Scenario Planning vs Traditional Forecasting

 

A procedure utilized to check reasonable, deviating prospects founded on doubt is referred to as scenario planning (Amer, et al., 2013). In other words, scenario planning means developing various possible future circumstances. Conventionally, scenario planning has been advantageous for pin-pointing opportunities and dangers in the future. Businesses probably won’t be capable of discerning and predicting the precise nature of an opportunity and threat; however, the businesses can be more braced in routing a possible outcome if they’ve reckoned a doubt via numerous perspectives instead of the extrapolation of a single trend line as the most likely future while simultaneously ignoring alternative viewpoints (Rasmus, 2012). A prime focus of scenario planning – examine the penalties of present decisions and actions; recognize and prevent issues before they materialize; to pinpoint present penalties of future occurrences; and to imagine aspects of desired futures (Epstein, 1998).   

In contrast to traditional forecasting that utilizes quantitative techniques, scenario planning utilizes a qualitative approach. Traditional forecasting via quantitative techniques is founded on the assumptions that the near-future will pretty much look like today – unfortunately when shifts in the environment transpires, forecasts tends to fail (Huss, & Honton, 1987). The quantitative techniques usually used are cross-impact analysis and trend impact analysis – these techniques utilizes current and past trend info to infer their probability of transpiring in the future as well as possible consequences.

 

 

  

 

 

 

References

Amer, M., Daim, T. U., & Jetter, A. (2013). A review of scenario planning. Futures, 46, 23-40.

Epstein, J. H. (1998). Scenario planning: An introduction. The Futurist, 32(6), 50.

Huss, W. R., & Honton, E. J. (1987). Scenario planning—what style should you use?. Long range planning, 20(4), 21-29.

Rasmus, D. W. (2012, July 30). 3 Reasons CIOs Need Scenario Planning. Retrieved August 18, 2020, from https://www.fastcompany.com/1802117/3-reasons-cios-need-scenario-planning