Three Plays, One Opening Night

In the early 1970s a small planning unit inside Royal Dutch/Shell asked the company’s managers to do something that sounded like a waste of a morning. Not to forecast the oil price, which everyone agreed would keep drifting upward, but to sit with a story in which the producing states seized control of supply and the price broke. The exercise changed no budget on the day it was run. What it changed was the speed of recognition three years later, when the thing happened and Shell’s managers found themselves in a world they had already walked through once. The company came out of the 1970s having climbed several places among the majors. Peter Schwartz ran that unit a decade after Pierre Wack built it, and this book is his attempt to explain what actually happened in that room.

01 · The argumentWhat the book actually claims

Schwartz’s claim is easy to state and hard to accept: scenarios are not predictions, and a scenario exercise that produces a better forecast has been run badly. The product is not a picture of tomorrow. It is a set of internally consistent stories, each one plausible, that between them stretch the range of futures a decision-maker takes seriously, so that when one of them starts arriving the recognition is immediate rather than argued.

Underneath sits a diagnosis of how organisations actually fail. Every firm carries what he calls its official future, a single unstated storyline about how the world will go that has been baked into the capital plan, the hiring model and the language of the executive floor. The official future is rarely written down and is almost never wrong in an interesting way; it is simply the present, extended. The scenario method exists to make that storyline visible, name the forces driving it, separate the parts that are genuinely settled from the parts that are genuinely open, and then build two or three alternative worlds that a serious person cannot dismiss. The eight-step appendix at the back of the book is the operational core, and it has been copied more often than it has been credited.

02 · Author’s vantageWho is making it, and from where

Schwartz trained as an aeronautical engineer at Rensselaer, ran the Strategic Environment Center at SRI International, then headed scenario planning for Royal Dutch/Shell in London from 1982 to 1986, inheriting the unit Pierre Wack had built. In 1987 he co-founded the Global Business Network, which taught the method to corporations and governments for two decades before being absorbed into Monitor and closed after Deloitte’s acquisition. He has since been Chief Futures Officer at Salesforce. He has also consulted on screenplays, which explains more about the book than it might appear to: he thinks in plots.

03 · Key insightsFive things the book gets right that most planning processes get wrong

Every organisation already has one scenario, and refuses to call it that

The official future is the book’s most useful idea and the one most often left behind when the method is copied. Ask a leadership team to describe next year and you will hear a single storyline delivered as description rather than as prediction: demand grows modestly, the regulator stays quiet, the incumbent competitors behave as they did last year. Nobody has argued for that story because nobody has noticed it is a story. Schwartz’s first act is to write it on a wall, at which point it becomes a claim with alternatives rather than a background assumption, and the room can finally see what it has been betting the capital plan on.

The sorting question is importance against uncertainty, and the corners are what matter

The cross-ranking step is where a workshop stops being a discussion and becomes an analysis. Every driving force gets placed on two dimensions: how much it matters to the focal decision, and how uncertain it genuinely is. What emerges is a map with two useful corners. High importance and low uncertainty gives the predetermined elements, the things that will be true in every scenario and can therefore be planned against directly; demographics dominate this corner because the twenty-year-olds of 2046 have already been born. High importance and high uncertainty gives the critical uncertainties, and those become the axes of the scenarios. Everything else is discarded, which is the part teams resist.

Scenarios must be stories, and the naming is not decoration

Schwartz insists that a scenario is written as narrative with a plot, characters and a causal spine, and that each one carries a memorable name. This reads as a stylistic preference and is actually a retention mechanism. A scenario nobody can retell at dinner will not be in anyone’s head eighteen months later when the signal arrives, and the whole value of the exercise is deferred recognition. The names matter for the same reason: a manager who can say this looks like Market World has performed a compression that a forty-page appendix cannot deliver. Scenario planning is, in this sense, a memory technology disguised as an analytical one.

The good scenario contains something you would rather not think about

Three worlds that differ only in growth rate are one world with error bars. Schwartz requires each scenario to break at least one belief the organisation holds dear, which is why the exercise generates so much discomfort and why so many corporate versions quietly sand it off. The test he offers is simple and brutal: if the leadership team is not visibly uneasy in at least one of the sessions, the scenarios have been written to be acceptable rather than to be plausible, and the money spent on the exercise has purchased reassurance.

Signposts convert a story into an operating discipline

The eighth step is the one everybody drops. Having built the worlds, the team must name the specific observable events that would indicate which world is arriving: a regulatory filing, a price crossing a threshold, a competitor hiring pattern, a component lead time. Those signposts then go into the operating rhythm rather than into the report, and are reviewed on a schedule. Without them the scenario set becomes an artefact that lives in a drawer and is remembered fondly, and the firm reverts to its official future within about two quarters.

04 · Where the argument echoesThree fields that formalised this before management did

The book’s structural claims rhyme well outside strategy. Each parallel sharpens something Schwartz leaves implicit.

