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Guide

The evolution of scenario planning

Part of

Archived
This content was archived in October 2014

About this guide

  • Published: 20 February 2008
  • Updated: 2 October 2012

View full guide as a single page

Contents

Scenario planning
  • The evolution of scenario planning
  • Potential uses
  • Successful scenario planning
  • Scenario sets
  • How to: a step-by-step guide
    • Scoping
    • Trend analysis
    • Building scenarios
    • Generate options
    • Test options
    • Action plan
  • Applying creativity to the scenario process
    • Brainstorming
    • News headlines
    • Thinking the unthinkable
    • Metaphors and stories
    • Sources of inspiration
    • 'Personal lives': profiling target groups
    • Timeline
  • Moving forward
  • Acknowledgements and references

Scenario thinking has a long history. Back in the 16th Century a Spanish Jesuit theologist and scholar, Luis de Molina, was credited with introducing the concept of ‘conditional future contingents’ or ‘futuribilia’ as an explanation for free will, foreknowledge and predestination (Molina 1589, in Malaska and Virtanen, 2005 pg 12).

More recently, in 1960s France, the futurist Gaston Berger reflected in his work ‘Phénoménologies du Temps et Prospectives’ (trans. prospective methodologies) on contextualising past and present events with a view to making choices in alternative futures (Berger, 1964). Referring to Molina, the French political philosopher Bertrand de Jouvenel, took the idea of ‘futuribilia’ and combined ‘future’ and ‘possible’ into a new term called ‘futurible’ (de Jouvenel, 1967 in Malaska and Virtanen, 2005 pg 12).

He defined ‘futuribles’ as ‘a fan of possible futures’, explaining that ‘the mind cannot grasp with certainty… but it can conjecture possible alternatives’ (de Jouvenel, 1967 in Malaska and Virtanen, 2005 pg 12).

According to Fahey and Randall (1998 pg 17) the notion of scenario development is commonly attributed to Herman Kahn during his tenure in the 1950s at RAND Corporation (a non-profit research and development organisation) for the US Government, and his formation of the Hudson Foundation in the 1960s.

Kahn, described variously as a military strategist and systems theorist, is also known as the most celebrated and controversial nuclear strategist. He encouraged people to ‘think the unthinkable’, first about the consequences of nuclear war and then about every manner of future condition (Bishop, et al 2007 pg 10).

Kahn’s insights into the benefits of using futures or indeed scenarios as strategic planning tools stretched further than military matters and Scenario Thinking began to emerge everywhere from politics and economics to public policy. These techniques were also gaining credence in the corporate world and in the 1970s both Royal Dutch Shell and the Consulting Firm SRI International contributed to the creation of a more formalised approach to Scenario Thinking that could be more readily linked with strategic planning (Fahey and Randall, 1998 pg 17).

Pierre Wack, head of corporate planning for Royal Dutch Shell, discovered that the oil industry was running on two very volatile assumptions; firstly that oil would remain plentiful and secondly that prices would remain low. He presented the Shell senior management with stories or scenarios that would change their perception of the need to plan for many different possible futures. In one scenario, an accident in Saudi Arabia led to the severing of an oil pipeline, which in turn, decreased production and supply, creating a market reaction that increased oil prices, allowing Organisation of the Petroleum Exporting Countries (OPEC) nations to pump less oil but make more money.

When confronted with this possible view of the oil industry’s future the senior managers decided to change their approach to strategic planning and re-think those initial assumptions that oil was plentiful and prices would remain low. On further investigation it was discovered that the OPEC were in fact intending to increase their oil prices and when the Oil Shock of 1973 hit Shell was the only major Western company (or nation for that matter) that was prepared.

Within two years, Shell moved from the eighth biggest oil company to the second (Willmore, 2001).

Faced with a multi-billion dollar decision about building a natural gas platform in the North Sea, Wack’s protégé, Peter Schwartz, continued the scenario thinking campaign at Shell. At the time most natural gas came from the Soviet Union and it was with great foresight that the scenario planners at Shell established ‘the Greening of Russia’ scenario that investigated the possible effect on natural gas prices if communism fell and democracy and a free and opening unthreatening natural gas marketplace prevailed.

While the world was shocked by the fall of communism in 1988, Shell had in fact been planning for it years before (Willmore, 2001).

It is not surprising then that Shell began to lead the commercial world in scenario thinking and by the 1980s most large organisations were beginning to take a more strategic approach to planning for the future (Diffenbach, 1983). Large corporations began to take notice of Schwartz’s techniques and the apparent success of scenario thinking in a business context and in recent years scenario planning techniques have been emerging in every sphere from industry to academia.

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