What a scenario is for
Scenario planning does not consist of producing three growth forecasts or putting optimistic/central/pessimistic labels on a single model. A scenario is an internally coherent description of how the environment could evolve under different combinations of forces and uncertainties. Its main value lies in comparing strategic implications, detecting fragile assumptions and preparing early indicators.
The Innobasque training material proposes starting with the strategic issue, identifying variables and uncertainties, exploring how they might evolve, building scenarios and examining implications and options. It also distinguishes relatively predetermined elements from critical uncertainties. We have adapted that logic into a compact, operational exercise, without presenting it as a single universal procedure.
Six steps in a scenario exercise
1. Define the focal question. “How could industrial adoption of thermal storage evolve in our market over the next five years, and what options would Company A keep open?”. That is better than “what will happen with energy?”.
2. Take stock of the forces. Technology, costs, regulation, customers, energy grids, suppliers, financing, internal capabilities and substitutes. Mark which ones rest on data and which are conjecture.
3. Select critical uncertainties. Choose them for their importance to the decision and their genuine uncertainty, not for narrative appeal. Fictional example: industrial adoption (early or slow) and integration and supply (accessible or restrictive), the two axes of Company A’s matrix.
4. Build consistent futures. Crossing two axes can produce four quadrants, but check that each story has plausible causal relationships, actors and constraints. A quadrant is not a scenario by itself.
5. Test strategic options. In which scenarios does a learning alliance work? When would waiting be preferable? Which investment is irreversible and which step keeps options open?
6. Design the follow-up. Define signals that would let you review the relevance of each scenario. A scenario without useful observables risks being an elegant story with no operational capability.
Interactive · Put in order
Put the scenario exercise in order
Place the six steps in order.
Activity: put the six steps of a scenario exercise in order.
- Define the focal question
- List the forces of change
- Select the critical uncertainties
- Build consistent futures
- Test strategic options
- Design monitoring with indicators
Company A case · simulation
Fictional caseCompany A case: four fictional futures
Company A works with two critical, independent uncertainties: industrial adoption (early versus slow) and integration and supply (accessible versus restrictive). Both axes are hypotheses to explore, not market forecasts, and they are the same ones used by the R13 template and Lab L08.
| Accessible integration | Restrictive integration | |
|---|---|---|
| Early adoption | A · Coordinated expansion. There is demand and a chance to enter through partners; risk of arriving late. | B · Blocked demand. Customers are interested, but costs and bottlenecks slow projects down. |
| Slow adoption | C · Open optionality. Technical capabilities exist, but purchasing takes time; light trials prevail. | D · Stagnation. Low incentives and high friction; it is advisable to retain knowledge without tying up resources. |
These are teaching worlds, not forecasts of a real market. Differences by region and segment can coexist; the axes simplify things to make learning easier.
Variant: a different choice of axes
With the same information, other axes could be chosen, for example technical-economic viability (limited progress versus verified favourable performance) and pace of adoption. That choice produces four other worlds (contained exploration, pressure to adopt, capability without a market and selective take-off) and is just as legitimate as an exercise. It is not used in the rest of the Company A case or in Lab L08: comparing the two serves to check that scenarios depend on which uncertainties are considered critical.
Educational simulation: fictional information and organisations.
Interactive · Interactive matrix
Four futures, three options
Click a quadrant to read the scenario. Then test each option and see in which worlds it holds up.
Matrix of scenarios A–D with options O1, O2 and O3.
- Works
- Works with conditions
- Vulnerable
A · Coordinated expansion
There is demand and a chance to enter through partners; the risk is arriving late.
B · Blocked demand
Customers are interested, but costs and bottlenecks slow the projects down.
C · Open optionality
Technical capabilities exist, but purchasing takes time; light trials take priority.
D · Stagnation
It makes sense to preserve knowledge without tying up resources.
O1 · Own line
Invest now in an own line: irreversible capacity.
O2 · Pilot with a partner
Limited pilot with a partner and exit milestones: a conditional robust option.
O3 · Observation
Targeted monitoring with structured review: requires triggers and a regular cadence.
