What Is Scenario Planning?
Scenario planning is a fancy term for a very logical and sensible process -- the "what if" process. It involves looking into the future, anticipating possible events, scenarios or changes, and analysing what will happen to the company as a result of those things happening, AND, planning to minimize any damage, and maximize opportunities.
Scenario planning is often used in IT environments but applies to any business. For example, the IT department might anticipate what would happen if a major hurricane hit and destroyed their central computers. As a result they would minimize their risk by using offsite data storage geographically separate from the main installation, or move their central computers to a more resistant building.
Scenario planning can look at any set of possible circumstances. For example, an oil company might plan around the possibility that a new, non-petroleum based vehicle becomes available. As an outcome of this kind of scenario planning, they might look at the possibility of offering hydrogen fuel at their retail outlets (or charging stations). It doesn't mean they would implement those NOW, but they would be more prepared if such changes happened.
In small business, one might consider, and plan for a scenario where one's rent might double, or one might lose the prime retail space.
In essence scenario planning is about being prepared.
See Also: Why Is Strategic Thinking So Important To The Success of Any Business?
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