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Managing uncertainities
Scenario planning is a strategic management tool which allows companies make long term flexible plans by examining possible future developments. Investigating uncertainties and anticipating key driving forces enable companies to explore alternative futures and provide strategic direction for their businesses, helping them to be more proactive and flexible to adapt changes that the future may unfold.
In addition, scenario planning is an effective learning tool for companies. Through scenarios, companies can explore risks and opportunities that expand their understanding of the current business environment and knowledge about the key driving forces that would gradually impact their strategic plans. Pre-testing decisions against a range of what future may offer enable companies to create distinct competitive advantages.
Phases of Scenario Planning
1. Deciding on the key scenario question: The scenario question should be developed in collaboration with the top management and aligned with the mission and vision of the company.
2. Gathering information: Information should be gathered about the necessary changes affecting the company, such as the changes in science and technology, important developments that affect society, demographical trends.
3. Defining key driving forces: Find out which driving forces will affect the company. These forces mainly come from society, economy, politics, and technology.
4. Finding relatively predictable forces: The predictable forces are those which will exist no matter what the situation and scenario will be.
5. Defining key uncertainties: Unpredictable forces are identified and correlation between different unpredictable forces is assessed.
6. Developing and assessing scenarios: Scenarios are constructed, and assessed including upsides and downsides.
By incorporating scenario planning methodology into strategic planning, ARGE helps companies to make effective and creative decisions, better manage the risks of operating their businesses and be ready for change.
ARGE is also a leader in applying this methodology for country's development strategies as examplified by the "Searching for Tomorrow" conference and workshops.
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