In the 1950s and 1960s there was an optimistic belief in the more advanced economies that they would continue to grow steadily, leaving the devastations of two world wars and the Great Depression firmly behind. The expectation of enduring growth persists, along with mounting resentment over domestic and international inequities, conflicts, and oil crises.
There is a growing recognition, however, that social, political and economic change is becoming impossible to predict, even before we consider the impact of a changing climate.
Scenario planning had its origin in military war games in the 1940s and moved into the civil domain through the RAND Corporation and the Hudson Institute. But it took until the late 1960s before any major business began to realize that the global outlook had become inherently uncertain, and that it was no longer sensible to rely on conventional business forecasting methods assuming that the future would be much like today, only richer.
Shell was among the first large corporations to develop scenario planning. Years before the first oil crisis in 1973 the company explored a range of possible future business conditions in the oil industry, including a “crisis scenario” where the Organization of Petroleum Exporting Countries (OPEC) used its cartel power to break the upward trend in global supply, triggering a large increase in the price of crude oil. The oil majors routinely planned for 6% annual compound growth in supply to match the escalating global demand. As a direct result of its new insights from scenario planning, Shell abandoned this policy, which gave it an advantage over its competitors who took years to even begin reducing their planned refinery capacity.