Scenario Planning VS Traditional Forecasting

Scenario Planning VS Traditional Forecasting

 In traditional forecasting, it relies on the projections that paint a picture of the future of the business landscape based on the current state (Wade, 2012). Scenario planning on the other hand looks at multiple factors that determine the future that is most likely to emerge. The primary difference here is the wide range of variations that scenario planning can produce contrary to traditional forecasting. An organization must look at multiple possible scenarios for the future of an organization instead of just one possibility. Using traditional forecasting, it is possible that past and current states do not correctly prepare the organization for future uncertainties. This could lead to alternate future that is not planned for, thus creating a situation where the organization is not prepared and could miss potential opportunities. Scenario planning enables a team to sit down and systematically formulate possible scenarios based on emerging trends and driving forces to produce flexible strategies that give an organization the agility to react to different scenarios in the future.

According to Globis.jp (2014), the goal of scenario planning is to explore the future, not predict. This is a fundamental difference that sets scenario planning and traditional forecasting apart. However, there similarities between the two because they are both focusing on preparing for the future. In some aspects, both scenario planning and running multiple extrapolations of traditional forecasting is similar in the way they account for multiple possibilities (Wade, 2012). There is a fundamental difference that sets the two apart from each other. In the traditional forecasting sense, the planner’s base tomorrow’s actions with the basis that it will just be a variation of today’s events. Next month will be slightly different than last month, and so on so forth. This is a flawed thought process for it does not take into consideration for the introduction or metamorphosis of variables in extremes. Traditional forecasting only considers the changes in magnitude of current variables.

The case study presented by World Association of Newspaper (WAN) conducted a scenario planning initiative to evaluate the future of being relevant in the evolving digital industry of news delivery (Frum, 2013). The company used scenario planning to look at four scenarios and produce plans that became possible solutions for likely scenarios of the future. If the WAN did not initiate exercises in scenario planning and relied on traditional forecasting, it could have led to the ultimate demise of the company. Using traditional forecasting, the company would plan for the increase or decrease of newspaper orders and demand based on current trends and states (Wade, 2012). The traditional forecasting would not consider the rise in digital delivery of news and the overall impact it would have to traditional printing operations. Scenario planning in this case study, prepared the company for social and technological drivers in the world.

  

References

Wade, W. (2012). Scenario Planning: A field guide to the future. Hoboken, NJ: John Wiley & Sons, Inc.

Frum, R. (2013, August 6).  Word association of newspapers scenario planning . Retrieved from the Personal Expert System Web site: http://personalexpertsystem.blogspot.com/2013/08/world-association-of-newspapers.html

Globis.jp. (2014, September 3).  Woody Wade: "Scenario planning" - Thinking differently about future innovation . Retrieved from http://e.globis.jp/article/000363.html