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Skip to 0 minutes and 5 seconds Why do we use scenarios? And when do we use them? At the same time, when should we not use them? So as we know by now, the future and understanding the future entails different dimensions. The same goes for scenarios. We use them for different purposes. One basic reason for doing the scenario exercise is to gain more knowledge about some uncertainty, to explore the future. I’d like to quote an author by the name of Greeuw. He says that scenarios are perhaps most effective when they are seen as a powerful tool to broaden perspectives, to raise questions, and to challenge conventional thinking. A second function, though not necessarily exclusive, is that of communication.

Skip to 0 minutes and 55 seconds I now want to quote a gentleman named Godet, who once said, “Scenarios contribute to stimulating strategic thought and communication within companies.” What he’s saying there is very important. Obviously, the most well known output of the scenario exercise is coming up with three or four scenarios. That’s very important. Equally important is all the deliberation, the understanding, the debate, the thinking behind those scenarios that encourages amongst the scenario team very sometimes uncomfortable and yet very penetrative discussions about the organization. So scenarios secondly are used to further and to stimulate strategic conversations. Thirdly, scenarios might be used to enable us to set goals.

Skip to 1 minute and 48 seconds So for instance, the well-known story– perhaps an urban legend– is that back in the early 1960s, John F Kennedy claimed or stated he would like to see an American land on the moon by the end of the 1960s. In essence, he set a goal and then left it up to the experts to come up with a pathway, a way of achieving that particular goal. Fourthly– and very often what we find in the world of business– is that scenarios are used to make decisions. They’re used to help us formulate strategies. They enable us to arrive at the right decisions, to work out options, to take action, give us indicators for taking action.

Skip to 2 minutes and 29 seconds And of course, they enable us to evaluate the success or lack thereof of those decisions. In a nutshell therefore, to summarize, scenarios used to explore the future, gain more knowledge, and or for communication, and or to help us set goals, and or to make decisions and formulate strategies. I say and or because sometimes they’re used for more than one purpose. It once again depends on the use of the scenario. Why are we doing it? What the purpose is. That will drive the fundamental reason for using it. Another reason, another argument for using scenarios is when you have a very wide range of variables. Earlier in this course, we spoke about the limitations, quantitative analysis.

Skip to 3 minutes and 18 seconds Scenarios enable us to overcome those limitations. We can now incorporate simultaneously not only quantitative data but also qualitative data. Scenarios are useful when you have a very high degree of uncertainty.

Skip to 3 minutes and 34 seconds And once again, it’s a combination of these things. It’s not either or, as we’re going to see over the next few learning units and topics when we start looking at the practical use of scenarios. It’s very much in the eye of the user and the facilitator as to how and why we use scenarios.

When and why do we use scenarios?

How can we use scenarios to think about possible futures and thereby prepare for them effectively?

In the comments section, discuss a situation in your own organisation that could be more effectively managed by using a scenario.

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This video is from the free online course:

Futurism and Business: Dealing with Complexity

University of Stellenbosch Business School Executive Development