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JSMA
8,2
The development of
strategy scenarios based on
prospective hindsight
176
An approach to strategic decision making
Received 8 January 2015
Revised 10 March 2015 Philip Meissner and Torsten Wulf
Accepted 15 March 2015 Philipps-University Marburg, Marburg, Germany

Abstract
Purpose – Research focussed on the scenario method has increasingly criticized the widely used
intuitive logics (IL) approach to scenario development and introduced enhanced approaches, such as
the backwards logic method (BLM) or the antifragile (AF) method, to overcome the restrictions
associated with the IL approach. The BLM and the AF method have contributed to the further
development of the scenario method by integrating backward reasoning and by increasing the
method’s effectiveness for decision making. The purpose of this paper is to build on these ideas and
introduce strategy scenarios as a further enhancement of the scenario method that directly applies the
benefits of scenario-based planning to strategy development in corporations.
Design/methodology/approach – The authors argue that the existing methodologies do not fully
integrate the benefits of scenario-based planning for strategic decision making and strategy
development, as they mostly aim to develop macroenvironmental scenarios and test organizations’
existing strategies.
Findings – The paper suggests that changing the scope of scenario planning from environmental
developments to the organization’s strategies themselves can further strengthen the method’s
effectiveness for decision making.
Originality/value – The strategy scenario approach provides an enhanced approach to more
comprehensively utilize the benefits of scenario-based reasoning for strategic decision making.
Keywords Scenario planning, Strategic planning, Strategic decision making
Paper type Conceptual paper

Introduction
Scenario-based planning has evolved into a widely used technique for strategic planning
and for developing strategic foresight in corporate practice (Hodgkinson et al., 2006;
Rigby and Bilodeau, 2007; Bradfield et al., 2005). Prior research has identified three main
advantages of scenario-based planning for corporate practice. First, scenario-based
planning helps organizations enhance their understanding of causal processes that shape
the future. Second, it challenges conventional thinking and established mindsets. Third, it
can contribute to improved decision making in the strategy process (Varum and Melo,
2010; Wright et al., 2013). Given these benefits, scenario-based planning is widely used and
well established in both research and practice (Van der Heijden et al., 2002; Schwartz, 1996;
Wright et al., 2013). This is particularly true for the intuitive logics (IL) approach, which
uses narrative causal chains to develop scenarios in organizations. However, recent
research on the scenario method has increasingly criticized IL for failing to consider the
Journal of Strategy and
Management uncertainty associated with unforeseen events (Goodwin and Wright, 2010; Wright and
Vol. 8 No. 2, 2015
pp. 176-190
Goodwin, 2009), for being too time consuming to quickly develop contingency-based
© Emerald Group Publishing Limited
1755-425X
strategies for organizations (Wright et al., 2013; Meissner and Wulf, 2013; Millett, 2003)
DOI 10.1108/JSMA-01-2015-0004 and for being biased toward recent or general factors, such as economic developments.
Research suggests that these biases arise from the causal forward-looking logic built An approach
into the IL approach (Mietzner and Reger, 2005; O’Brien, 2004). to strategic
Despite efforts to overcome this criticism by the integration of so called “remarkable
people” (Van der Heijden, 1996) and other techniques like devil’s advocacy, role play
decision
and dialectic inquiry (Wright et al., 2013) these practices have largely remained making
unstructured and unevaluated (Wright and Goodwin, 2009).
Two new methods have been proposed to overcome these limitations and to enhance IL. 177
The first is known as the backwards logic method (BLM) (Wright and Goodwin, 2009).
As part of this method, macroenvironmental end states are developed, and backward
reasoning is used to build causal links. The goal of this method is to overcome the
biases associated with the ILs approach by drawing the attention of decision makers to
a broader range of factors (Wright et al., 2013). The second approach – named
antifragile (AF) methodology – aims at treating the future as if it were completely
non-deterministic. It thus refrains from integrating causal linkages altogether and moves
the level of analysis directly to the organization’s strategy. In fact, AF (Derbyshire and
Wright, 2014) aims at developing strategies that enable the organization to even benefit
from unforeseen events (Taleb, 2012; Derbyshire and Wright, 2014). It thus contributes to
increasing the effectiveness of the scenario method for decision making by directly
applying the method for improving strategy. Both approaches have provided important
and complementary additions to the scenario planning literature. Thus far, however, their
benefits have not been integrated to form an even further enhancement of IL that uses
backward reasoning and that is directly applicable for strategy development.
In this paper, we extend these methodological developments in research on the
scenario method by proposing a new approach that integrates important benefits of
BLM and AF. This approach, which we refer to as the “strategy scenario approach,”
aims at increasing scenario-based planning’s ability to improve decision making in
organizations by changing the scope of analysis from environmental developments to
the organization’s strategies themselves – as proposed by AF – while at the same time
integrating a backward reasoning perspective rooted in prospective hindsight.
We define prospective hindsight as a method for sensemaking that fosters decision
makers to go forward in time and then look backwards – an approach that yields
significant cognitive benefits (Mitchell et al., 1989) as it can for example reduce biased
judgments in the decision-making process (Kahneman and Klein, 2009; Klein, 2007).
We argue that the strategy scenario approach can help reduce the limitations
of existing scenario-planning methodologies, and can help solidify the significance of
scenario-based strategic planning in research and practice alike. More specifically,
this paper contributes to the discussion on scenario-based planning by proposing
a methodology that merges the strategy-development and decision-making processes
of organizations with scenario-based reasoning and planning. It thus contributes to the
evolution of scenario-based planning from a potential stimulus for better decision
making (Wright et al., 2013) to an integrated, direct method for decision making and strategy
development. In addition, by integrating the behavioral benefits of prospective hindsight
into this methodology, we contribute to the development of a less biased scenario approach,
which should improve judgment and decision quality in corporate practice.

