Improving decision-making with scenario planning

Decision makers struggle with four important contributors to decision failure, namely, 1) bounded rationality, 2) a tendency to consider only external variables, 3) the stickiness and friction of information and knowledge, and 4) mental models that include decision premises or policies. Whether independent or combined, these decision problems can form the ultimate in decision error—folly. The four problems in decision-making are reviewed in detail and scenario planning is posited as a tool for preventing the impact of each, ultimately with an aim of avoiding folly.     

Exploring the relationship between scenario planning and perceptions of learning organization characteristics

This article attempts to verify some assumptions evident in the scenario planning literature through the application of quantitative measures. The Dimensions of the Learning Organization Questionnaire is used to measure participant perceptions of the learning organization characteristics pre- and post-scenario planning intervention. Results are discussed, limitations are identified and clarified, and conclusions are drawn with speculations and refinements for future research.     

Changing organizational culture with scenario planning

This paper explores scenario planning as a tool to help change organizational culture. Changing the culture of the organization to adapt to changes in the environment is an important concern for most organizations—yet this change is often reactive. The authors present scenario planning as a proactive tool for developing alternative, possible cultures as an initial step toward effecting change. The following describes and clarifies the relationships between scenario planning and the cultural framework, along with research suggestions to determine the validity of this argument.     

Perceived Environmental Uncertainty in scenario planning

Scenario planning is a strategy tool with growing popularity in both academia and practical situations. Current practices of scenario planning are largely based on existing literature which utilises scenario planning to develop strategies for the future, primarily considering the assessment of perceived macro-external environmental uncertainties. However there is a body of literature hitherto ignored by scenario planning researchers, which suggests that Perceived Environmental Uncertainty (PEU) influences the micro-external as well as the internal environment of the organisation. This paper reviews the most dominant theories on scenario planning process and PEU, developing three propositions for the practice of scenario planning process. Furthermore, it shows how these propositions can be integrated in the scenario planning process in order to improve the development of strategy.     

Exploring techno-economic scenarios in an input-output model

The dynamic input-output model DIMITRI (Dynamic Input-output Model to study the Impacts of Technology Resulted Innovations) can be used for long-term scenario explorations on technology, demand and environmental effects. The model describes at a sectoral level the relations and dynamics between consumption, production and emissions. Technologies are introduced bottom-up at a sectoral level, through variations on the inputs from other sectors and by changes in the coefficients for capital, labour and emissions. This paper presents a methodology for future explorations of technologies in four scenarios, based on the International Panel on Climate Change (IPCC) scenario framework. Trend analysis combines detailed information on specific technologies. Differentiations are made between scenarios, based on their specific storylines. The adjustment of coefficients influences model outcomes such as production, balance of trade and emissions. This paper briefly outlines the methodology and presents the main outcomes for four scenarios for the period 2000-2030.     

Exploring bank website expectations across two task scenarios

This article compares consumer expectations of bank website functionality for two online task scenarios: information search and transaction. This study uses task technology fit theory and follows a novel methodological approach by using expectation ‘fit’ according to a set of website attributes. An online questionnaire, distributed through e-mail invitation, achieved a sample of 469 Internet users. This research finds several points of similarity and difference with regard to consumer expectations of website attributes according to task context and makes an important and original contribution to both practice and theory. For marketing practitioners, the findings inform how they might ‘manage’ expectations to facilitate positive website experiences. Theoretical contributions are made through integrating IS and Marketing theory to identify the impact of goal-directed behaviour on satisfaction with website attributes.     

Institutional evolution as an emerging focus in scenario planning

In this paper, we argue that institutional evolution should occupy a center stage in scenario development. During the last two decades, strategy models have neglected the institutional milieu, partly because analytical approaches to link institutional milieus and business contexts were underdeveloped. However, theoretical developments in institutional economics accomplished during this time period make it possible to connect the consequences of institutional evolution to strategy development. Further, with the increasing globalization of commerce, and the attendant complexity and turbulence in institutional evolution, particularly in emerging economies, significant opportunities for strategy related action may reside not in product markets but in institutional arenas. Institution-focused scenarios are therefore increasingly needed. We outline the key linkages between the institutional milieu and business contexts and illustrate how scenarios incorporating institutional parameters can shed light on the strategy context in the case of emerging economies.     

