We met Alexander for a chat about scenario planning, and how to combine it with data analytics.
- What are your thought on scenario planning? “I don’t believe history repeat itself, at least not in any predictable way, hence the reason for deterministic models, for example forecasting models, often failing to predict the future, especially in the long run. This is why many of our clients see themselves challenged when faced the task of making decisions impacting their business 5, 10, or 15 years out in the future. Scenario planning provides a way of embracing this uncertainty instead of trying to control it, and provides a set of scenarios our clients can navigate from.”
- Why do you believe scenario planning should be combined with data analytics? “I previously stated that I don’t believe history repeat itself in any predictable manner, which is true, but, what I do believe is that the future rhymes with the past. This is important, as it means that the future quantitatively speaking is simply the product of different pieces of developments from the past. By combining the scenarios one can create by sampling pieces of the past, with a set of qualitative scenarios created from scenario planning – one can provide a set of truly robust scenarios.”
- Can you highlight any interesting cases where scenario planning and data analytics were combined? “In a project for a larger energy company an analysis of strategic decisions made in the past, revealed that their deterministic models simply couldn’t cope with the uncertainty apparent in the industry, leading to a number of over-optimistic decisions. As a solution data analytics was leveraged to create more than 1,000 scenarios, followed by a set of qualitative scenarios from scenario planning. The solution completely altered the foundation of which the company based their strategic decisions.”