∆ Tool: SCENARIO MATRIX

Building sound and plausible scenarios is a challenging task that needs to follow a structured process. Before describing the scenario building itself, one should first identify the purpose that the creation of scenarios fulfils.

The scenarios are used as a one-time activity to:

• predict and evaluate a specific, already defined strategic plan of action.   
• support and enhance a specific strategic planning process including related decisions. 
• an ongoing course of action within an organization’s strategic planning process supporting how an organization learns

What all three purposes have in common, is that scenarios enable network participants and organizations to be better prepared for strategic decisions, especially in times of increased volatility and environmental uncertainty.

The scenario matrix builds and visualizes four scenarios based on two key uncertainty factors. Four is regarded as the maximum number of scenarios that decision-makers are still able to manage. 

In overall, four sub-steps are necessary to design and describe scenarios based on the scenario matrix tool.

1. Create a list of future uncertainties - brainstorm on the specific topic or area of the network development. Try to think in the long-term time perspective and try to think about the most underlying, fundamental issues.
2. Select two critical uncertainties that are most impactful and most uncertain. 
3. Identify plausible extremes for the future state of each critical uncertainty.
4. Using the critical uncertainties as axes, plot the four possible scenarios in a 2x2 matrix. At the heart of scenario identification is the scenario matrix. The scenario matrix is based on the 2 key uncertainty factors. To construct the scenarios, it is necessary to protect each key future uncertainty with an extremely positive and negative outlook along the x and y axes of the matrix. 

Subsequently, one can position the scenarios in the four quadrants of the developed matrix, thus automatically generating four distinct scenarios. The two key uncertainty dimensions are hence the basis for building as well as describing the four scenarios. We commonly develop scenarios that look three to five years into the future. This matches the typical time frame for strategic planning activities. Each scenario should be given a concise and easily memorable name. It is important to focus the name on the chain of causes and effects behind the scenario description, the so-called influence diagram, rather than its end state.

Finally, Develop narrative explanations for each scenario. Finally, the stories behind the scenarios need to be built. These stories describe the paths along which the world will arrive at the four alternative scenarios. To derive these stories, we generally build a chain of causes and effects leading to these end-states.