Making sense of future uncertainties using real options and scenario planning

Healthcare across the world is facing many uncertainties. In Dutch healthcare, a recent policy change is forcing health organizations to deal more efficiently with their real estate, and this increases the need for real estate strategies that are more flexible. In order to support managers in incorporating flexibility in their decision-making over the design of new healthcare facilities, we have developed a method that combines scenario planning and real options. Scenario planning enhances sensemaking over the consequences of future uncertainties, and real options should help in addressing flexibility in decision-making through weighing the pros and cons of flexibility measures. We illustrate the sensemaking process by applying the method to a hospital, to a forensic clinic and to a care organization for vulnerable citizens. Data collection took place through interviews and workshops. We found that the identity and characteristics of the workshop participants influenced the sensemaking process. The method proved a useful means of making sense of abstract uncertainties that influence an organization, aspects that are normally outside the scope of real estate managers. The real options approach offered a more structured way of balancing the costs and benefits of strategies in dealing with future uncertainties.     

The origins and evolution of scenario techniques in long range business planning

Scenario Planning has been around for more than 30 years and during this period a multitude of techniques and methodologies have developed, resulting in what has been described as a ‘methodological chaos’ which is unlikely to disappear in the near future (A. Martelli, Scenario building and scenario planning: state of the art and prospects of evolution, Futures Research Quarterly Summer (2001)). This is reflected in the fact that literature reveals an abundance of different and at times contradictory definitions, characteristics, principles and methodological ideas about scenarios. It has been suggested that a pressing need for the future of scenarios is amongst other things, to resolve the confusion over ‘the definitions and methods of scenarios’. This paper makes a beginning at this need by tracing the origins and growth of scenarios and the subsequent evolution of the various methodologies; a classification of the methodologies into three main schools of techniques is given and the salient features of these schools are compared and contrasted.     

Creativity and dysfunction in strategic processes: The case of scenario planning

This paper attempts to open up a new line of enquiry into the dysfunctions of creativity within strategic processes. Generally, the impact and results of introducing creativity (and innovation) into organisational life are perceived to be wholesome and beneficial. But recent research in the area of organisational psychology has documented a ‘dark’ side to its introduction, e.g., low employee morale, stress, theft, sabotage, destructive conflict. Learning from this work and shifting the domain to strategic management, this paper focuses on scenario planning—a strategy process widely regarded by participants and facilitators as creative and innovative in structure, content and output. First, the creative credentials of the process are established with reference to the literature and definitions from the creative and cultural industries. Second, the process is deconstructed into activities and each is examined for the extent of its embedded creativity. Third, informed by case evidence, four dysfunctions of the scenario planning process are conjectured: creativity layered on fantasy; heightened expectations and confusion; pride and passion; and creativity leading to excess. The paper concludes by suggesting four options for handling these potential dysfunctional effects and, in the light of the dialogue presented, re-interprets the definition of scenario planning presented earlier in the text.     

Directions in scenario planning literature - A review of the past decades

This paper provides a systematized overview of patterns in the scenario planning literature published in the last decades. Recently, scenario planning has enjoyed a revival, apparent in the ‘boom’ in published research on the matter. Consequently, a major issue that needs to be addressed is how to organize the literature along precise lines. A number of reviews that describe the current status of the body of literature and knowledge on scenario planning have made attempts to respond to such requirements. These studies agree that systematizing the existing literature is a necessary step in developing the field. This paper aims to contribute to this purpose. The review of the academic literature here conducted is thought to be useful for both academics and practitioners. For researchers, this systematic overview will be constructive not only in providing an analysis of the directions of published research but also in setting up a research agenda for the future. For managers and practitioners, it provides a clear outline of firm-related articles and discusses their contribution from a managerial point of view. It also raises awareness with regard to future analytical methods, and in particular, to scenario planning and its potential contribution to the competitiveness of firms. The research was carried out under the research Project Enterprise of the Future of the University of Aveiro.     

Using client performance measures to identify pre-engagement factors associated with qualified audit reports in Greece

The purpose of this paper is to test the extent to which client (corporate) performance measures can be used to enhance the ability to discriminate between the choice of a qualified or unqualified (clean) audit report. Audit firms face the risk of losing the client if they issue a qualification. On the other hand, failing to qualify exposes the auditor to potential lawsuits and loss of reputation. We examined the financial statements, auditors' opinions, and financial statements notes for companies in Greece that received a qualified audit report and for those that received an unqualified audit report. We modeled the auditor's qualification using a multicriteria decision aid classification method (UTADIS—UTilités Additives Discriminates) and compared it with other multivariate statistical techniques such as discriminant and logit analysis. The qualification decision is explained by financial ratios and by nonfinancial information such as the client litigation. The developed models are accurate in classifying the total sample correctly with rates of almost 80%.     

