Analytical tools such as SWOT (Strengths, Weaknesses, Opportunities and Threats) and PEST (Political, Economic, Social and Technological analysis) provide a useful perspective in the short term, but they don’t necessarily allow you to think out of the box. A technique known as ‘scenario planning’ will help you to look into the future.

Also known as ‘scenario thinking’, scenario planning is a great strategic tool for making flexible long-term plans. Scenarios provide alternative views of the future. They help to identify significant events and their drivers and to explore different perspectives on how the world functions. Building and using scenarios can help you to explore how you might face the future.

A number of approaches to scenario planning are recommended by academics, but let’s follow this one:

Scoping – What is the question/issue you want to answer/address?

Trend analysis – Identify external forces in operation and consider the pressure that they exert

Building scenarios – Using the outcomes from the first two stages to build an ‘optimistic’ scenario and then a ‘pessimistic’ scenario

Test options – Identify and discuss the potential implications and impacts of the two scenarios

Action plan – Define an action plan as a result of the issues you have identified.

To get the best value out of the exercise, scenarios are best planned in groups including people with different mindsets. It is important to avoid certain traps. For instance, scenarios should not be treated like a forecast, and they should be sufficiently global in their scope.

What Google or Facebook-type invention in the United States will affect people’s shopping and lifestyle habits here in the UK sooner than we think? The world is very flat and is getting ever flatter. Technology has an unbelievably wide reach.

Scenarios must not be too simplistic either – such as being only optimistic and pessimistic. To help illustrate these points, the rest of this module uses one example to demonstrate how to work through the stages.