The benefits and limitations of scenario-based planning

Scenario planning is based on a multitude of different methods and definitions
(Tapinos, 2013; Chermack and Lynham, 2002; Tapinos, 2012). Some researchers regard
scenario planning as a method for creating images of the future that are not directly
JSMA linked with strategy development while others consider scenario planning as
8,2 a combination of scenario development and strategy development (Tapinos, 2012).
In this paper, we refer to both perspectives as scenario-based planning (Schwenker
and Wulf, 2013).
IL is one of the most frequently and widely used methods for developing scenarios
in organizations (Hodgkinson et al., 2006; Linneman and Klein, 1983). In fact, many
178 authors refer to this method as the standard tool for scenario-based planning (Ringland,
2002; Ramirez and Wilkinson, 2014). IL develops scenarios based on the industry’s
most important and uncertain driving forces, which form the basis for a two-by-two
matrix that frames the scenarios (Schwartz, 1996; Schwenker and Wulf, 2013), or by
inductively using causal narratives (Van der Heijden, 1996). These scenarios are further
developed into consistent causal stories in a chronological structure. Finally, the
scenarios are used to derive strategies for the respective organization (Wright et al.,
2013; Schwartz, 1996; Van der Heijden et al., 2002). The IL approach aims to foster
strategic thinking in the strategy process in order to derive a more holistic and
contingency-based strategic plan (Schoemaker, 1995). IL is beneficial for organizations, as
the causal narratives or the two-by-two matrix provide a clear and easy-to-communicate
structure for scenario development (Ramirez and Wilkinson, 2014).
Organizations mainly use scenarios to achieve three goals: to enhance their
understanding of how the future may unfold, to challenge conventional thinking in the
management team, and to improve decision making (Wright et al., 2013). Prior research
suggests that scenario-based planning is particularly well-suited for realizing these
objectives because of its psychological and cognitive benefits (Schoemaker, 1993;
Schoemaker, 1995; Meissner and Wulf, 2013).
In fact, multiple studies have found that scenario-based planning can overcome
negative cognitive biases in the strategy process on the group and individual levels.
Van der Heijden (2000) suggests that the strategic conversation that is created inside
the organization through scenario-based planning can help overcome groupthink.
This finding is supported by other studies on the individual level, which suggest that
scenario-based planning reduces overconfidence bias (Schoemaker, 1993), framing
effects (Meissner and Wulf, 2013) and confirmation bias (Bradfield, 2008). In addition,
the method seems more effective than other strategic planning tools in ensuring high
decision quality in the strategy process (Meissner and Wulf, 2013).
Despite these benefits, the IL method has been criticized by researchers and
practitioners alike. Some researchers have presented more general criticism of IL.
In particular, they regard the two-by-two matrix approach to developing scenarios as
overly simplistic for mapping out future contingencies (Ramirez and Wilkinson, 2014)
and argue that scenario planning methods in general may be subject to errors that stem
from poor process facilitation or a suboptimal team composition (Hodgkinson and
Wright, 2002; Whittington, 2006). Others have pointed to more specific areas for the
enhancement of IL by highlighting challenges that arise from the process of IL itself.
These studies argue that the IL methodology does not accurately consider the
uncertainty arising from extreme and hardly foreseeable events (Goodwin and Wright,
2010; Wright and Goodwin, 2009), which are often referred to as “black swan” events
(Taleb, 2007). Furthermore, the causal forward-looking logic built into the approach
may strengthen mental models rather than challenge them (Healey and Hodgkinson,
2008). This may be due to the fact that participants in a scenario-planning workshop
tend to overemphasize recent events and economic factors, such as GDP development
(Mietzner and Reger, 2005; O’Brien, 2004). The creation of scenarios from these factors
can preserve existing beliefs without fostering a true strategic conversation that An approach
expands individuals’ own points of view (Van der Heijden et al., 2002). To overcome to strategic
these challenges, researchers have proposed the integration of several techniques such
as devil’s advocacy, role play (Wright et al., 2013) and “remarkable people” (Van der
decision
Heijden, 1996) that have reduced narrow framing, into the IL methodology. making
Still, however, Wright and Goodwin (2009) call for a more structured approach to
further improve this issue. 179
