The future of scenarios: challenges and opportunities

Abstract

Corporate and institutional managers don’t get the full return on investment in scenarios that they should, nor do they employ scenarios on the full range of corporate issues suited to this methodology. Most often, scenarios are used by top management to provide a better understanding of the range of possible business environments they must contend with in the future. But mid‐level managers often grumble that these big picture “strategic scenarios” don’t address the competitive issues and the critical decisions that they face in the trenches of their business. To achieve more consistently productive uses of scenarios, there are several major challenges that must be addressed for the future of the scenario method: resolve the confusion over the definitions and methods of scenarios; and clarify and enlarge the appropriate application of scenarios. Beyond the confusion caused by the different definitions and methods of scenarios lies the uncertainty about when and how to apply scenarios in the business environment. In addition to planning and forecasting, scenarios can be used for market research and new product development. A major debate revolves around whether or not scenarios have successfully developed into a tool for investment and company decision‐making. One view has been that scenarios provide context, but not direct inputs for such decisions (R&D priorities, new products, and financial investments). This approach emphasizes the role of scenarios in team building, information gathering, learning, and strategic thinking. It advocates using scenarios primarily as a tool for corporate learning and for changing corporate culture. Another view, however, holds that scenarios can and should be used for near‐term business decision‐making. Scenarios need to be applied to the numerous operational issues that companies face. As such, they are a key method of analysis, especially for highly uncertain circumstances.