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Scenario Planning: A Tool for Strategic Thinking

Scenario Planning: A Tool for Strategic Thinking
References 1. C. Cerf and V. Navasky, The Experts Speak (New York: Pantheon Books, 1984). 2. P.J.H. Schoemaker and C.A.J.M. van de Heijden, "Integrating Scenarios into Strategic Planning at Royal Dutch/Shell," Planning Review 20 (1992): 41-46. 3. C. Sunter, The World and South Africa in the 1990's (Cape Town, South Africa: Human and Rousseau Tafelberg, 1987).


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Scenario Planning

Scenario Planning

Managers who can expand their imaginations to see a wider range of possible futures will be much better positioned to take advantage of the unexpected opportunities that appear.

By identifying basic trends and uncertainties, a manager can construct a series of scenarios that will help to compensate for decision-making errors from overconfidence and tunnel vision. That’s what scenario planning does. 





Cognitive biases

Cognitive biases

...are common thinking errors that harm our rational decision-making.

We don't always see things as they are. We don't simply glean information through the senses and act on it; inste...

Optimism Bias

Is our tendency to overestimate the odds of our own success compared to other people's. 

Overly optimistic predictions can be dangerous, leading us to waste time and resources pursuing unrealistic goals. In the real world of business, things don't always work out for the best, and it serves us well to know when conditions are not on our side.

How to control the optimism bias

  • Be skeptical of your own rosy expectations for your work. 
  • Assume projects will be more difficult and more expensive than you initially think they will. 
  • Don't trust your good ideas to manifest through positive thinking - be ready to fight for them.
  • Trust the numbers. Numbers are firm but fair, and getting intimate with your business's cash flow can help you make more rational decisions.

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The first views on motivation

The first views on motivation
  • At first, psychologist William James thought that only the initial act was conscious, thereafter behaviour was a spontaneous cascade of habits. He suggested we struggle with motivation when ...

Mathematics of motivation

When Ivan Pavlov and his dogs led to the discovery of learned behaviour through repeated exposure, and Edward Thorndike discovered the Law of Effect that stated that rewarded behaviours tended to increase, many psychologists were impelled to separate psychology from armchair introspection and formulated their theories as mathematical formulas.

  • The Drive x Habit Theory. Clark Hull's formula was sEr = D x sHr, which states that excitatory tendency (E) is the result of the drive (D) combined with the habit (H). The drive is nonspecific, such as hunger or thirst. The habit, however, depends on the stimulus (s) and response (r). But the theory turned out to be wrong and even opposite in many cases. 
  • Expectation x Value Theory. Drawing on ideas in economics and game theory, Edward Tolman and Kurt Lewis formulated an alternative account by evaluating motivation based on expectations. Tolman expressed the ideas as the mathematical formula: Subjective Expected Utility = Probability1 * Utility1 + P2U2 + P3U3 + … where subjective expected utility of an action equalled the motivation to act. But, if you expect a reward, why act and not simply passively wait for the expected reward? 

Motivation as change

Donald Hebb realised that existing theories were too focused on reacting to the immediate environment. Thoughts, ideas and goals could be just as strong for triggering action as sights and sounds.

Together with John Atkinson, they noted that the study of motivation had undergone a "paradigm shift", where motivation couldn't be seen as how actions get started, but how the organism decides to change its behaviour from one thing to another.


They are basal responses that begin in the subcortical areas of the brain responsible for producing biochemical reactions to environmental stimuli that have a direct impact on our physical state.&n...


Feelings are preceded by emotions and tend to be our reactions to them. Emotions are a more generalized experience across humans, but feelings are more subjective and influenced by our personal experiences and interpretations, thus they are harder to measure.

Negative Emotions

They can be defined as unpleasant or unhappy emotions evoked in individuals to express a negative effect towards something.

Although some are labeled negative, all emotions are normal to the human experience. And it’s important to understand when and why negative emotions might arise, and develop positive behaviors to address them.