In response to this call, two methods have been proposed to further enhance IL.
The BLM aims at reducing the problems associated with the forward causal thinking
inherent in IL (Wright and Goodwin, 2009). This method develops a picture of a scenario’s
end state and then uses a backward-oriented logic to determine potential causes of that
outcome. It therefore avoids diagnostic causal thinking (Wright et al., 2013).
This method is conceptually based on the prospective hindsight perspective. Rooted
in the future perfect strategy (Weick, 1979, 1995), prospective hindsight is a sensemaking
technique that helps decision makers generate potential explanations for a future event by
going forward in time and then looking backwards. This requires decision makers to
focus on finding explanations for future circumstances, as if they had happened, and not
on discussing if these circumstances are likely to occur or not. Mitchell et al. (1989) argue
that this simple change in temporal perspective can have significant cognitive benefits,
as decision makers can only make sense of future events if they consider them
retrospectively, i.e. if they think about the future as if it had already occurred (MacKay
and Parks, 2013; Gioia et al., 2002).
In fact, people tend to explain the past and predict the future, which is why future
and past events are typically treated differently (Weick, 1979). Therefore, prospective
hindsight can assist decision makers in obtaining greater variety in the list of different
contingencies that might occur in the future. Because of this extension of the field of
vision, this technique can help improve decision making in organizations (Weick, 1979;
Sevón, 1984). An additional benefit of prospective hindsight is that it enables decision
makers to generate more critical points that may challenge the conventional opinions in
the group or in the organization as a whole (Kahneman and Klein, 2009; Mitchell et al.,
1989). It may thus not only widen the scope of potential future developments that are
considered in the decision-making process but also overcome groupthink, risk shift, and
individual objections to the dominant opinion in the group (Kahneman and Klein, 2009;
Kahneman and Klein, 2010; Klein, 2007). In other words, prospective hindsight utilizes the
natural ability of decision makers to generate causal chains for certain outcomes (Mitchell
et al., 1989). This, in turn, can create an increased awareness of uncertainty (Hoch, 1984;
Koriat et al., 1980; Mitchell et al., 1989), which may foster debiasing in the decision process
(Kahneman et al., 1982; Powell et al., 2011; Russo and Schoemaker, 1992).
Building on these arguments, Wright and Goodwin (2009) use a four-step process to
develop broad macroenvironmental scenarios based on prospective hindsight: identify
the objective that the organization wishes to achieve; imagine high and low degrees of
achievement for these objectives; list the external factors that could have led to the
respective over- or underachievement of the defined objectives; and rethink whether the
outcomes determined in step 2 could be made more extreme while remaining plausible.
If this is the case, step 3 should be repeated for these more extreme outcomes. The goal
of this repetition is to stretch the boundaries of plausible objectives until implausibility
is reached (Wright and Goodwin, 2009). This process results in an overview of different
environmental drivers that can produce extreme variation in the firm’s objectives.
These drivers are then ranked according to their impact.
JSMA Thus, BLM reduces certain limitations of IL. It uses backward reasoning to
8,2 overcome the limits of conventional thinking. This simple shift of framing can
significantly alter and expand the scope of the factors discussed by participants as well
as the resulting drivers (Mitchell et al., 1989; Jungermann and Thüring, 1987). It may
thus change the mental models of decision makers and expand their fields of vision.
The second method proposed for reducing the limitations of IL is the AF methodology
180 developed by Derbyshire and Wright (2014). This approach aims to more accurately
consider extreme events by treating the future in a non-deterministic way. It thus refrains
from integrating causal linkages altogether (Taleb, 2007, 2012). In addition, AF applies
this reasoning to directly develop strategies rather than macroenvironmental scenarios
first. By developing strategies that might even benefit from uncertainty, AF increases the
effectiveness of the scenario method for decision making.
While the causal logic of IL and the identification of core drivers within BLM
assume that the future can be analyzed and structured if sufficient information and
imagination is integrated in the process, AF is based on indeterminism, such that it
refrains from making causal assumptions on the future. Instead, the goal is to develop
