Scenario Based Strategy is an approach to strategic planning that assumes the future will not be a continuation of the present. It incorporates traditional near-term forecasting techniques with longer-term analytical methods. The combination of these two approaches enables leaders to engage in "foresight thinking" and planning for business opportunities and "marketplace surprises" that may occur during the firm's planning horizon.

The Business Case for Scenario-Based Strategy

Boston June, 1976

In 1973, the global economy was shocked by a major oil crisis. Royal Dutch Shell wasn't. Scenarios helped Shell weather the volatility of the 1970s, bringing financial gains in the billions thanks to the sale of refineries or decisions not to replace them. A series of scenario-based decisions during the last four decades has enabled Shell to profit from economic, political and social change on many occasions.

Amsterdam February, 2008

In 2008, the global economy was shocked by a major credit crisis. Rabobank wasn't. It made record profits in 2008 while most of the industry made record losses. Their skillful use of scenarios enabled them to add real value to their customers and bond holders during the credit crisis.

The success of companies like Shell and Rabobank has inspired others to achieve impressive results. Application of scenario methodology and scenario thinking has:

• Prepared a telecom operator to gain double-digit market share growth from the 2001 telecom crisis
• Enabled cities to develop new visions of the future together with their citizens, strengthening the self-organizing power of the community and building trust in the political leadership
• Transform a shipbuilding company to a technology company, doubling revenue and tripling profits during a five-year period
• Repositioned industry associations from after-the-fact lobbyists to thought leaders for their members and stakeholders

Scenario methods will counter any of the following:

• A shortage of strategic thinking in the planning process (formats and formulas trump fresh ideas)
• Strong differences of opinion exist; multiple opinions have merit
• Want to avoid costly marketplace surprises
• Not generating sufficient new opportunities to stay ahead of the competition
• In an industry facing significant change
• Lack a common language and framework to facilitate strategic thinking in the leadership ranks.