4 Identify the issues arising: The robust scenarios that have survived the
evaluation process should then be reviewed to see whether any critical
event or outcomes have been identified that would have a major
impact on the organisation.
There is no reason to assign a probability of the likelihood of a scenario actu-
ally happening. If the reasoning behind a scenario is sound then it is a
potential future that could happen and management needs to be aware of
the impact that future could have on their organisation. The technique was
used to great affect by Shell in the early 1980s. Shell developed a range of
scenarios aimed at developing a view of economic development and the
demand for oil that would accompany them covering the 1980–1985
timescale. One scenario created a surprise result that demand for oil would
fall as consumers began to implement conservation measures to lower
energy use as a result of the second oil shock (OPEC’s second oil price
increase). The general consensus in the oil industry was that demand would
be sustained at normal levels. At the time there were worries about the out-
break of the Iran–Iraq war, customer orders were strong and therefore the
general feeling in the industry was towards expansion. Oil companies in
1980–1981 competed heavily to win supply contracts and increase drilling
activity massively. However, early in 1981 there were the first signs that the
scenario of less demand for oil was beginning to develop in the real econ-
omy. Further scenario work leads them to refine this scenario to include
more detail.
With the benefit of hindsight in 1980–1981 oil companies clearly over-
estimated future demand. The scenario technique allowed Shell to see this
early and to have prepared appropriate plans if this scenario actually
started to develop. In 1981 Shell reduced oil stocks much earlier and at a
greater level than the industry as a whole. This had the added benefit of
allowing them to sell before prices decreased (Wack, 1985).
The scenario technique is obviously open to similar group dynamic
problems as the jury method. They may also be open to the problem of
currently fashionable ideas being given too high a profile. There are how-
ever clear benefits to the scenario planning process:● It is a useful technique to help managers understand the critical
issues that lie at the heart of the future of the organisation. It can
help create a framework within which to understand events as they
evolve.
● Prepares managers for the possibility that there may be discontinuities
in the external environment.
● Critically, it helps to place fundamental strategic issues on the man-
agement agenda.The key dimension of scenario writing is not so much forecasting the
future but helping managers to understand the factors that could have a
major impact on their business. Graham Galer of Shell states ‘Accuracy
has to be judged, I think, in terms of whether the scenarios got the right
things on the management agenda’ (Galer, 1998).122 Strategic Marketing: Planning and Control