Building Actionable Scenarios

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Scenario planning helps you avoid being trapped by preconceived notions about the future. It involves looking at all relevant possible futures for a given issue before assigning probabilities and making decisions.1 By practicing this technique, organizations can develop strategies that are resilient and adaptable to uncertainty. 

This article looks at the history of scenario analysis, best practice workflow, and how scenario planning can be integrated with decomposition in ARC to create a thorough analysis of a strategic question. 

Origins of scenario planning

Also known as alternative futures analysis, scenario planning has its roots in the work of Hermann Kahn at the RAND Corporation in the 1940s.2 The method expanded from defense and national security into the corporate world. Shell is a well-known early adopter, using scenario planning for nearly 50 years to manage periods of change, including the OPEC oil embargo of the 1970s.3

Today, scenario planning is a common approach for both governments and leading companies facing complex and uncertain environments. Rather than trying to predict a single outcome, scenario planning considers multiple plausible futures that could involve significant change from the status quo.4 This approach helps organizations identify possible risks, challenge assumptions, and prepare agile strategies for different environments.

Scenario planning is also widely used in intelligence analysis. As the Soviet Union was destabilizing in the late 1980s, analysts explored a range of scenarios, including slow reform, collapse, and potential military intervention, helping policymakers prepare for multiple potential outcomes during a period of rapid change.5 

Best practices: example workflow

To demonstrate how to conduct effective scenario analysis, let's revisit the example we've used throughout this guide: Leadership at your global technology company with major operations in Europe has been prompted to rethink strategy due to rising European security concerns related to Russia and increasing EU autonomy. Scenario analysis can help you assess how evolving security dynamics might impact your company’s risks and operations. 

Here's what scenario planning would typically involve, whether you use traditional methods or ARC:

1. Clearly define the question

Begin with a well-articulated research question so your scenarios remain relevant and actionable, such as: "How will evolving European security dynamics impact our global technology company’s operations and competitiveness over the next five years?"
2. Identify key drivers and uncertainties

Research major drivers shaping your issue, such as EU regulatory changes, and geopolitical and cybersecurity threats.

If you're using ARC, run a decomposition prior to building your scenarios to help you identify the key drivers and measurable indicators for your research question. 
3. Gather diverse perspectives

Scenario planning is a creative process and requires thinking about the future from many different angles. Involve team members with different backgrounds and skills. Engage stakeholders (ideally the end-user of your analysis) to ensure alignment with their priorities and concerns, and surface wider perspectives. 

For this example, you might consult with in-house cybersecurity experts, external advisors familiar with EU policy, and supply chain leaders to ensure your scenarios reflect a range of viewpoints and are not limited by groupthink. Using ARC, you can invite and collaborate with team members on scenarios within the platform.
4. Build the scenario matrix

Select two drivers most relevant to your issue (or drivers that have a high level of uncertainty), and map them on a 2x2 grid: one axis for each driver. Each quadrant represents the basis for a scenario narrative. For the European tech organization, the matrix could be EU tech sovereignty (status quo to high) and transatlantic relations/cooperation (limited to robust).
5. Create and describe your scenarios and likelihoods

Use the resulting matrix quadrants to develop scenario narratives. Take the time to flesh out narratives in detail, enabling analysts and end-users to explore how each scenario would look and how it could come about.

ARC speeds up the process of generating scenarios, and gives you even more customization options. Choose for ARC to produce a list of all plausible scenarios, or mutually exclusive scenarios. It can use your decomposition and search results–or your own source material–to feed the scenarios it generates, as well as the likelihoods it assigns to each.

See Image 1 below depicting four plausible scenarios ARC generated for this example question.
6. Assess impacts and actions

For each scenario, evaluate its potential business impact: operational disruptions, compliance workload, supply chain risks, or opportunities in digital sovereignty. You might use quantitative modeling or qualitative assessments here.

Identify actions your company could take now to mitigate downside scenarios or take advantage of upside scenarios, such as investing in alternative suppliers or enhancing cyber resilience. 
7. Review and update scenarios regularly

Track indicators of your scenarios to enable timely responses as world events unfold. In this case, monitor new EU tech legislation or increased Russian cyberthreats. Update scenario details, likelihoods, and recommended actions accordingly. 

In a traditional approach, this would also involve periodically gathering the original participants to revisit scenarios. In ARC, you can instantly collaborate with your team and update or regenerate scenarios and likelihoods based on up-to-date news and search results.

Image 1. Scenarios and assigned probabilities generated by ARC

(Note: The narratives shown have been shortened from ARC's initial version for this illustration.)

Modern scenario analysis with AI

A traditional scenario planning approach like the one above can require days or even weeks of work by a team of analysts.6 The lack of time and resources often makes it prohibitive for teams that would stand to gain competitive advantage from this process. Using AI and LLMs, ARC facilitates scenario analysis so that it is an agile, doable and efficient part of your analysis. 

Pairing scenarios and decomposition  

Another major benefit to using ARC for scenario analysis is that you can easily integrate it with decomposition. Both are distinct yet complementary analytic techniques, and the strongest analysis draws on both. Here's a closer look: 

Step-by-step in ARC

Make sure you're maximizing ARC's features for building scenarios. See our support page for detailed instructions. 

1. US Government, A Tradecraft Primer, Structured Analytic Techniques for Improving Intelligence Analysis (US Government, 2009), 34. ↩

2. Rich Horwath, Scenario Planning: No Crystal Ball Required (Strategic Thinking Institute, 2006), 1. ↩

3. Horwath, Ibid. ↩

4. What are Shell Scenarios? Accessed May 21, 2025, https://www.shell.com/news-and-insights/scenarios/what-are-shell-scenarios.html ↩

5. Central Intelligence Agency, National Intelligence Estimate 11-18-85: The Future of the Soviet Union, NIE 11-18-85, October 1985, Washington, DC: Central Intelligence Agency, 1985. Accessed June 2025, https://www.cia.gov/readingroom/docs/20080229.pdf ↩

6. US Government, Ibid. ↩


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