The technique of creating sets of realistic conditions, called scenarios, and thinking through their implications can significantly help managers prepare for the future. I have written previously about scenario applications (See my post of March 25, 2005: case studies of risks; Dec. 9, 2005: scenario planning for law departments; Dec. 20, 2005: real-options analysis; Jan. 4, 2006: intelligent agents; Feb. 1, 2006 #1: Herman Kahn and the origins of scenarios; April 1, 2007: story-telling, aka scenario building; Nov. 8, 2007: bonuses for law firms; April 22, 2008: limits on quantitative case analysis; and July 9, 2009: budget scenarios instead of single figures.).
Decision-analysis software and techniques complement scenarios (See my post of May 15, 2005: Monte Carlo simulations; Oct. 24, 2005: decision analysis and Bruce Beron and Marc Victor; Jan. 17, 2006: other aspects of decision trees; June 18, 2007: belief nets as an improvement on decision trees; Feb. 8, 2006: a step to prepare for mediation; April 2, 2006: Predix; April 22, 2008: limitations on quantitative analysis of litigation; Feb. 22, 2009: a simple explanation of decision trees; and June 17, 2009: Jacob Ruytenbeek’s decision-tree software.).