What are the key steps and tools for creating effective scenarios?

1 Identify the focal question

The first step in scenario planning is to define the focal question or issue that you want to explore. This should be a clear and specific question that reflects your decision-making challenge or opportunity. For example, you might ask: How will the COVID-19 pandemic affect the demand for our products and services in the next five years? Or, how will the rise of artificial intelligence impact our industry and competitive advantage in the next decade?

2 Determine the key drivers and uncertainties

The next step is to identify the key drivers and uncertainties that will shape the future scenarios. Drivers are the factors or trends that influence the focal question and are relatively certain or predictable. For example, demographic changes, technological developments, or regulatory frameworks. Uncertainties are the factors or events that influence the focal question and are relatively uncertain or unpredictable. For example, political shifts, social movements, or natural disasters.

3 Develop a scenario matrix

The third step is to develop a scenario matrix, which is a tool that helps you organize and visualize the scenarios. A scenario matrix consists of two axes that represent the most important and uncertain drivers that you have identified. Each axis has two opposite and plausible outcomes, creating four quadrants that represent four different scenarios. For example, if you are exploring the future of the energy sector, you might use the axes of renewable energy adoption and global cooperation, creating scenarios such as: high adoption and high cooperation, high adoption and low cooperation, low adoption and high cooperation, and low adoption and low cooperation.

4 Flesh out the scenarios

The fourth step is to flesh out the scenarios, which means adding more details and narratives to each quadrant of the matrix. You can use a variety of tools and techniques to enrich your scenarios, such as: brainstorming, storytelling, personas, timelines, or indicators. The goal is to make each scenario as realistic, coherent, and vivid as possible, so that you can imagine yourself living in that future and how it would affect your focal question.

5 Analyze the implications and options

The final step is to analyze the implications and options that each scenario presents for your decision-making. You can use a variety of tools and techniques to evaluate your scenarios, such as: SWOT analysis, risk assessment, opportunity identification, or contingency planning. The goal is to identify the commonalities and differences among the scenarios, the strengths and weaknesses of your current strategy, and the actions and alternatives that you can take to adapt to each scenario or shape the future in your favor.

Scenario planning is not a one-time exercise, but a continuous process that requires regular monitoring and updating. By using scenario planning, you can enhance your decision-making by expanding your perspective, challenging your assumptions, and preparing for multiple futures.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?