Does scenario planning affect performance? Two exploratory studies

Scenario planning is increasingly practised to enable firms to cope with changing competitive environments. However, little evidence is available about the effects of scenario planning on company performance. This paper reports two exploratory studies in contrasting industries in the UK: the water industry and the information technology (IT) consultancy industry. Analysis of these studies pays particular attention to the issue of discriminating between interrelated size effects and scenario planning effects. Comparison of these studies allows some tentative conclusions regarding the effects of scenario planning to be drawn. We find support for improved financial performance resulting from scenario planning in both industries. A possible secondary effect of scenario use, encouraging firms to concentrate on financial returns at the expense of customer service levels, is also discussed.