It is a strategic planning method that organisations use to make flexible long-term plans. It was first adopted by the military intelligence in crafting their different scenarios/alternative plans. The scenario is an alternative future or Plan B with these two basic components:

• Trends: Things we believe we know something about g. demographic shifts, substitution effects for certain new technologies.
• True Uncertainties: Indeterminable elements we consider uncertain or unknowable, e.g. future interest rate, outcome of political elections, rate of innovations, and fads/fashions in market.

Scenario planning permits blending of the known and the unknown into a limited number of internally consistent views of the future spanning over a wide range of possibilities, e.g. Royal Dutch Shell originally established the power of scenario planning for business in the 1950s as part of its process of generating and evaluating its strategic options – i.e., Shell has been consistently better in oil forecasts than other major oil companies.

Herman Kahn, who is the originator of the scenario planning tool in the 1950s through his work for the US military at the RAND corporation, explained how other corporations, such as General Electric, Apple, SRI International, used the tool very well in combining the utilization of Delphi techniques in scenario planning to providing different alternative futures in the argumentation of scenarios by making the scenarios more profound and creating enough confidence in the entire scenario planning process.

Scenario planning helps leaders to rediscover the original entrepreneurial power of foresight in contexts of change, complexity, and uncertainty. It is precisely in these contexts not in stable times that the real opportunities lie to gain competitive advantage through strategy. Scenarios deal with two worlds of facts and perceptions.

The following questions often arise:

• How do CEOs and top Managements fortify against perceived threats and strategically prepare for any unlikely scenarios?
• How do they create, use, and assess scenarios?
• How do they make the scenarios plausible, but not probable?
• How do they turn the scenarios into actions and open doors?
• How do they understand the critical forces driving their business systems rather than solely relying on mere forecasts or alternatives?

Since volatility, uncertainty, complexity, and ambiguity (VUCA) are basic structural features of today’s global business environment, leaders must confront these dilemmas by understanding the driving forces of STEEP (Social, Technological, Economic, Environmental, and Politics) and its applications in their respective industries.