Introduction to Scenario Planning – the Tool of Our Time
The foresight toolbox contains a variety of methods, many designed to build pictures of plausible futures—those it is wise to prepare for and invest in.
Which tool to use depends on internal and external circumstances, such as:
- Internal capability in foresight methods (some tools are easier to apply than others)
- Availability of people to contribute (e.g., how much time the organization can allocate, sometimes a function of management’s understanding of the value of foresight)
- Access to relevant expertise (inside or outside the organization)
- A plan for using the insights (e.g., in strategy, innovation, and risk management)
- The desired emphasis on exploring the unknown versus deepening knowledge of the well known
Today’s world bears many hallmarks of a late‑stage global order. The dominant power—the US—struggles with internal cohesion and the cost of maintaining a vast military presence, while a rising power—China, a manufacturing powerhouse—reshapes markets and geopolitics. Layered onto this is rapid technological change, most notably artificial intelligence, altering work, production, finance, information processing and more month by month. Meanwhile, a new breed of political leadership, sometimes with greater appetite for rapid action and less regard for established norms and minority interests, makes the world of regulations and international cooperation less predictable. In such conditions, it pays to invest in approaches that surface possible opportunities and threats. Scenario planning is the right tool for any leader who needs to grasp what might lie ahead.
Scenarios Focus on the Important but Uncertain
The overall purpose of foresight is to improve long‑term decision‑making—including innovation—by combining analytical and creative processing of external signals and data. Scenario planning, specifically, is built for events and developments that are less predictable than trends. It creates pictures of possible futures. Within those pictures, leaders can detect strategically significant issues across a wide horizon of possibilities and act proactively in both the short and long term.
Short‑term actions might include adapting to newly recognized risks revealed by the scenarios. Longer‑term actions often involve defining and tracking indicators—“canaries in the coal mine”—that warn of low‑probability but high‑impact shifts.
The Double‑Uncertainty Matrix
Scenario planning can be structured in several ways, from “what‑if” narratives (e.g., “What if China attempts to take Taiwan by force?” or “What if multi-purpose humanoid robots come to cost less than $5000?) to multi‑factor explorations. This article focuses on the double‑uncertainty matrix, built by meticulously distinguishing two types of contextual factors: trends and uncertainties.
First, there are trends, changes with a defined direction that are visible today through multiple observations. Those trends that have a strategically significant impact on your arena are the developments to watch as you move forward. Depending on resources, organizations typically define 10–20 trends for their domain.
Second, there are uncertainties, often surfaced while trend‑scanning. They are high‑impact, high‑uncertainty developments that could alter the organization’s premises at a magnitude that demands strategic adjustment. An example might be: Will Europe continue to pursue strategic autonomy vis‑à‑vis the US after a second Trump presidency, or will the region revert toward a pre‑Trump posture? As the example suggests, an uncertainty is often framed as two plausible end‑states or pathways.
The identified trends form the baseline of every scenario. They are assumed to hold regardless of which uncertainties unfold. Because developing scenarios takes time uncertainties must be evaluated for significance, prioritize ruthlessly to find two critical uncertainties. and cross them to form a 2×2 matrix that yields four scenarios. Ensure the uncertainties are orthogonal: whichever direction one takes, the other can still plausibly move either way. Otherwise, there is no need for four scenarios.
Thoroughly Imagine Each Scenario
Once the two critical uncertainties are selected, explore what each quadrant means for the landscape in which you aim to succeed. This is done by formulating scenario building blocks: brief explanations of what how scenario is expressed in different areas, such as work, workplaces, mobility, logistics, finance, spare time, education, public agencies, government, food systems, and more (tailored to your domain). For each scenario, ask: What does this imply for each area? A simple table is often enough to capture these scenario building blocks.
From Building Blocks to Stories
With the building blocks in place, bring each scenario to life. Humans learn and remember through stories, which is one of scenario planning’s strengths: a well‑written scenario engages both intellect and emotion far better than a dry trend list. In practice, combine a capable writer with the baseline (trends) and the building blocks to craft each narrative.
No one should write scenarios entirely alone. To achieve clarity and completeness, ensure that additional reviewers challenges assumptions, checks consistency with the trends, and tightens the prose. At the same time, it is also valuable that each scenario stretches the readers imagination, so a good scenario is not too cautious.
Using Scenarios: From Insights to Action
As with trends, scenarios are not the end; their consequences are where strategic value resides. Conduct a consequence analysis: read each scenario closely, derive an extensive list of implications, and from these identify threats and opportunities. Then develop ideas and options, assess them by impact, implementation costs and time horizon, and integrate the chosen actions into strategy, innovation roadmaps, risk registers, and business plans.
Success Factors for Scenario Planning
- Secure visible top‑management support—both at launch and when it is time to harvest insights and embed them in planning.
- Be honest about plausibility—challenge the unlikely so the scenarios remain possible and internally coherent.
- Choose the right uncertainties—high impact, truly uncertain, and independent.
- Be clear on ownership—who will use the insights, how, and where in existing processes.
- Trust the process—when trends are solid and uncertainties are well framed, the results are practical and actionable, not daydreams.
Scenario planning is an analytical and creative discipline that harnesses our uniquely human capacity to imagine and assess what is not yet visible. Done carefully, it is one of the best approaches available for navigating complex, fast‑changing environments.
Is scenario planning something anyone can do? Yes, with training it is. If your organization desires a better understanding of what might come, you are most welcome to us at Kairos Future. We are happy to support you in any way, including the training that makes you self-sufficient in scenario planning.