Scenario planning is a process of visualizing what future events or conditions are probable, what the impacts of these conditions and events would be and developing plans to respond to and optimize performance in these future states.

Scenario planners do not put all their planning eggs in the same basket. Typically, a planner will generate between 3 and 5 different scenarios based on their best-estimates of what the future might hold. For each of these scenarios they will generate strategies that will allow their company the best chance of meeting targets.

As the future reveals itself, decision makers can align their strategies with those that perform best in the scenario that matches reality.

But there’s a problem, three of them, in fact.

First, when you reduce an infinite number of futures to less than half a dozen choices you are almost assured of being wrong.

Second, even the most complete scenarios will not be able to include all the components that might impact the future, and this means there will always be inaccuracy and a lack of granularity.

Third and importantly, it is not simple to adjust a scenario when new information emerges – the handful of scenarios that are developed will most often stay as they are no matter how the world evolves.

Little wonder, then, that planners look to simulation to help them predict what will happen next.

It’s easy to see why there is confusion between Scenario Planning and Simulation. Both are means of predicting various futures and developing plans to meet targets in those futures. But there are some significant differences between the two that are important to understand.

Scenario planning limits itself to a handful of futures with a single static plan to ensure targets are achieved if that prediction matches the real-world.

Simulation, on the other hand, tests near-unlimited scenarios simultaneously and Prescriptive Simulation Twins can generate individual operational and strategic plans for each scenario.

Far from static, these simulations and dynamic plans can be updated with new information in real-time and decisions optimized to ensure goals are met no matter how the future unfolds.

After first finding a market in critical industries such as nuclear energy and public utilities, today simulation is a trending topic in all sectors.

Manufacturers and retailers are embracing simulation because, for executives tasked with making optimal choices, there’s really no contest: the advantages of simulation and the incredible power of Prescriptive Simulation Twins offers the best path towards a robust, resilient, sustainable, and successful future, whatever form that might take.