Background
The oil crisis began in October 1973 when Arab oil producers imposed an embargo. As a result the oil prices rocketed from $3 per barrel to $12 by 1974. This disaster was followed by the second energy crisis in 1979. At that time Pierre Wack (1922-1997) was an unconventional French oil executive who developed the scenario process. His success in scenario planning enabled the Royal Dutch/Shell oil giant to anticipate both of these oil catastrophes.
Why scenarios
Pierre Wack agreed that straightforward forecasts may be very accurate, however he believed that is why they are dangerous. As Peter Drucker said, “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.” (Harvard Business Review, …show more content…
However, later, he realises that even good scenarios may be inefficient. Scenarios can only help decision makers, when they change their own perception of how the world works. Pierre Wack had to influence the picture of reality held by decision makers. In order to change their perceptions, he had to destroy their current view of the world, in which everything followed the expectable pattern. Afterwards managers would have to reconstruct a new model of perception themselves. As a result, using a well-designed package, managers would use scenarios to construct a new model of reality and would make the decisions based on what happens within the boundaries of it (For example: relentless rise in oil prices). That actually brings the idea, that the learning process may be even more valuable, than the scenarios themselves. It carries managers away from “tunnel” vision and linear thinking, but transfers them to the peripheral vision and abstract thinking. These skills are very useful when dealing with scenarios which have major shifts in them. It also allows decision makers to learn from their mistakes, which they have not made in reality, but thought through in one of the …show more content…
However it evolved. For example “today, the interview is one of the first steps taken when Shell starts a scenario exercise”. (Harvard Business Review, 1985, p.149) Interviews help to find out what is on managers’ minds and to illuminate their existing decision framework. Scenario Planning has become popular outside of Shell, not only in corporations but in some governments. In South Africa scenario planning played a major role in the peaceful transition from a system of apartheid to a stable multiracial government. Over the past 40 years many companies adopted scenario planning, however due to complexity of the process and the difficulty to learn, some of them were not able to use scenario planning to its full potential. Recently however scenario planning has been successfully used by other big companies such as
The oil crisis began in October 1973 when Arab oil producers imposed an embargo. As a result the oil prices rocketed from $3 per barrel to $12 by 1974. This disaster was followed by the second energy crisis in 1979. At that time Pierre Wack (1922-1997) was an unconventional French oil executive who developed the scenario process. His success in scenario planning enabled the Royal Dutch/Shell oil giant to anticipate both of these oil catastrophes.
Why scenarios
Pierre Wack agreed that straightforward forecasts may be very accurate, however he believed that is why they are dangerous. As Peter Drucker said, “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.” (Harvard Business Review, …show more content…
However, later, he realises that even good scenarios may be inefficient. Scenarios can only help decision makers, when they change their own perception of how the world works. Pierre Wack had to influence the picture of reality held by decision makers. In order to change their perceptions, he had to destroy their current view of the world, in which everything followed the expectable pattern. Afterwards managers would have to reconstruct a new model of perception themselves. As a result, using a well-designed package, managers would use scenarios to construct a new model of reality and would make the decisions based on what happens within the boundaries of it (For example: relentless rise in oil prices). That actually brings the idea, that the learning process may be even more valuable, than the scenarios themselves. It carries managers away from “tunnel” vision and linear thinking, but transfers them to the peripheral vision and abstract thinking. These skills are very useful when dealing with scenarios which have major shifts in them. It also allows decision makers to learn from their mistakes, which they have not made in reality, but thought through in one of the …show more content…
However it evolved. For example “today, the interview is one of the first steps taken when Shell starts a scenario exercise”. (Harvard Business Review, 1985, p.149) Interviews help to find out what is on managers’ minds and to illuminate their existing decision framework. Scenario Planning has become popular outside of Shell, not only in corporations but in some governments. In South Africa scenario planning played a major role in the peaceful transition from a system of apartheid to a stable multiracial government. Over the past 40 years many companies adopted scenario planning, however due to complexity of the process and the difficulty to learn, some of them were not able to use scenario planning to its full potential. Recently however scenario planning has been successfully used by other big companies such as