From the course: Excel: Scenario Planning and Analysis
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Estimate scenario plausibility and outcomes
From the course: Excel: Scenario Planning and Analysis
Estimate scenario plausibility and outcomes
- [Instructor] Predicting the future accurately is impossible. The world is too complex to make accurate predictions, especially at the strategic level and over longer periods of time than, say, a couple of weeks, and even then it can be extremely difficult. Rather than focus on specific probabilities, in other words, we believe that it's 10% likely X in so scenario will occur. Rafael Ramirez, who is director of the Oxford Scenarios Programme encourages you to focus on plausibility. The idea is that you don't want to lock your decision-makers into unlikely scenarios. For example, at the end of an exercise, you might have a world where structural steel costs three times as much as it does now, and would impact a construction project. Now, of course, that kind of price increase could happen, it's not in violation of the laws of physics, but it is extremely unlikely and you want to avoid putting something like that into the minds of your decision-makers so that you can avoid having them…
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