independent strategies that are robust or even AF, i.e., that are unaffected by
uncertainty and volatility, or even benefit from them (Derbyshire and Wright, 2014).
An AF strategy would capitalize on environmental crises in a manner similar to a put
option. In fact, AF strategies could enable an organization to strive in times of economic
downturn (Taleb, 2012).
According to Derbyshire and Wright (2014), AF should follow a three-step process,
which is best conducted in a workshop setting. First, the participants list all of the
organization’s current strategies and investments, and create labels and short
descriptions of each. In the second step, the executives categorize the strategies on
a continuum between fragile and AF. In the final step of the process, they develop ideas
for making each strategy more AF. This process results in a list of AF strategies that
prepare the organization for extreme cases of uncertainty as well as black swan events.
It can therefore help overcome some of the challenges arising from the increasing
volatility and complexity of the macroenvironment.
BLM and AF complement and enhance the intuitive logics school in important ways.
On the one hand, the AF methodology increases the scenario approach’s effectiveness
with regard to decision making because it applies the scenario-based reasoning directly
to the strategic rather than the macroenvironmental level of analysis. On the other
hand, BLM integrates backward reasoning into scenario-based planning. In this regard,
it reduces IL’s potentially narrow and biased consideration of factors by making
a broader range of factors visible in the scenario-development process (Derbyshire and
Wright, 2014; Wright and Goodwin, 2009).
While both methodologies have significantly contributed to the further development
of the scenario method, both have only addressed one single limitation of IL respectively.
BLM focusses on integrating a backwards logic reasoning approach while still applying
this approach to the development of macroenvironmental scenarios. AF in turn has
changed the focus from applying the scenario methodology from macroenvironmental
scenarios to the strategic level of analysis while still relying on a forward looking time
perspective (Table I). However, none of the methods similarly addresses both areas of
criticism regarding IL.
To overcome this research gap in the scenario-based planning literature, we propose
a conceptual addition that directly applies the scenario method’s benefits to strategy
development. We label this new method the “strategy scenario approach,” and we
argue that it adds to recent methodological developments in scenario-based planning An approach
by integrating important benefits of BLM and AF approaches. Building on prospective to strategic
hindsight (Mitchell et al., 1989), the strategy scenario approach can challenge decision
makers to see and integrate unusual and unexpected factors thus aiming to produce
decision
similar cognitive benefits as are associated with BLM. From AF the strategy scenario making
approach uses the idea of directly applying the benefits of scenario-based planning to
the strategy-development process rather than first creating macro scenarios and 181
consequently deriving strategic actions (see Table I).
This approach, however, is not meant to replace existing approaches to scenario-
based planning. Rather, it may complement and enhance these approaches and provide
strategists with a more complete set of scenario-based planning approaches that can be
used for specific applications in the organization. While IL or BLM may be particularly
useful for enhancing the organization’s understanding of environmental developments
and for challenging conventional thinking (Wright et al., 2013; Van der Heijden et al.,
2002), strategy scenarios may be best used for developing a robust and flexible set of
strategies. More specifically, the method allows for the development of flexible
strategies that are defined as a set of strategic measures that can be quickly
implemented if unfavorable changes arise in the organization’s environment.
In addition, it can create so called core strategies, which are defined as strategic
measures that can be implemented instantly as they directly contribute to achieving the
firm’s goals under given circumstances. Flexible and core strategies are then combined
to form a strategy scenario, a holistic set of strategic measures that better prepare an
organization for environmental uncertainty. The concrete strategic measures that the
strategy scenario entails can thus consist of both strategic action plans and
contingency strategies that can be implemented. Strategy scenarios thus aim to directly
improve the quality of strategic decisions. This integrative approach is discussed in
detail in the next section.

