Scenario Planning versus Traditional Forecasting

 

Bill Krysinski 

Doctoral Research: Futuring and Innovation (CS875-2003C-01)

Unit 3 Discussion Board

Dr. Cynthia Calongne 

Aug 11, 2020

 

Scenario Planning versus Traditional Forecasting

Planning takes on many lifeforms, and many methods exist to predict possible outcomes, enlighten the ill-informed, and everything in-between. Information presented by a planning process can make the impossible seem possible or inhibit the next move due to fear of the unknown. As we look at both the scenario-based planning and the traditional forecasting model, there are several advantages and disadvantages that we will need to discuss to make a more informed decision on when to use each and to level-set expectations on what the results mean. A plan is just that a plan, since no one can accurately predict the future, using information, and deploying the best model will help users of the predictions make more accurate and informed decisions.   

Scenario planning is a tool designed to allow decision-makers an opportunity to explore “what-if” situations and help to determine a combination of likely, not likely, and even outlandish alternatives. It is designed for organizations to becoming more flexible in planning because various assumptions can be addressed in the process, particularly when historical data is not available.  

The advantages of scenario-based process include allowing the group to think creatively about uncertain times that exist or could exist. Scenario-based planning also allows the team to look at different perspectives and see if there are strengths, weaknesses, opportunities, and potential threats that could be looked at for better outcomes (Schwenker, Wulf, 2012). Users can set various assumptions when making developing potential outcomes.  

There are several critical disadvantages of scenario-based planning. If accurate predictions are necessary, then scenario-based planning is not the best method to employ. Wade (2012) stated that only “illuminate different ways the future may unfold.” Because no one is a soothsayer, all of the parameters that could be involved with setting up a scenario cannot be known, thus impacting the confidence of the results.  

Traditional forecasting is defined as “predicting the future as accurately as possible” (Hyndman & Athanasopoulos, 2018). Using all necessary historical datasets and any future information that would impact the analysis, forecasting helps to present a more accurate picture for conclusions to be drawn from.

Advantages of forecasting primarily include Once data is available, making data representation data more efficient. Some forecasts can be extremely accurate, based on historical data analysis and trends. Take forecasting the weather in a desert climate. Hundreds of days of data can be reviewed and making the accurate five-day weather forecast a much easier task.     

Disadvantages forecasting brings to the decision-makers is that it might no paint the entire picture because we are using hard data and cannot take into account issues with disruptions and changes as quickly as a scenario. So forecasting is usually seen as a more rigid, facts only planning tool.  

 

References

‌ Hyndman, R., & Athanasopoulos, G. (2018). Forecasting : principles and practice (2nd ed.). Heathmont, Vic.: Otexts.

Schwenker, B., & Wulf, T. (Eds.). (2015). Scenario-based Strategic Planning Developing Strategies in an Uncertain World. Germany: Wiesbaden Springer Fachmedien Wiesbaden Gmbh Springer Gabler.

‌ Wade, W. (2012). Scenario planning : a field guide to the future. Hoboken: Wiley.

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