Visual explanation of Scenario Development
Probably one of the best explanations of the term ‘scenarios’ in the Internet
The term ‘scenario’ is often misused in business.
People think that they have a common understanding of this term, but there are actually at least two different ways that it is used which could lead to misunderstandings.
Managers frequently say things like, “We will expand to the African market by 2020, we’ll open a new plant in Brazil and every manager will be using the EIDOS Management Suite more frequently than Office products. This is my best case scenario for 2020.”
But this isn’t a scenario. It describes events that people in this specific company can influence and the results of a strategy that the company can decide on.
Scenarios describe elements that an individual or company are not able to influence, such as STEEP elements, e.g. climate change, social cohesion, economic development etc.
It is important and beneficial to make an accurate distinction between strategies and scenarios. Here’s an easy to understand visualization which helps people quickly understand and remember the difference:
Please let us know how you like this explanation. Note: please use a computer to views this page. Other devices lack of performance to generate the parallax effect.
EIDOS - FUTURE VALLEY
An investor wants to build a hotel in beautiful Future Valley.
Imagine what the Valley might look like in the future.
Please scroll down to view different scenarios!
Sometimes the future might look different than expected. A new government might change regulations quickly. It's worth it to also consider events with a low probability but a large impact in a strategy development process.
Scenario Storage Lake
Imagine that there are plans to construct a concrete dam that leads to an artificial lake in beautiful Future Valley - What's the impact on the construction of a hotel in the Valley now?
Scenarios are sets of plausible pictures and
descriptions of a not too distant future.
One needs to decide if such a scenario should be taken into consideration.
Scenario Climate Change
Maybe climate change will have a negative impact.
It's possible that the Valley could look like this in ten or twenty years.
Scenario Development can also be used as method to think about the unthinkable. Events with a very low probability but an extremly large impact can be moved into a scenario space for wildcards.
This can be an interesting and fun exercise, but it is not usually carried out in business enviroments.
Okay! Now let's think it though 'til the end and have fun with it...'