An integrative approach to the development of strategy scenarios

The strategy scenario approach is based upon two core pillars that are rooted in
previous research on the scenario method. Just like IL, the strategy scenario method is
based on the planning school of strategy (Mintzberg et al., 1998), which aims at
predicting and preparing (Ansoff, 1965) for possible future contingencies, particularly
focussing on the external environment of the firm. While building on the same
conceptual logic as previous methods for scenario-based planning, the strategy
scenario approach aims at fostering a broader consideration of contingencies inside
and outside the organization. This is based on prospective hindsight that also forms the
basis for BLM (Klein, 2007; Kahneman and Klein, 2009). Also, the approach

Scenario techniques Focus of scenarios Time perspective

Intuitive logic (IL) method Macroenvironment Forward logic

Schwartz (1996); Van der Heijden et al. (2002)
Backward logic method (BLM) Macroenvironment Backward logic
Wright and Goodwin (2009) Table I.
Antifragile (AF) methodology Strategy Forward logic Conceptual overview
Derbyshire and Wright (2014) of scenario
Strategy scenario method (SSM) Strategy Backward logic methodologies
JSMA incorporates a strategic level of analysis that allows for a direct development of
8,2 strategies for corporations, which is based on the benefits of AF.
Combining these enhancements to previous scenario methods, the strategy scenario
approach comprises four steps to analyse future contingencies and to develop
scenario-based strategies thus providing a direct and integrated method for strategy
development and decision making in organizations. These steps are best applied in
182 a workshop setting directly by the management team.

Step 1: identify the company’s strategic goals

The first step in the development of strategy scenarios is to frame the discussion at the
strategic level of analysis. For this purpose, the management team should identify
the company’s strategic goals and set a time by which the goals should have been
reached. These goals can then be used as the target for the strategies that are developed
in subsequent steps. To select the strategic goals, the management team can, for
example, start by analyzing the firm’s vision, which should provide a comprehensive
statement of the firm’s medium-term goals. The vision usually comprises three to four
main objectives in different fields, and typically contains both financial and nonfinancial
targets. A focus on these goals is advantageous, as it allows for the development of
specific and targeted strategies in the ensuing steps of the process.
To further illustrate this step, consider the hypothetical example of the Coca Cola
Company, the world’s largest beverage company. Coca Cola has created a 2020 vision that
focusses on five main areas: profit, people, portfolio, partners and planet. These elements
of the vision are then further specified to five strategic goals comprising for example
“more than doubling system revenue while increasing margins” or “more than doubling
our servings to over 3 billion a day” (The Coca Cola Company, 2014). When applying the
strategy scenario approach in this hypothetical example, the management team of Coca
Cola uses these five goals specified by the company’s vision as the strategic goals to be
met by the strategic measures that result from the strategy scenario approach.

Step 2: develop flexible strategies – perform a premortem analysis and identify

potential strategic countermeasures
Based on the strategic goals selected in step 1, the management team can start
developing and discussing different contingencies in order to create a holistic set of
flexible strategies for the organization. This process begins with a premortem
analysis, a decision-making tool designed to comprehensively assess the potential
risk associated with projects on the basis of prospective hindsight. It changes
the thinking of the project team by reframing the core question in risk-focussed
strategic conversations from “What could go wrong?” to “What did go wrong?”
(Klein, 1998, 2007).
Team members first apply prospective hindsight and take a backward-looking
perspective. As a result, they establish a list of reasons for why the company was not
able to achieve the strategic goals that it set for itself. To encourage this type of
thinking, the workshop facilitator asks all participants to imagine that they are in the
year by which the company’s strategic goals should have been reached. He then
informs all participants that the company’s strategy to arrive at the set goals has
completely failed and asks all individual participants to write down reasons for this
failure. These reasons are summarized and discussed by the entire group (Klein, 2007;
Kahneman and Klein, 2009). This analysis results in a list of potential internal and
external reasons for the company’s failure to achieve its strategic goals. In the second An approach
part of this step, the management team defines a range of strategic countermeasures to strategic
that can prevent the potential failures. As a result, this step of the strategy scenario
process leads to an initial list of potential flexible strategies that can be adopted by
decision
the organization if any of the negative circumstances analyzed in the premortem making
materialize.
In the case of the Coca Cola Company, the management team participating in the 183
workshop would be informed by their staff that every single of the five goals initially
specified in the vision 2020 had not been achieved. For example, in 2020 sales totaled
only to two billion bottles per day while operating margins have plummeted to
12 percent. Now, each member of the team individually writes down a set of reasons for
this failure. One of the senior managers might come up with the following three factors:
new competitor launched an all-natural, sugar-free product that customers love,
consolidation in retail continued worldwide, European Union launched ban on
advertisements for high-sugar beverages. After having shared, discussed and
combined these factors with those of the other members of the management team,
the workshop participants continue to create a list of potential countermeasures for
each of the possible reasons for failure. Such a list of flexible strategies corresponding
to the three reasons stated above could entail the following elements: In order to
counteract the new competitor, the company could expand its healthy product line.
A flexible strategy for reacting to the reduced negotiation power based on a
consolidation in the retail sector would be for Coca Cola to set a stronger focus on online
channels or cooperate with other companies to jointly negotiate with the big retail
chains. For overcoming the negative impact of an advertising ban, the management
team might come up with strategies like rearranging the marketing mix or shifting
the regional focus more toward emerging economies. This list is then used as
a starting point in the subsequent discussion of the management team in process
step 4, in which the best and most suitable flexible strategies are combined to form
the final strategy scenario.
Using this approach for the development of flexible strategies has two important
benefits. First, the premortem analysis and its backward logic break mental boundaries
and thinking frames by overcoming the traditional, forward-looking, cause-and-effect
logic. It can thus allow potential strategies to surface that might otherwise have been
disregarded. Second, it creates a safe environment in which the management team can
suggest unconventional ideas or voice criticism (Klein, 2007). Thus, a holistic list of
potential flexible strategies can be created based on open strategic thinking and the
consideration of different contingencies without being framed by first developing an
optimal path to the strategic goal.

