Peter Schwartz's books provide an introduction to scenario planning as a strategic tool for decision-makers to prepare for an uncertain future. Scenario planning involves constructing plausible narratives about how social, economic, political and technological factors may influence the future. Rather than predicting a single outcome, scenario planning prepares organizations by considering how they should respond to a range of possible scenarios. Schwartz evaluates how accurate past scenarios have been to demonstrate scenario planning's strengths in reducing uncertainty and shortening response times to emerging situations.

1. 1
BOOK REVIEW
Peter Schwartz (1991, 1996). The Art of the Long View (New York: Crown Business).
Peter Schwartz (2011). Learnings from the Long View (Global Business Network: The
Monitor Group).
INTRODUCTION
The main goal of these two books is to provide ‘paths to strategic insights’ for
decision makers (in order to get their companies successfully into the future). There
are a number of such strategic tools; the one that is at stake in these books however
is known as ‘scenario planning.’ What Peter Schwartz attempts to do in these books
is to provide a readable exposition of the theory and practice of scenario planning to
whoever might be interested. Schwartz however does this on the basis of his
experience as a scenario planner for the Royal Dutch Shell group of companies
where he served as a scenario planner and later as a leading consultant with the
Global Business Network. The first of these books was published in 1991 and
reprinted in 1996. Schwartz evaluated the value of scenario planning again in 2011
when he published a brief follow-up on this theme to summarize the learnings from
a career dedicated to scenario planning. Schwartz’s career involved not only doing
scenario planning but teaching a large number of executives to learn and, most
importantly, to practice the rudiments of scenario planning. In other words, Schwartz
has thought about scenario planning from the locus of an employee, a consultant, a
teacher, and a writer. This book will provide a comprehensive introduction to the
scope of scenario planning along with specific instances of whether it makes a
practical difference to how companies should think about their future. It is however
not the case that those who have not read this book do not know anything about
scenario planning; they probably do. Nonetheless they wind up restricting
themselves to a more modest version of scenario planning under the aegis of ‘if-then’
scenarios in a spreadsheet.

2. 2
SCENARIO PLANNING IN CENTRAL BANKING
The difference between tweaking variables of a quantitative and qualitative sort and
attempting a case in full-fledged scenario planning is that the latter involves a much
greater commitment to the attention span of a company’s top management.
Furthermore, scenarios are not merely about crunching information; we must
instead think of them as plausible narratives about the future. In other words, of all the
tools of strategy, this is the one that is most likely to appeal to those with a
background in literature. That is because understanding the structure of stories is an
important skill that is developed by literary critics. It is basically this literary skill
that is deployed in analysing scenarios about the future. The main difference
however is that stories are fictional in their intent, but scenarios are plausible
narratives about the future that are based on hard socio-economic data. Scenarios are
not meant to be read merely for their entertainment value like stories, but because
they can provide us with strategic insights about how the socio-economic
determinants of a company’s performance will play out in the years to come. Even
those who are encountering this strategic tool for the first time will know that
companies like to tweak oil prices to analyse how a change in the value of a
particular variable will affect the performance of the remaining variables in
macroeconomic forecasts. Another important example is interest rates. How will
even small increases or decreases in the federal funds rate affect the ‘broader
economy?’ A possible use of scenario planning might be to ascertain how thinking
through plausible narratives about the future can help policymakers in central banks
to provide ‘forward guidance’ on the path of interest rates. While numbers and
graphs might help to illustrate the content of the forward guidance mechanisms,
using hypothetical scenarios and plausible narratives about the future can help the
Federal Reserve and other central banks explain monetary policy. The
communication challenges of explaining unconventional monetary policy can also be
attempted using narratives about the performance of various sectors of the economy
across a range of socio-economic scenarios.
VERSATILITY OF SCENARIO PLANNING
Scenario planning is already being used in the armed forces to anticipate whether
their battle plans will survive contact with the enemy; and what, if anything, can be
done if they don’t. These then are some of the contexts in which scenario planning
has either already been used, or can be deployed, in the contexts of policy making.
Scenario planning then – as should be obvious – is a versatile tool that can be used in
the contexts of both the macro-economy and in determining the strategic direction
for a specific company. Its scope is not reducible to any particular ideological or
policy orientation; it is the sheer versatility of scenario planning then that makes it useful
from a strategic point of view. The term ‘long view’ is used in scenario planning to

