Scenarios Planning — An Ancient Art

The big move to the real world came in the '70s and '80s when the Shell oil company did considerable work on how to construct scenarios and how to plan strategy based on them. Famously, Shell spent a reported $15 million and months of senior management time in the 1980s — a huge investment at that time — working on 13 different scenarios. Eleven of those scenarios proved useless, since they didn't remotely happen. But two of them proved enormously helpful. One was that the price of oil would rise to $100 a barrel, and the second was that there would be a war in the Persian Gulf. As a result, the company kept large reserves of oil and set up exploration sites in Mexico and other places that seemed enormously difficult and expensive compared to the Gulf.