Step 3: develop core strategies – create an optimal path to the strategic goal and
identify potential strategies for achieving it
After having created a list of potential flexible strategies for the company, the
management team now focusses on the development of core strategies that complement
the flexible strategies in the final strategy scenario. This part of the strategy scenario
approach follows a similar two-step process based on backward-logic. The main difference
between the two process steps, however, is that a positive rather than an extremely
negative frame of reference is used to create the potential core strategies. To facilitate this,
the workshop participants are informed that the company was able to achieve its goals.
Then again, each individual participant is asked to create a list of reasons that could have
JSMA led to this positive result. These reasons are subsequently discussed by the entire team.
8,2 In the second step, the team jointly develops potential core strategies to facilitate these
positive developments strategically from within the organization. As a result of this step,
the team arrives at a list of core strategies that will directly contribute to achieving all of
the company’s strategic goals. These core strategies resemble the best-case scenario from
a strategic perspective.
184 In the hypothetical workshop for Coca Cola, the management team would thus be
informed this time that the corporation’s goal had been reached in 2020. More specifically,
this would mean that the company had been able to sell three billion bottles per day and
to improve its operating margin. Resembling the approach of the previous step, each
individual manager would start to create a list for possible reasons for this
development looking back in time. The list of one senior manager might feature items
like: growing demand for Coke’s product portfolio, health trend boosts diet product
lines, Coke’s brand image is viewed as superior to Pepsi’s in emerging markets.
This list, together with the ones created by the other participants then yields a strong
basis for deriving potential core strategies for Coca Cola that are generated based on
a group discussion in the second part of this process step. A potential result of this
discussion might be three core strategies to foster the developments mentioned above.
In order to significantly grow the demand for its core product line, the company could
continue and grow its marketing campaigns to win the next generation of customers
for its products. Another core strategy for fully utilizing the growing health trend would
be the introduction of new and healthier products in this category. Effective branding in
emerging markets complements the other two measures to ensure a superior brand image
compared to its competitors in growth markets.
By focussing participants’ attention directly on the strategic implications and
strategic foundations for achieving initially held strategic goals, this process step
provides a comprehensive list of potential core strategies that can be selected and
combined with flexible strategies in the next process step to form the final strategy
scenario.

Step 4: create a strategy scenario – combine adequate core strategies and flexible
strategies
The final step in the process combines core strategies with the flexible strategies.
In this step, the previously developed strategic measures are evaluated in terms of their
potential impacts on the organization. The result of this step is a strategy scenario
(see Figure 1), which can form the basis for more flexible strategy implementation, and
which accounts for an increasingly dynamic and uncertain environment. The figure
shows how a strategy scenario comprises both a core strategy, which can be