3. 3
imply that if the scenario planner is able to identify and analyse the relevant
variables in any given situation, it is akin to being able to see right into the future.
Why is this important? It is important precisely because scenario planners are
haunted by the need to manage change and uncertainty. Economists who predict the
future can get it wrong. The difficulties in envisaging the future might lead us to the
hasty conclusion that scenario planners are also bound to be unsuccessful. The
burden of Schwartz’s argument is to show that is not necessarily the case. There is a
difference between merely ‘speculating’ about the future and ‘building plausible
narratives’ about the future based on existing socio-economic trends.
RESPONDING TO THE FUTURE
The purpose of scenario planning is to not to predict the future as such, but to
prepare for the future across a range of scenarios. A more accurate way of putting
this might be to prepare for the ‘futures’ in the plural. That is the main difference
between economic forecasting which assumes that there is only one type of future
and scenario planning which assumes that a range of scenarios might well play out
in the years to come; in other words, a company must be ready for anything. So the
future is not something about which we will be right or wrong in the absolute or
historically determinate sense of the term; only God can be determinate about the
future. What scenario planners do is to actually ask how a company, policy maker,
or a decision maker should respond against a range of emerging or envisaged
scenarios. In other words, scenario planning does not have to see into the future in
the literal sense; it merely has to reduce the response time of the decision maker to
an emerging scenario. That will not only reduce the possibility of an unexpected
crisis for a company, but also increase the probability of getting it right. That then is
broadly speaking the rationale for scenario planning. The remaining parts of the first
book are devoted to asking what sort of a mind, education, preparation, and
planning goes into training the scenario planners of the future. Schwartz also
examines the basic assumptions on which we think about the future to ask what is
involved in changing those assumptions in the light of new developments. So
though scenario planning was invented for the first time in the context of the oil
sector, it can be used in other institutional contexts as well.
LEARNING FROM SCENARIO PLANNING
In order to ascertain exactly how useful scenario planning is, Schwartz considers the
fate of scenarios that his team came up with in the Global Business Network. In his
summary of the learnings, Schwartz explains why in some of the scenarios he was
able to get it right, and why in some of the scenarios he got it wrong. These scenarios
don’t matter per se. What is really at stake is in being able to identify what went
right or wrong with specific instances of scenario analysis and figure out the

4. 4
underlying reasons for Schwartz’s conclusions. This retrospective analysis using
historical hindsight then provides the reader with a better understanding of the
strengths and weaknesses of scenario planning as a strategic tool. It will also help the
reader to conduct ‘strategic conversations’ with more confidence than was the case
when scenario planning was invented for the first time. The main difference
however between the scenarios enumerated in these books is this. The scenarios in
the first book relate to Schwartz’s career at Royal Dutch Shell whereas the scenarios
in the second book relate to his career as a consultant in the Global Business
Network. An important technique that Schwartz emphasises in scenario planning is
known by the acronym STEEP. This involves crunching information relating to the
‘social, technological, environmental, economic, and political factors and forces’
involved in order to construct plausible narratives about the future.
CONCLUSIONS
After analysing the scenarios that he got right and those that he got wrong, Schwartz
concludes his book with ‘three scenarios for 2025’ so that readers who survive that
long will have yet another opportunity to think through the validity of scenario
planning as a tool of strategic analysis. The fact that Schwartz thinks as far ahead as
2025 means that he expects scenario planning to be actively incorporated into the
discourse of strategic analysis. In other words, if all goes well, it will not be
necessary to write books on this topic in the future since scenario planning will not
be something new, but just another tool that we would have got used to deploying
when we think about the plausible futures of the social entities with which we are
consulting, developing, teaching, or working.
While the first of these books is widely known amongst scenario planners, the
second book might not be so well known. It is important to read both as companion
volumes because the learnings in the second book will give us a better
understanding of whether scenario planning was able to realize its potential. These
books should be useful to all business educators even if they are not directly
involved in scenario planning at all because it will give them important directions on
how they should educate themselves and their students in order to prepare for the
future.
SHIVA KUMAR SRINIVASAN