Connecting adaptation and strategy: The role of evolutionary theory in scenario planning

In this study, evolutionary theory is used to analyze and critique the strategic process of scenario planning. We argue that scenario planning can be strengthened as a theory- and practice-oriented process through the incorporation of evolutionary theory in the scenario narrative process, and in the subsequent implementation phases in response to environmental change. First, this paper addresses scenario planning in relation to theoretical perspectives on strategic planning and forecasting. Then, the concepts of variation, selection, retention, organizational learning and inertia are used to analyze scenario planning as a strategic process. This study argues that because scenario planning mirrors modes of variation and selection at the organizational level, evolutionary theory is a useful approach for assessing the plausibility of scenario narratives and strengthening the theoretical foundation of scenario planning as a process. By utilizing an evolutionary framework throughout the scenario planning process, this method has a better chance of encouraging exploratory strategic thinking without reinforcing non-blind variation or inertial practices. Concepts including inertia can also be used to better address bias and myopia in the scenario planning process. Additionally, evolutionary theory can be used to assess how entities learn from the outcomes of scenario planning as the environment changes over time.     

City foresight and development planning case study: Implementation of scenario planning in formulation of the Bulungan development plan

This article discusses the formulation of the Bulungan Development Plan (2002) that sought to formulate a 25 year city vision. The foresight process included how to prepared the process, implemented the scenario planning method, created consensus amongst stakeholders, and formulated graphic and narrative scenarios that explored alternative future for Bulungan. Based on these scenarios, the stakeholders formulated a vision for the city's preferred future. The vision is “excellence in agro industry supported by qualified human resources”.Project debriefing showed that unlike traditional forecasting or market research, the methods of foresight, especially scenario planning, is a more appropriate and powerful planning tool for integrated regional development. The main reason for this is that the future is unpredictable, and scenarios allow stakeholders to make sense of complexity.     

Imagineering city futures: The use of prospective through scenarios in urban planning

This article, based on empirical work by the authors over the past decade, argues that city planners and policy-makers lack an effective future-oriented approach enabling them to comprehend current complexity, anticipate impending change and shape a preferred future condition.Reflecting on more than a dozen recent city futures exercises, three overriding themes emerge: changing values systems will be the single biggest driver over the next thirty years; the forging of shared visions is a prerequisite to strategic city planning; and the nature, force and direction of the various vectors of collaborative leadership by constituent stakeholders will determine the future success or otherwise of city stewardship.The article concludes by calling for the formulation of a Unified Theory for Sustainable Cities by reference to Gaia and the application of a futures oriented approach such as Prospective Through Scenarios.     

Future visioning of local climate change: A framework for community engagement and planning with scenarios and visualisation

There is an urgent need for meaningful information and effective public processes at the local level to build awareness, capacity, and agency on climate change, and support planning and decision-making. This paper describes a conceptual framework to meet these requirements by generating alternative, coherent, holistic climate change scenarios and visualizations at the local scale, in collaboration with local stakeholders and scientists. The framework provides a template for a process to integrate emission scenarios with both mitigation and adaptation strategies, and to link local manifestations of impacts and responses with global climate change scenarios. The article outlines the empirical application of this framework in the Local Climate Change Visioning Project in British Columbia, Canada. The project collaboratively localized, spatialized, and visualized possible climate change effects and community responses in the community's ‘backyards’. The article concludes with lessons learned and suggested principles for future visioning efforts to engage communities in possible policy and behavioural choices.     

Enhancing the role of participatory scenario planning processes: Lessons from Reality Check exercises

This paper critically assesses a series of scenario planning exercises in the Washington Metropolitan region and the State of Maryland within a broad and evolving framework of participatory planning. Reality Check, as the exercises were called, were a daylong set of activities using tools that encouraged stakeholder participation to develop scenarios focused on long-term regional sustainability. The paper draws upon planning theory, participant reactions, media reports, post-exercise outcomes and author's experiences of shaping the process. It illustrates how the model was adapted to multiple scales and contexts, and variations in desired technical complexity. The paper concludes that such processes have an inherent value in capturing the issues of the future and in creating awareness and knowledge. It argues that certain considerations such as early strategic engagement of stakeholders, flexibility of technical tools and diversity among organizers, all played a role in enhancing the dialogue. Furthermore, it suggests that when timed with favorable external conditions and designed within suitable institutional frameworks, they have the potential to provide a foundation from which tangible regional benefits can be realized.     

Integrating scenario planning and design thinking: Learnings from the 2014 Oxford Futures Forum

This issue of Futures has covered a lot of ground and much of it breaks new ground. It is not too bold to write that these articles have added new thinking to the scenario and design literatures. Even bolder, we believe that human existence and long-term sustainability are predicated in part on the ideas in this issue of Futures. In his recent book The Meaning of Human Existence, Pulitzer Prize winning Biologist E.O. Wilson wrote: premier among the consequences [of human existence] is the capacity to imagine possible futures, and to plan and choose among them. How wisely we use this uniquely human ability depends on the accuracy of our self-understanding. The question of greatest relevant interest is how and why we are the way we are, and from that, the meaning of our many competing visions of the future. Wilson, 2014, p. 14.