Core Strategy

Strategic Goal

Status Possible
Quo Futures

Figure 1.
Approach to the
development of Flexible Strategy

strategy scenarios
Today Future
implemented directly as it contributes to the firm’s goal independent from unforeseen An approach
events, as well as flexible strategies. These flexible strategies allow the firm to react to to strategic
negative contingencies, which may arise in the future. They thus enable the firm
to overcome potential strategic downsides by flexibly adjusting its strategy based on
decision
certain trigger events. making
For generating the strategy scenario, the management team starts by comparing the
two lists that were developed in steps 2 and 3. The goal of this comparison is to identify 185
those strategies that occur in both lists and those recommendations that are exclusive
to only one list.
The final core strategy then comprises those strategic measures that have the
highest potential for directly achieving the firm’s strategic goals including those
measures, which have occurred both as core and as flexible strategies. The latter can be
extremely beneficial for organizations as they allow circumventing potential downsides
and at the same time contribute to the firm’s strategic goals. However, the final core
strategy can also comprise high impact strategies that have only occurred on the core
strategy list. Finally, the team has to evaluate and select the most important flexible
strategies. This can best be done by identifying those strategic measures that have
a high benefit and are extremely flexible with regard to the degree to which they can be
scaled up and down in the future (Wright and Goodwin, 2009). The selection of both
the core strategies and the flexible strategies is based on the judgment of the top
management team. In the end, this decision on the selection of the firm’s strategy
scenario is one of the most fundamental in the organization as it determines its overall
course of action. The question the team has to answer at this point in time is which of
the potential core strategies and flexible strategies best equips them to achieve their
strategic goal on the one hand and which ones are best suited to protect them against
potential downside on the other hand.
To plan the potential execution of the flexible strategies that complement the
company’s core strategy, the management team also defines so called “trigger events,”
which would make the implementation of each flexible strategy necessary. Combined,
this bundle of strategies forms a thorough strategy scenario with solid core and agile
flexible strategies that are crucial in volatile environments.
In the case of the Coca Cola Company, the management team could for example start
their discussion on the strategy scenario from the (simplified) list of potential core
strategies and flexible strategies, which have been previously developed in the
workshop. First, the managers look for high impact strategies that are similarly in
the list of core strategies and flexible strategies. This results in the first core strategy
that they include in the strategy scenario. This final core strategy is investing in
a healthier product portfolio based on natural ingredients. This way, the company can
both profit from the growing health trend while at the same time building barriers for
potential new entrants to join the market successfully. The management team also
agrees to complement this initiative by a second high impact core strategy:
An integrated marketing campaign, which will insure that both young customers and
emerging markets are targeted. These final core strategies are complemented by two
flexible strategies:
(1) The setup of online sales channels combined with cooperation agreements with
other companies that offer complementary product portfolios to establish a joint
key account system. Such a flexible strategy would become highly relevant for
Coca Cola should an additional consolidation in the retail sector take place.
JSMA In case that, for example, major retail chains in the USA or Europe merge, this
8,2 flexible strategy could be directly implemented. In addition, it can already be
prepared today by establishing online channels and negotiating cooperation
agreements. Should a merger then take place, marketing efforts could push the
online channel and the cooperation could be quickly rolled out.
(2) Shift regional focus away from Europe. This flexible strategy can be used
186 should the European Union or other major countries and regions decide to ban
advertisements for high sugar-containing food based on a growing concern in
the general public about its health effect. Also in this case, the company can
already prepare a detailed strategic plan to shift its activities to other regions
without such a ban. Combining these flexible strategies with the two core
strategies thus results in a robust hypothetical strategy scenario for Coca Cola
that is based on multiple contingencies.
In summary, we propose an integrated and direct method for merging the
strategy-development and decision-making processes of organizations with scenario-based
reasoning and planning. The strategy scenario approach incorporates many of the
benefits of scenario-based planning, as it facilitates strategic thinking, integrates
different perspectives, and leads to the development of multiple strategic alternatives.
In addition, it offers the behavioral benefits of prospective hindsight, which can
improve judgment and decision quality in corporate practice. Furthermore, the strategy
scenario approach allows for a more direct focus of the scenario method on the strategy
level, thus building on one important benefit of AF. We suggest that combining
contingency-based thinking, which is rooted in scenario-based planning, with a more
direct, strategy-based application of the method, which we believe are combined in the
strategy scenario approach, can complement recent methodological developments in
scenario-planning research by extending the benefits of BLM and AF.

