Premium
When and how to use scenario planning: A heuristic approach with illustration
Author(s) -
Schoemaker Paul J. H.
Publication year - 1991
Publication title -
journal of forecasting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.543
H-Index - 59
eISSN - 1099-131X
pISSN - 0277-6693
DOI - 10.1002/for.3980100602
Subject(s) - heuristic , computer science , scenario planning , perspective (graphical) , management science , operations research , scenario analysis , strategic planning , key (lock) , range (aeronautics) , risk analysis (engineering) , process management , artificial intelligence , economics , engineering , management , business , computer security , finance , aerospace engineering
This paper offers a step‐by‐step analysis of a heuristic approach to scenario planning, taking a managerial perspective. The scenario method is contrasted in general with more traditional planning techniques, which tend to perform less well when faced with high uncertainty and complexity. An actual case involving a manufacturing company is used to illustrate the main steps of the proposed heuristic. Its essence is to identify relevant trends and uncertainties, and blend them into scenarios that are internally consistent. In addition, the scenarios should bound the range of plausible uncertainties and challenge managerial thinking. Links to decision making are examined next, including administrative policies as well as integrative techniques. At the strategic level, a key‐success‐factor matrix is proposed for integrating scenarios, competitor analysis and strategic vision. At the operational level, Monte Carlo simulation is suggested and illustrated as one useful technique for combining scenario thinking with formal project evaluation (after appropriate translations). The paper concludes with a general discussion of scenario planning, to place it in a broader perspective.