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Decision making and planning under low levels of predictability: Enhancing the scenario method

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  • Wright, George
  • Goodwin, Paul

Abstract

In this paper we review and analyse scenario planning as an aid to anticipation of the future under conditions of low predictability. We examine how successful the method is in mitigating issues to do with inappropriate framing, cognitive and motivational bias, and inappropriate attributions of causality. Although we demonstrate that the scenario method contains weaknesses, we identify a potential for improvement. Four general principles that should help to enhance the role of scenario planning when predictability is low are discussed: (i) challenging mental frames, (ii) understanding human motivations, (iii) augmenting scenario planning through adopting the approach of crisis management, and (iv) assessing the flexibility, diversity, and insurability of strategic options in a structured option-against-scenario evaluation.

Suggested Citation

  • Wright, George & Goodwin, Paul, 2009. "Decision making and planning under low levels of predictability: Enhancing the scenario method," International Journal of Forecasting, Elsevier, vol. 25(4), pages 813-825, October.
  • Handle: RePEc:eee:intfor:v:25:y:2009:i:4:p:813-825
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    References listed on IDEAS

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    1. Paul Goodwin, 2001. "Enhancing Strategy Evaluation in Scenario Planning: a Role for Decision Analysis," Journal of Management Studies, Wiley Blackwell, vol. 38(1), pages 1-16, January.
    2. Wright, George & Cairns, George & Goodwin, Paul, 2009. "Teaching scenario planning: Lessons from practice in academe and business," European Journal of Operational Research, Elsevier, vol. 194(1), pages 323-335, April.
    3. Wright, George, 2002. "Game theory, game theorists, university students, role-playing and forecasting ability," International Journal of Forecasting, Elsevier, vol. 18(3), pages 383-387.
    4. Orrell, David & McSharry, Patrick, 2009. "System economics: Overcoming the pitfalls of forecasting models via a multidisciplinary approach," International Journal of Forecasting, Elsevier, vol. 25(4), pages 734-743, October.
    5. Robert Fildes & Paul Goodwin, 2007. "Good and Bad Judgment in Forecasting: Lessons from Four Companies," Foresight: The International Journal of Applied Forecasting, International Institute of Forecasters, issue 8, pages 5-10, Fall.
    6. Fildes, Robert & Goodwin, Paul & Lawrence, Michael & Nikolopoulos, Konstantinos, 2009. "Effective forecasting and judgmental adjustments: an empirical evaluation and strategies for improvement in supply-chain planning," International Journal of Forecasting, Elsevier, vol. 25(1), pages 3-23.
    7. John M Bryson, 2004. "What to do when Stakeholders matter," Public Management Review, Taylor & Francis Journals, vol. 6(1), pages 21-53, March.
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