Multiple scenario development: Its conceptual and behavioral foundation

Multiple scenario development: Its conceptual and behavioral foundation This paper examines the multiple scenario approach as an important corporate innovation in strategic planning. Using a participant/observer perspective, I examine how scenario planning tries to meet certain methodological, organizational and psychological challenges facing today's senior managers. Three prime characteristics are identified as setting the scenario approach apart from more traditional planning tools: (1) the script or narrative approach, (2) uncertainty across rather than within models, and (3) the decomposition of a complex future into discrete states. After exploring the intellectual roots of scenario planning, I examine such organizational aspects as the need for diversity of views and the importance of simplicity and manageability. Both benefits and obstacles to using scenarios in organizations are identified. Cognitive biases are examined as well, especially the well‐known biases of overconfidence and the conjunction fallacy. Two experiments test the impact of scenarios on people's subjective confidence ranges. Another two experiments test the internal coherence of subjects' beliefs. The psychological benefit of scenario planning appears to tie in the exploitation of one set of biases (e.g., conjunction fallacies) to counteract another (such as overconfidence). http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Strategic Management Journal Wiley

Multiple scenario development: Its conceptual and behavioral foundation

Strategic Management Journal, Volume 14 (3) – Mar 1, 1993

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Publisher
Wiley
Copyright
Copyright © 1993 John Wiley & Sons, Ltd.
ISSN
0143-2095
eISSN
1097-0266
DOI
10.1002/smj.4250140304
Publisher site
See Article on Publisher Site

Abstract

This paper examines the multiple scenario approach as an important corporate innovation in strategic planning. Using a participant/observer perspective, I examine how scenario planning tries to meet certain methodological, organizational and psychological challenges facing today's senior managers. Three prime characteristics are identified as setting the scenario approach apart from more traditional planning tools: (1) the script or narrative approach, (2) uncertainty across rather than within models, and (3) the decomposition of a complex future into discrete states. After exploring the intellectual roots of scenario planning, I examine such organizational aspects as the need for diversity of views and the importance of simplicity and manageability. Both benefits and obstacles to using scenarios in organizations are identified. Cognitive biases are examined as well, especially the well‐known biases of overconfidence and the conjunction fallacy. Two experiments test the impact of scenarios on people's subjective confidence ranges. Another two experiments test the internal coherence of subjects' beliefs. The psychological benefit of scenario planning appears to tie in the exploitation of one set of biases (e.g., conjunction fallacies) to counteract another (such as overconfidence).

Journal

Strategic Management JournalWiley

Published: Mar 1, 1993

References

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