Scenario Thinking

An Article on Scenario Thinking

Scenario thinking also known as scenario planning is described in WIKIPEDIA (2013) as “a strategic planning method that some organizations use to make flexible long-term plans. It is in large part an adaptation and generalization of classic methods used by military intelligence.” (WIKIPEDIA 2013). Scenario thinking is based on a model that is drawn like a cross with the X-axis representing one variable and the Y-axis representing another variable. According to WIKIPEDIA, introduction of scenario planning is attributed to Herman Kahn through his work for the US Military in the 1950s at the RAND Corporation where he developed a technique of describing the future in stories as if written by people in the future.”

Scenario thinking or planning can further be described as the experimenting to find out how something or someone change or behave when certain variables are shifted. Scearce,D. Fulton, K. and the Global Business Network community (2004) notes that “ scenario thinking is a tool for motivating people to challenge the status quo, or get better at doing so, by asking “What if?” Asking “What if?” in a disciplined way allows you to rehearse the possibilities of tomorrow, and the to take the action today empowered by those provocations and insights” (Scearce, D. Fulton, K. and the Global Business Network community, 2004, p.3)

Benjamin Franklin once remarked thus, “Only three things are certain in life, birth, death and taxes.” To add to that, I say change. Bruce Sterling a science fiction writer argues, “Futurism is the art of reperception. It means recognizing that life will change, must change, and has changed, and it suggests how and why. It shows that old perception have lost their validity while new ones are possible.”

Scenario thinking at a glance may seem as a complicated economic concept that is the reserve of economists. An example will help de-mystify this concept. Imagine you want to measure the economic development of your country.

You grab a piece of paper and draw two lines. One vertical running on the left hand side of the paper from top to bottom. Draw another horizontal line from the base of the first line running from left to right. Now you have a sample of graph paper with x-axis and y-axis.

Now name the y-axis at the base, “Bad Governance and at the top, “Good Governance.” Likewise, name the x-axis at the base, “Weak Economy” and at the far end, “Vibrant Economy.” Note that the x-axis will represent economic development.

Next, draw two diagonal lines one starting at the base of the intersection between the two lines running from left to right. The other diagonal line starting from the top of the y-axis running diagonally from left to right. The result is a diagram similar to that of a supply and demand curves as used in economics.

Now assume the supply curve to represent the effect of good governance brought about by for instance democracy, peace, and order etcetera. You will notice that as you move further and further away from the base of the curve the resultant effect is a vibrant economy or economic development. The reverse being if there is bad governance the result is a weak economy or stalled economic development.

Let the demand curve represent enemies of development for instance war, anarchy, corruption. In addition what you notice is that as we move further from the top of the curve  towards the far end down along the curve, represents better economic development and vice versa. The intersection of these two curves will represent the equilibrium; the point at each economic development is at any particular time.

It follows that scenario thinking is a concept that can be used on any kind of situation in our lives so long as we have shifting variables. It is important to note that various assumptions are made while using this model.

REFERENCE

Global Business Network. Available from: http://www.monitorinstitute.com/downloads/what-we-think/what-if/What_If.pdf [Accessed: 12/04/2013]

SCEARCE, D. FULTON, K. AND THE GLOBAL BUSINESS NETWORK COMMUNITY (2004) What if? The art of scenario thinking for non-profits [Online] Available from: http://www.monitorinstitute.com/downloads/what-we-think/what-if/What_If.pdf. [Accessed 12/4/2013]

WIKIPEDIA (2013) [Online] Available from http://en.wikipedia.org/wiki/Scenario_planning [Accessed: 12th April 2013]