SCENARIO PLANNING AND THE STEEPLE FACTORS

Phuoc D. Nguyen

There are many causes for the unpredictable changes in the future. Most of the causes are external and should be determined by the STEEPLE factors. Many factors cause a business to change its strategic plan and direction as it operates in a complex and dynamic market, accompanied by many changes in the external environment. Although businesses cannot control these factors, they can count on them. In principle, internal developments will not affect scenarios, so they are not considered a factor.

Lindgren & Bandhold (2002) proposed “Scenario planning is an instrument that enables the organization to integrate discussion of the long and medium-term futures with short to medium-term strategic planning… There is a reason to use scenarios in the strategic process as soon there is a significant amount of uncertainty in the decision context.” (pp. 26-27). Scenario planning is not about making accurate predictions, but about exploring what might happen in the future. This gives the business the time to think about ‘How they can succeed in different scenarios?’.

Mietzner and Reger (2005) defined “Foresight is regarded as the ability to see what one’s future needs are likely to be; the basic assumption is that there is a range of possible futures and a stronger focus on the process perspective of the foresight activities. Scenario techniques fit very much in the latter understanding.” (p. 235). Many future scenarios will be used, each with a detailed description of what may happen in the future and how they affect the business. Business leaders should consider the possibilities, opportunities, risks, and challenges in each scenario. What are the factors that need to be considered? Answering this question is the only way for businesses to better prepare themselves for these unforeseen circumstances and changes and not be surprised by such circumstances. This is the added value of scenario planning.

Postma and Liebl (2005) indicated limitations of the scenario approach including “The first issue, that of unknowables, is related to the idea that the scenario approach has to deal with what is known and what is not known in order to provide relevant information for early-warning purposes… The second issue indicates that scenarios do not prevent management from being surprised. Companies are regularly confronted with entirely unanticipated situations.” (pp. 166-167). Through scrutiny of all scenarios, a business can test whether the strategy they have chosen can be maintained under uncertainty. This is why businesses should look at trends and fundamentals that have a significant impact on events. If the current strategy cannot withstand such impacts, the business should change its strategy.