Document Type

Research Brief

Publication Date

11-2020

Abstract

Highlights: Scenario planning typically focuses on the future, beyond the normal strategic planning horizon. It has been used primarily by large organizations, but it can be useful to organizations of any size trying to develop strategy for the future. COVID-19 has arguably broadened planners’ perspectives, thus emphasizing potential benefits from scenario planning for organizations, both large and small. Rural hospitals may find some scenario planning beneficial.

Background: Formal introduction of scenario planning in the U.S. can be traced to Herman Kahn’s use of stories in military planning. Royal Dutch-Shell’s use of scenario planning is widely noted as the first big organizational use. Scenario planning involving plausible future oil pricing that differed from a mere extrapolation of current prices positioned the company to weather unexpected oil market shocks in the 1970s. The requirement to break from status quo, extrapolated forecasting—thereby forcing deeper strategic conversation—is the primary strength of scenario planning. Scenario planning usually focuses on the longer-term—beyond a normal time horizon for strategic planning (Schwartz, 1991), but there is no rule to prohibit its use in a shorter horizon. By asking the question of what might happen, scenario planning can be useful to any organization trying to develop strategy for the future. While it has been utilized by primarily large organizations, this approach offers meaningful contributions to organizations, no matter its size.

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