Discussion
Despite the many benefits associated with scenario-based planning and the intuitive
logics school, recent research on the scenario method has criticized existing approaches
for creating biased scenarios based on forward-looking reasoning and for being too
complex for a quick development of contingency-based strategies in the organization
(Wright et al., 2013; O’Brien, 2004; Meissner and Wulf, 2013). While the backward logics
and AF approaches address these issues (Wright and Goodwin, 2009; Derbyshire and
Wright, 2014), both have only addressed one limitation of IL, respectively, by focussing
on either increasing the method’s applicability for strategy development or integrating
backward reasoning.
The strategy scenario approach introduced in this paper complements extant
research on the scenario method by combining important benefits of BLM and AF to
develop scenario-based strategies in organizations. They are designed for a very
specific application in organizations – the development of contingency strategies.
They do not allow for the development of fully fleshed environmental scenarios as in
the case of IL and BLM (Goodwin and Wright, 2010; Van der Heijden et al., 2002), or for
the undertaking of robustness tests of existing strategies as in the case of AF
(Derbyshire and Wright, 2014). This implies that the scenario-planning approaches
suggested in prior research, together with the strategy scenario approach, have the
potential to serve as a complementary set of tools for corporate practice and academia
that can be further developed with regard to their specific applications and goals.
For research on the scenario method, this might imply that future studies in the area An approach
can move in more diverse directions. Rather than focussing on IL as the major to strategic
approach to scenario-based planning, future research could develop and test a variety
of complementary and more specialized methods designed for different goals.
decision
Such studies could also improve the application of scenario-based planning in practice, making
as the methodological suggestions offered by research would more closely reflect the
specific requirements inherent in different application situations. 187
A greater specialization of scenario approaches might also highlight additional
interesting areas for future research. In this regard, several promising areas for the
application of scenario-based planning in organizations remain largely idle due to the lack
of relevant methodologies. Therefore, we call for more specialized scenario-based
methodologies that cater to these areas. One possible focal area could be the quantification
of scenarios to make them more applicable for financial decision making in organizations.
Another interesting area for future research on the scenario method lies in empirical
tests of existing and newly developed scenario methods. While prior research has made
important initial contributions in this area (Schoemaker, 1993; Bradfield, 2008;
Meissner and Wulf, 2013), little is known about the precise effects of the application of
different scenario approaches. Such research could include both qualitative and
quantitative studies. Qualitative research could, for example, focus on developing
a more fine-grained understanding of how and why scenario-based planning is used in
organizations’ strategy processes. These results could contribute to a better understanding
of the method’s benefits and shortcomings, which could then be used to further develop
the method conceptually. Quantitative research could test the widely claimed cognitive
benefits of scenario-based planning. Such studies could, for example, analyze the
influence of scenario-based planning on various biases or changes in mental models.
In addition, comparative analyses could examine the effect of different approaches in
order to identify those methods that are best suited for specific situations. In sum,
greater diversity and specialization in research on scenario methods might offer
important new insights that could benefit the academic discussion and corporate
practice alike.

Implications for practice

The conceptual research presented in this paper has important implications for corporate
practice. For decision makers in organizations, the strategy scenario approach introduced
in this paper is a new methodology for scenario-based planning that can be quickly and
directly applied in the course of strategy development. Executives can implement this
approach to develop robust strategies that can be flexibly implemented depending on
various contingencies.

Conclusion
This paper contributes to research on the scenario method by introducing strategy
scenarios as a method that directly integrates scenario-based reasoning into the
strategy-development process in corporations. It therefore provides a tool for strategic
decision making. In addition, this paper adds to recent research on the scenario method
in that it complements the widely used intuitive logics method for scenario development
with the introduction of an approach that helps reduce the limitations inherent in IL.
This new approach to the development of strategy scenarios builds on prospective
hindsight to foster an open conversation in strategic decision making and strategy
JSMA development, such that it complements existing methods focussed on developing
8,2 macroenvironmental scenarios and testing organizations’ existing strategies.
This suggests additional methodological potential for developing a more diverse and
specialized set of scenario approaches, which can serve as the foundations for
additional research in the field.

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About the authors

Dr Philip Meissner is an Assistant Professor at the Philipps-University Marburg and received his
PhD from HHL Leipzig Graduate School of Management. His current research focusses on
behavioral strategy, the strategic management process and scenario planning. Dr Philip Meissner
is the corresponding author and can be contacted at: philip.meissner@uni-marburg.de
Torsten Wulf is the Chaired Professor of Strategic and International Management at
Philipps-University Marburg. In addition, he is the Academic Director of HHL’s Center for
Strategy and Scenario Planning. His main research areas are family firms, the role of top
executives in organizations as well as scenario planning.

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