Every strategic plan rests on assumptions about the future. The problem is, those assumptions are often wrong.
Scenario planning offers a different approach. Instead of betting everything on a single forecast, you explore multiple plausible futures—and prepare your strategy to succeed across them.
This guide covers everything strategy leaders and consultants need to know about scenario planning: what it is, why it matters, and how to do it well. I'll walk through the methodology step by step, share concrete examples, and show you how to move from scenario exploration to strategic action.
Whether you're stress-testing a major investment, helping a client navigate disruption, or building long-term resilience, scenario planning gives you the structure to think clearly about uncertainty. Let's get into it.
Scenario planning is a strategic methodology for exploring how different combinations of external forces might shape the future. Rather than predicting a single outcome, you develop multiple plausible scenarios—coherent stories about how the world could evolve—and use them to test and strengthen your strategy.
The approach originated in military planning and gained prominence in corporate strategy through Shell's pioneering work in the 1970s. Shell famously used scenarios to anticipate the oil crisis, giving them a strategic advantage when competitors were caught off guard.
Key distinctions: Scenarios are not forecasts. Forecasts predict what will happen. Scenarios explore what could happen. Scenarios are not predictions. You're not trying to be right about the future—you're trying to be prepared for multiple futures. Scenarios are not contingency plans. Contingencies respond to specific events. Scenarios help you think systemically about how interconnected forces shape outcomes.
A good scenario is internally consistent, plausible (even if uncomfortable), and strategically relevant. It should challenge your assumptions and reveal blind spots.
For strategy leaders, scenario planning transforms uncertainty from a source of paralysis into a source of insight.
The business environment is becoming harder to predict. Technology disruption, geopolitical shifts, climate change, and social transformation create cascading effects that linear planning cannot capture.
What's at stake without scenario planning: Strategies built on brittle assumptions break when conditions change Organisations get blindsided by shifts competitors anticipated Decision-makers lack the mental models to respond quickly to disruption Resources get locked into paths that may become obsolete
The benefits of mastery: Resilience: Strategies tested against multiple futures are more robust Agility: Teams develop shared mental models that speed decision-making when change arrives Confidence: Leaders can articulate why their strategy works across conditions, not just in the best case Alignment: Scenarios create a common language for discussing uncertainty with stakeholders
Scenario planning doesn't eliminate uncertainty—nothing does. But it transforms how your organisation relates to uncertainty, moving from reactive firefighting to proactive preparation.
Building useful scenarios requires structure. Here's a proven methodology you can apply immediately.
Every scenario exercise starts with a focal question—the strategic decision or challenge you're exploring. This keeps your scenarios relevant rather than abstract.
Good focal questions: "What should our market position be in Southeast Asia over the next decade?" "How should we invest in technology capabilities given potential regulatory changes?" "Where should we focus R&D given uncertain customer preferences?"
Tip: Frame the question broadly enough to allow exploration, but specifically enough to drive actionable insights.
Map the external forces that could shape your strategic context. These typically include:
Political and regulatory trends Economic conditions Social and demographic shifts Technological developments Environmental factors Industry-specific dynamics
The Trend Database in Portage helps here—structured foresight signals provide evidence-based inputs for identifying relevant forces.
Tip: Focus on forces outside your control. Internal capabilities matter, but scenarios explore the external environment your strategy must navigate.
Not all forces deserve equal attention. Evaluate each driving force on two dimensions:
Uncertainty: How predictable is this force's trajectory? Impact: How significantly would different outcomes affect your strategy?
Forces with high uncertainty and high impact become your scenario axes. Forces that are predictable (even if impactful) become "predetermined elements"—facts that appear in all scenarios.
Most practitioners use a 2x2 matrix built from two critical uncertainties. This creates four distinct scenarios, each representing a different combination of how those uncertainties resolve.
Example framework for a healthcare organisation: Axis 1: Regulatory environment (restrictive vs. permissive) Axis 2: Technology adoption (gradual vs. rapid)
This produces four scenarios: Restrictive regulation + gradual adoption Restrictive regulation + rapid adoption Permissive regulation + gradual adoption Permissive regulation + rapid adoption
Tip: Choose axes that are genuinely independent—they shouldn't be different expressions of the same underlying force.
Transform each quadrant into a rich, coherent story. Good scenario narratives include:
A memorable name that captures the essence A description of how the world arrived at this state Key characteristics of this future environment Implications for your industry and organisation
Portage's Scenario Generator helps structure this process, producing AI-generated scenarios that you can refine and develop.
Example narrative (abbreviated): "Regulated Innovation" — In this scenario, governments respond to rapid technology change with comprehensive oversight. Adoption proceeds quickly but within strict guardrails. Compliance becomes a competitive advantage. Smaller players struggle with regulatory burden while established organisations leverage their compliance infrastructure.
This is where scenarios become actionable. Take your current strategy—or strategic options you're considering—and stress-test them against each scenario.
Ask: Does this strategy succeed in this scenario? What capabilities would we need? What risks emerge? What early indicators would signal we're moving toward this scenario?
Portage's Strategy Boards let you map options against scenarios and document your reasoning for each combination.
