This document discusses how scenario thinking can help future proof businesses. It explains that strategic thinking used to focus on variables under a company's control, but the environment is less predictable. Scenario thinking develops multiple plausible futures rather than single forecasts. The document describes how Shell pioneered scenario planning in response to uncertainty in the 1970s, accurately envisioning a future with higher oil prices. It advocates that businesses learn to consider "unthinkable" scenarios through developing wild cards and scenarios to identify vulnerabilities and opportunities that may arise in the next 5-10 years.
2. From strategic to scenario thinking
▪ “Strategy as Planning” – Strategic thinking used to be defined by variables under
control of the company.
▪ A company’s chess play determined by the variables of its own operations, its
customers and its competitors.
▪ “Deliberately choosing a different set of activities to deliver a unique mix of
value”(Porter)
Jeroen Oskam
4. Scenario thinking
▪ From forecasts to scenarios
• Forecasting: quantitative estimate of the future outcomes of current developments
• Scenarios as “an internally consistent view of what the future might turn out to be”
(Porter).
• “a well-worked answer to the question: ‘What can conceivably happen?’”
(Lindgren and Bandhold).
• “Future memory” (De Geus).
Jeroen Oskam
5. Scenario thinking: Shell
In 1967, Shell launched Management by Objectives, “Unified Planning Machinery”.
In 1968, “the cobblestones of Paris were flying through the air”. A short time later
the Club of Rome published its report on “The Limits of Growth.”
Shell’s specialised system of was not capable of providing answers to questions
about society's long-term natural resource decisions.
Shell responded well to the challenge. Top management created a new,
independent planning outfit to begin studying the company's social environment.
Jeroen Oskam
6. Scenario thinking: Shell (2)
The first scenarios were ready in 1972. It's noteworthy that among eight
scenarios presented that year, there was one which concerned a crisis in
the supply of oil. This scenario examined a world in which the price of a
barrel of oil four years hence, in 1976, would be $8. It was a wildly unlikely
scenario at the time. In those days, the limits of a whole generation of oil
managers’ known world were defined by the price of a barrel of oil from
Kuwait , C.I.F. Rotterdam that was $1.85 in 1972, down from $2.25 in 1951.
In 1972, many Shell managers could not believe that a world of $8.-/bbl oil
was even imaginable. They could not get themselves to start contemplating
what action to take in response to the $8 a barrel scenario.
“
”
Jeroen Oskam
7. Scenario thinking: What if?
“Learn to think the
unthinkable as an
organisation.”
Jeroen Oskam
9. Scenario examples: Tourist development
Wadden sea
Fast tourism
Focus on
regional
qualities
UNESCO
World Heritage
Destination
LOW COST
Destination
Focus on
Leisure
NATURE
Destination
JET SET
Destination
Slow tourism
Choosing an appropriate strategy
Jeroen Oskam
14. Future proofing your business
Scenario studies can help businesses and destinations anticipate
opportunities that lie ahead in the next 5-10 years.
www.jaoskam.com
www.hotelschool.nl/research
Jeroen Oskam
