Rethinking Scenarios: What a Difference a Day Makes
What is the probability that, five years from now, you will have to pay for a Google search? Today, most people would find this scenario unlikely, perhaps even impossible. Now consider a different question: suppose that five years from now, you do have to pay. How did it happen? The same people would offer up a range of possibilities: cash-starved governments are compelled to seek new tax sources; stratospheric energy prices, driven by a global fuel shortage, force Google, with its massive server farms, to start charging for its services; or a game-changing algorithm enables Google to charge for premium search results. In an instant, the impossible has become the plausible.
The “what if?” school of thinking clearly has a place in the business world. For a host of reasons, however, classic scenario planning of the sort pioneered by the legendary Pierre Wack at Shell in the 1970s has fallen out of fashion. Some executives believe that it is too time consuming and resource intensive. Others feel that markets are too changeable for scenarios to be of much help. And to a degree, they're right. Traditional scenario planning can be hard work that demands a dedicated staff and months of quantitative study. It is best suited to exploring a limited set of key issues that drive the fundamental economics of a business.
But Wack's approach to scenarios is not the only one. Many of the benefits of scenario ...