise risk by being 'robust' (that is it will safely cope with all the alternative outcomes of these 'life and death' issues) rather than aiming for performance (profit) maximisation by gambling on one outcome.