From scenarios to robust options
Company A compares three responses: O1 invest now in its own line (irreversible capacity); O2 run a limited pilot with a partner, with exit milestones; O3 observe with targeted monitoring and structured review. Waiting without any activity is also possible, but it does not generate the information that would allow the decision to be reconsidered. Under uncertainty, options that let you learn, review and keep flexibility can be preferable to binary bets, but the choice will depend on real costs and objectives. We do not present a universally correct decision.
Do it yourself
Do it yourself · Scenario workshop (45–60 minutes)
Formulate a focal question and a horizon, identify eight forces of change and choose two justified uncertainties. Describe four scenarios of 150–200 words each. Select three strategic options and record their qualitative performance in each scenario. Finish with two verifiable early indicators per scenario and a review calendar.
Deliverable: scenario matrix, robust options and follow-up signals.
Common mistakes: building scenarios only from growth rates; attributing probabilities without a basis; writing stories that contradict each other; confusing a plausible scenario with a desired one; omitting options and review.
Scenarios and robust options
Explore alternative futures and conditional options.
See the template →Check it · self-assessment
Check your scenarios
This part needs professional judgement: there is no automatic marking. Complete your work in the practice, rate it with the lesson's rubric and compare it with the indicative solution.
What your answer should include
- Two critical, independent uncertainties, with justification.
- Four plausible scenarios, with no invented probabilities.
- Three options with their qualitative performance in each scenario.
- Two verifiable early indicators per scenario and a review calendar.
Indicative solution
With early adoption and high accessibility, investment can capture demand; with slow adoption and heavy restrictions, it exposes a lot of capital. A limited pilot preserves learning in several quadrants as long as there is a partner and a contractual exit; structured observation is reasonable when the pilot's conditions are not met. Indicators: contracts and installations; supply lead times and integration cost.
Mistake to avoid: Choosing the "most likely scenario" without evidence and calculating a false mathematical expectation.
Illustrative solution for a fictional case: reasoned alternatives are valid.
Optional extensionExtension · From the 2 × 2 matrix to a decision that survives several futures
Building four quadrants is the easy part. The difficulty lies in choosing truly critical and independent uncertainties, describing causal mechanisms and checking that the decisions work under more than one condition. The uncertainties must not be two ways of saying “the technology succeeds”. In the Company A case, the axes industrial adoption and integration and supply meet that condition: a technology can succeed technically and still run into restrictive supply.
Comparing options without predicting probabilities
Company A weighs three actions: O1 invest now in its own line; O2 run a limited pilot with a partner; O3 observe with structured review. We use a qualitative matrix to compare irreversible exposure, learning value and response time; we do not invent a net present value or a scenario probability.
| Option | A | B | C | D | Reading |
|---|---|---|---|---|---|
| O1 · Own line | Could capture demand | High exposure to friction | Risk of idle capacity | Highly vulnerable | Not robust without better data |
| O2 · Pilot with a partner | Fast learning | Integration test | Keeps the option to wait | Limited loss if bounded | Conditionally robust option |
| O3 · Observation | Risk of a late response | Useful if indicators are clear | Saves commitment | Preserves resources | Requires triggers and cadence |
The provisional recommendation can be O2 if there is a partner, a budget and stop conditions; if not, O3 with a plan for obtaining evidence. O2 is not declared a universal winner.
Indicators that link scenario and action
The indicators must observe the shift of the axes before generic signals: contracts with documented installation and acceptance, operational availability, integration costs, supply lead times and regulatory rules in effect. A sustained change in two independent indicators triggers a review of hypotheses; a single press release triggers cross-checking, not investment.
Optional extension (45 min): draw the four scenarios in R13, add two leading signals per quadrant, test O1–O3 against stated criteria and write the condition that would make you abandon the initial recommendation. Acceptance: non-redundant axes, internally plausible scenarios, traceable indicators and a reversible decision.
References and limits
- Innobasque · training material. Curso de escenarios (presentación, 2024) (2024).Phases of scenario building and critical uncertainties.Innguma training material, not public.
- Company A is a fictional case: its data, companies and figures do not describe real markets or organisations.
- The analyses do not assign probabilities or scores without an explicit rule. Scenarios are plausible worlds, not forecasts.
Intelligence Lab · L08
Scenarios
Ready to apply it? Open Scenarios in the Lab and build plausible futures and decision alternatives. Output: matrix of scenarios and options. Works in the browser, no server, no account and no connected AI. The result may need reviewing and adapting to your case.