Strategy
Scenario analysis
Scenario analysis, also known as horizon analysis or total return analysis, is a method of projection.
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Scenario analysis vs Scenario planning
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Scenario planning
Scenario planning is a methodology for understanding how long-term changes in the business environment (such as political shifts or new technologies) might affect your firm’s compe
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Use this when.
Use scenario analysis when a decision is consequential, difficult to reverse or exposed to several uncertain drivers. It can compare strategic directions, countries, locations, markets, capital choices or operating plans.
Understand how the business environment may change.
Extracted signals
Strengths, limits, and pitfalls.
Scenario analysis
- Evaluate the same decision and metrics across every scenario. This reveals which actions are robust, which are contingent and which assumptions deserve early warning indicators.
- Define the decision and success criteria.
- Gather evidence and map drivers.
Watch for
- Do not call a best, base and worst spreadsheet a complete view of uncertainty. Correlated drivers, discontinuities and competitor responses can create structurally different futures; challenge assumptions and causal consistency.
Scenario planning
- Spend disproportionate effort selecting critical uncertainties. They should be both highly consequential and genuinely uncertain, and their combinations should expose different strategic requirements rather than cosmetic variations.
- The process can take months in a large organisation or be adapted into a focused workshop, provided evidence and decision integration are not sacrificed.
Watch for
- Do not leave the scenarios with the workshop team. If executives do not test investments, capabilities and triggers against them, the exercise becomes polished storytelling with no effect on decisions.
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Related templates.
Program Management PlanProgram Management Plan Purpose. Use this plan to integrate how the programme will be managed, monitored, controlled and closed. It directs the allocation and use of resources, defines the programme's deliverables and benefits and coordinates the subsidiary plans that govern each management domain. Application. Approval authorizes programme execution and benefit delivery within the defined baselinInterface Management PlanInterface Management Plan Purpose. Use this plan to identify and manage the organisational, technical, interpersonal, logistical and political interfaces within the programme, across its portfolio and with external parties. It turns interrelationships and interdependencies into named controls, owners and risks rather than leaving them between component boundaries. Application. Develop the plan earKnowledge Management PlanKnowledge Management Plan Purpose. Use this plan to connect programme participants with useful knowledge, subject-matter expertise and the information created across components. Effective knowledge management reduces reinvention and duplicate work, helps people find proven answers quickly and reserves scarce expert attention for problems that genuinely require new thinking. Application. Prepare thBenefits Realization ReportBenefits Realization Report Purpose. Use this report to show which programme benefits were realised during a defined period, which expected benefits were delayed or missed, and which new benefits have emerged. Each entry should trace to the business case and benefits-realisation plan so decision-makers can distinguish delivered value from completed activity. Application. Benefits become meaningful