Analysis typically reveals three categories:
Robust moves: Actions that make sense across all scenarios. Prioritise these. Contingent actions: Moves that only make sense in specific scenarios. Develop trigger points and decision rules. Options to preserve: Investments that keep possibilities open while you gather more information.
Tip: The goal isn't to pick the "most likely" scenario and plan for it. The goal is to build a strategy that succeeds broadly while remaining adaptable.
A European energy company used scenarios to evaluate their generation portfolio over a 20-year horizon. Their critical uncertainties: carbon pricing trajectory and distributed generation adoption.
Four scenarios emerged, from "Centralised Transition" (high carbon prices, slow distributed adoption) to "Grid Edge Revolution" (low carbon prices, rapid distributed adoption).
Testing their current portfolio against each scenario revealed concentrated risk—their strategy only performed well in two of four scenarios. They adjusted investments to include hedging positions and optionality in distributed technologies.
An independent consultant helping a professional services firm evaluate Asian market entry used scenarios to structure the analysis. Uncertainties centred on regulatory openness and local competitor response.
Rather than building a single market entry plan, they developed four entry strategies tailored to different conditions, with clear indicators that would trigger pivots between approaches.
The client gained confidence in the decision—not because they knew which scenario would unfold, but because they had prepared for each possibility.
A software company used scenarios to stress-test their product roadmap. With uncertainty about AI regulation and customer adoption timelines, they built scenarios ranging from "AI Winter" to "Accelerated Integration."
The exercise revealed that several planned features only made sense in optimistic scenarios. They resequenced the roadmap to prioritise capabilities valuable across conditions.
Start with the decision, not the process. Scenarios without a strategic question become interesting exercises that don't drive action. Anchor every scenario project in a real decision.
Include diverse perspectives. Scenario quality improves dramatically when you bring together people with different functional expertise, industry experience, and cognitive styles.
Make scenarios vivid. Dry descriptions don't challenge assumptions. Give scenarios memorable names, include specific details, and tell stories that help teams genuinely inhabit each future.
Avoid the "official future." If one scenario becomes the implicit forecast everyone believes, you've lost the benefit of the methodology. Maintain genuine openness about which scenario might unfold.
Update regularly. Scenarios aren't one-time deliverables. Revisit and refresh them as new information emerges. Track early indicators that signal movement toward particular scenarios.
Document your reasoning. Capture why you made particular choices—which uncertainties you prioritised, how you evaluated strategic options, what trade-offs you accepted. This institutional memory becomes invaluable as conditions change.
Scenario planning connects to a broader set of foresight and strategy capabilities. Deepening your understanding of these related areas strengthens your scenario practice.
What Is Strategic Foresight? A Practical Guide for Leaders — Understand how scenario planning fits within the broader discipline of strategic foresight.
How to Create Effective Scenarios (Step-by-Step) — Dive deeper into the mechanics of scenario construction with detailed guidance on each phase.
Horizon Scanning vs Environmental Scanning: Key Differences — Learn how scanning methodologies feed inputs into your scenario development process.
Scenario Archetypes: Growth, Collapse, Constraint, Transformation — Explore common scenario patterns that can accelerate your scenario building.
How to Facilitate a Scenario Workshop — Practical guidance for running scenario sessions with teams and clients.
Parent Guide: Foresight & Scenario Planning: How Strategy Leaders Prepare for Change — The comprehensive overview of foresight methodology and applications.
The best way to learn scenario planning is to apply it to a real strategic question.
Start by identifying a decision you're facing that involves genuine uncertainty about external conditions. Map the driving forces. Select two critical uncertainties. Build your 2x2.
If you want to accelerate the process, Portage's Scenario Generator creates AI-generated scenarios based on your inputs, which you can refine and develop. The Trend Reports workflow helps you gather the signals and evidence that inform your driving forces analysis.
Generate your first scenario set →
Scenario planning explores multiple plausible futures rather than predicting a single outcome—preparing you to succeed across conditions.
Start with a strategic question. Scenarios without a decision to inform become abstract exercises.
Critical uncertainties drive your framework. Focus on forces that are both highly uncertain and highly impactful.
Good scenarios are vivid and coherent. Give them names, tell stories, make them real enough to challenge assumptions.
Test strategies against all scenarios to identify robust moves, contingent actions, and options to preserve.
Document and revisit. Scenarios are living tools—update them as conditions evolve and new signals emerge.
How many scenarios should we develop? Four scenarios (using a 2x2 matrix) is the standard approach. Fewer than three limits exploration; more than four becomes unwieldy for decision-making.
How far into the future should scenarios extend? Match your time horizon to your strategic question. Capital-intensive industries often work with 10-20 year scenarios. Technology companies might use 5-7 years. The horizon should be far enough to allow genuine uncertainty while close enough to inform current decisions.
What's the difference between scenario planning and contingency planning? Contingency planning prepares responses to specific events ("If X happens, we do Y"). Scenario planning explores how systems of interconnected forces might evolve, creating mental models for navigating uncertainty rather than specific response plans.
Can scenario planning be quantitative? Yes. While scenarios are often presented as narratives, you can attach quantitative assumptions to each scenario and model financial or operational outcomes. This supports stress-testing and impact analysis.
How often should we update our scenarios? Review scenarios annually at minimum, and whenever significant shifts occur in your strategic environment. Track early indicators that suggest movement toward particular scenarios.