Traditional Forecasting vs. Scenario Planning

          Logically, predicting the future makes a perfect world. However, this is very difficult in this unknowable future and ever-changing world. No matter how difficult predicting the future is, it is a necessity to plan for the future. Traditional forecasting and scenario planning are similar in predicting the future based on past data and present occurrences. However, they are different in that traditional forecasting assumes that the future will be like today, but scenario planning goes beyond that. Scenario planning considers several possible future scenarios (Adobe Communications Team, 2022). The fact is that the business situation changes, especially in this era of rapid development. There are possibilities for changes in the business processes, environment, and even personnel. Therefore, the first consideration in scenario planning is the identification of various eventualities in the future. These cases are then explored and analyzed for different ways to tackle the different scenarios in case it happens in the future (Adobe Communications Team, 2022). 

Scenario Planning is excellent for identifying future issues to avoid them by planning ahead. It spots consequences for future events and analyzes the repercussion of actions and business decisions (Adobe Communications Team, 2022). Scenario planning predicts by combining trend analysis techniques with forecasts to identify possible eventualities. It is based on how the future could turn out. According to Wade (2012), “scenario planning aims to illuminate and explore different ways the future might realistically develop.”  Even if a scenario seems almost impossible, scenario planning should consider it; who knows tomorrow? So many impossible things are now coming through, so scenario planning provides any scenario you can think of. It focuses on not only predicting the future but also preparing for uncertainties. IcefMonitor (2014) lists some possible global market changes in the future. These shifts are legislative changes, political confusions, innovations, new market competitors, attitude shifts of employees, and economic shifts. The major disadvantage of scenario planning is that some scenarios are too unrealistic and more brutal to brainstorm (Adobe Communications Team, 2022).

Ogilvi, J. (2015). [The eight step scenario planning process]. Scenario planning and strategic forecasting. https://www.forbes.com/sites/stratfor/2015/01/08/scenario-planning-and-strategic-forecasting/?sh=5086266e411a

Traditional Forecasting combines historical data with present ones in historical quantitative methods to predict the future (Adobe Communications Team, 2022). Traditional forecasting seems to be based on how the future will turn out. There are several disadvantages of traditional forecasting compared with scenario planning. It is not as dynamic as scenario planning. It is rigidly based on the available data, not considering the eventualities in the future. This limits the level of preparedness for the future.

          Personally, I prefer scenario planning because it goes an extra mile farther than traditional forecasting.

 

 

 

 

References

Adobe Communications Team. 2022. Scenario planning. Adobe Experience Cloud Blog. https://business.adobe.com/blog/basics/scenario-planning#:~:text=Traditional%20planning%20assumes%20that%20tomorrow,would%20succeed%20in%20those%20situations.

IcefMonitor. (2014). Beyond forecasting: how to use scenario planning to map the future. https://monitor.icef.com/2014/02/beyond-forecasting-how-to-use-scenario-planning-to-map-the-future/

Wade, W. (2012). Scenario planning. Wiley Professional, Reference & Trade (Wiley K&L). https://coloradotech.vitalsource.com/books/9781118237410