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The Essence of Scenarios

The Essence of Scenarios: Learning from the Shell Experience

Angela Wilkinson
Roland Kupers
Copyright Date: 2014
Pages: 185
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  • Book Info
    The Essence of Scenarios
    Book Description:

    In 1965, Royal Dutch Shell started experimenting with a new approach to preparing for the future. This approach, called scenario planning, eschewed forecasting in favor of plausible alternative stories. By using stories, or "scenarios," Shell aimed to avoid the false assumption that the future would look much like the present-an assumption that marred most corporate planning at the time.The Essence of Scenariosoffers unmatched insight into the company's innovative practice, which still has a huge influence on the way businesses, governments, and other organizations think about and plan for the future.In the course of their research, Angela Wilkinson and Roland Kupers interviewed almost every living veteran of the Shell scenario planning operation, along with many top Shell executives from later periods. Drawing on these interviews, the authors identify several principles that characterize the Shell process and explain how it has survived and thrived for so long. They also enumerate the qualities of successful Shell scenarios, which above all must be plausible stories with logical trajectories. Ultimately, Wilkinson and Kupers demonstrate the value of scenario planning as a sustained practice, rather than as a one-off exercise.

    eISBN: 978-90-485-2209-5
    Subjects: Business

Table of Contents

  1. Preface by Peter Ho
    (pp. 9-12)
    Peter Ho
  2. Introduction: The “Gentle Art”
    (pp. 13-16)

    Our fascination with the future reaches back millennia through oracles, visionaries, and utopians. Yet the future remains elusive. For example, Arthur Brehmer’sThe World in 100 Years,published in 1910,² gets every prediction wrong, with the exception of the pocket phone.

    Even if we can’t predict the future, a willingness and capacity to engage with new and different possibilities can help clarify the otherwise overwhelming messiness of continuous change. Modern foresight practices provide a rich choice of dealing with futures – the probable, the preferable, and the plausible. One of the most important of these practices is scenario building. Scenarios maintain...

  3. I A Unique Legacy
    (pp. 19-24)

    For the past hundred years, an increasingly more interconnected world has created a global business context of significant opportunity and faster and more turbulent change. Despite ever more sophisticated approaches to corporate foresight, including horizon scanning, probabilistic forecasting, and complex systems analysis, business leaders still experience a sense of widespread failure to engage effectively with uncertainty.

    More than forty-five years ago, Shell² executives began to grapple with irreducible uncertainty by harnessing the longer-term perspective through the creation and use of alternative stories of the future – scenarios. Over time, Shell established an in-house team that produced a range of scenarios by...

  4. II Shell Scenarios – A History, 1965-2013
    (pp. 25-74)

    The official Shell scenario history begins in 1965 with the appointment of Ted Newland to start up a new activity called Long Term Studies within the Strategic Studies Division. Two years later, he was joined by Jimmy Davidson, who was appointed as the head of Group Planning, with responsibility for several divisions, including Strategic Studies. Newland and Davidson had arrived at Shell in the middle of the twenty-five golden years of the oil industry that followed World War II. Global demand for oil was booming both in the OECD countries and in many developing economies. Oil was not only fueling...

  5. III The Essence of the Shell Art
    (pp. 75-112)

    In contrast to the more secretive and ‘one-off’ practices of other firms, Shell has widely shared and disseminated its scenarios. Shell now regularly publishes its global and long-term energy scenarios, and these, together with several handbooks detailing the Shell scenario method, have been used as reference by other companies, governments, and international institutions. This widespread use of Shell materials suggests that the impact and influence of the Shell scenario practice extends well beyond the company.

    Given the continuing relevance of Shell’s scenario practice, an examination of theessenceof the art, extracted from almost half a century’s practice, offers a...

  6. IV Looking Ahead
    (pp. 113-122)

    Most businesses are less than forty-five years old, the average tenure of the CEO is getting shorter, and fads and fashion in strategy don’t last a decade. Shell’s reputation for disciplined imagination as a basis for long-term thinking is therefore all the more surprising in an engineering-orientated business culture. Sustaining a practice for over forty-five years is even more remarkable. In grappling with accelerating change, irreducible uncertainty, and genuine complexity the Shell scenario practice has engaged intuition, in combination with rigorous analysis, to redirect attention from business as-usual projections to novel changes and discontinuities, to reveal and test deeply held...

  7. V Conclusion
    (pp. 123-130)

    Inevitably, for such an unusual corporate function, there has been a continuous low intensity debate about the value of scenarios. On at least three occasions, the board seriously considered discontinuing the practice. The first of these occurred immediately after Wack’s retirement, when De Geus was instructed by Van Wachem to “bring it closer to the business.”² The scenario team under Van der Heijden asked De Geus for six months to convince him of the use of scenarios. The fundamental lesson learned was that the scenarios are effective only when focused on the concerns of a specific client. De Geus concurred...

  8. Epilogue: Scenario Team Leaders
    (pp. 131-134)

    From the earliest days, when Davidson displayed an interest in catastrophe theory and resilience, scenario builders have been influenced by their own experiences and their own ways of seeing the world. In spite of the dangers inherent in over-simplification, the history of this thought provides another lens not only on the history of scenarios in Shell but also on the Shell scenario principles themselves.

    Jimmy Davidsonunderstood that there is no “God-given” perspective and that organizations needed to speculate with uncertainty. His earlier work on political and general business risk in 1967 had emphasized that “governments do not act capriciously....

  9. Afterword
    (pp. 135-136)
    Jimmy Davidson

    For centuries wise men have been trying to divine the future, and today the endless quest goes on with all the aids of modern science and technology, but like sailing in uncharted seas the best that it seems we can do is try to see where the rocks may be and where there may be some areas of clear passage.

    But, even if in the unlikely event that one day there is success in unlocking the future – what a dull world we will be entering....

  10. Appendix B Summary of Scenarios
    (pp. 139-166)