Aviation training solved the rehearsal problem sixty years ago and can prove it worked. Simulator hours exist because recognition under load is a trained response rather than an intelligent one, and crew resource management research established that pilots who have flown a failure mode in the box act faster and argue less when they meet it in the air. The parallel exposes what Schwartz asserts without evidence. He claims rehearsal produces faster recognition, which aviation has measured; but aviation also found that the effect decays without recurrent training, and the book prescribes no refresher cycle at all.

Bank supervision built the same instrument and then made it mandatory. Regulatory stress testing is scenario planning with the discretion removed: the supervisor writes the adverse world, the bank must run its balance sheet through it, and the results bind capital. What the comparison reveals is that Schwartz’s method has a governance gap rather than an analytical one. Supervisors learned that a firm allowed to choose its own severe scenario will choose one it survives, which is precisely the failure mode Schwartz names and then leaves to the good faith of the leadership team.

Evolutionary biology explains why the third scenario is worth its cost. A population carries genetic variation that is useless in the current environment and expensive to maintain, and it persists because the environment eventually changes and the standing variation is what allows a response without waiting for a mutation. Read this way, the uncomfortable scenario is not a thought experiment. It is standing variation held in an organisation’s memory, deliberately maintained at a cost, so that a response exists on the day the environment moves rather than beginning on that day.

05 · The enterprise translationWhat the method looks like run on a live question

A book from 1991 asking managers to imagine the world of 2005 invites an obvious test, and Schwartz supplied it himself. He closed with three worlds. New Empires had the post-Cold-War order fragmenting into rival trading blocs. Market World had liberal capitalism spreading into something like a global commons. Change Without Progress had wealth concentrating while states hollowed out, with ethnic conflict, organised crime and networked disorder running alongside technological advance. None arrived cleanly and all three arrived partially, which is the outcome the method predicts and the outcome that makes it so difficult to score.

Run the method forward instead, on the question sitting in front of most boards in 2026. The focal decision is not what will AI do, which is a topic rather than a choice. It is something narrower and answerable, such as how much of the next three years of capital should be committed to owned inference capacity against rented capacity. The predetermined elements are unusually strong here: the installed base of enterprise systems, the depreciation schedules already signed, the electricity generation that will exist by 2029 because it is being built now, and the cohort of graduates entering the workforce. Those are the same in every world. The critical uncertainties are narrower than the discourse suggests, and two of them dominate: the shape of the capability curve, and the tightness of regulatory and public permission.

The counter-case deserves equal space. Shell is the field’s founding story and it is also a survivorship artefact, because we do not have the register of firms that ran excellent scenario exercises and were destroyed anyway. Kodak understood digital imaging early and had the patents; Nokia’s research organisation was among the best in the industry; both had foresight functions and both lost. What separated Shell was not the quality of the scenarios but the seniority of the audience and the willingness of that audience to move capital against a story it did not like. Scenario planning, on the evidence, is a technology for changing what a leadership team can hear. It is not a technology for making them act, and a synopsis that pretends otherwise is selling.

06 · PracticesFour things to change in the operating rhythm

07 · RelevanceWhy a 1991 book about the long view reads differently in 2026

There is an irony in reading this book now. Schwartz wrote for organisations whose planning horizon was too short and whose imagination was too narrow, and he spent three hundred pages arguing that the future deserved more room in the conversation. That argument has been won so completely that it has curdled. Boards are not short of futures in 2026; they are drowning in them, arriving as vendor decks, consultant scenarios, model releases and an unending supply of confident narration about what the next decade holds. The scarce resource has moved from imagination to discrimination, and then from discrimination to commitment.

Which parts survive the shift is worth being precise about. The official future concept survives entirely, and is arguably more useful now, because a firm surrounded by exotic futures is more likely than ever to have a bland unexamined one running the capital plan. The importance-and-uncertainty sort survives, and does more work than it used to, because the volume of plausible-sounding forces has grown while the number that are genuinely both consequential and open has not. The narrative discipline survives for the reason Schwartz gave and could not have proved: stories are what leaders retain. What has aged is the cadence. A method built around a periodic exercise, run every few years by a specialist unit with an offsite at the end, does not fit a decade in which the fringe-to-mainstream lag has compressed to about five years. The steps are right. The clock they were written for has gone.

08 · Where the argument strainsFour lenses that sharpen the case rather than dismiss it

The book invites engagement from the disciplines it borrows from. Four lenses bring its genuine claims into relief.

Through the lens of forecasting research, the method has no scoreboard and is designed not to need one. Schwartz argues that scenarios should not be judged on accuracy, which is philosophically defensible and practically convenient, because it insulates the practice from the only test that would settle whether it works. Philip Tetlock’s programme showed that judgement can be measured and that most expert judgement performs poorly when it is. Scenario planning has never submitted to an equivalent. A reader should hold both thoughts: the method may well work, and after thirty-five years we still cannot say by how much.

Through the lens of strategic-planning criticism, Henry Mintzberg’s The Rise and Fall of Strategic Planning (1994) landed three years after this book and aimed at its neighbourhood. His argument was that formalised planning procedures tend to displace the synthesis they are meant to support, producing elaborate documents and a planning department while the actual strategy forms elsewhere. Scenario planning is more resistant to that critique than most techniques, because it is deliberately qualitative. It is not immune. The eight steps are still a procedure, and a procedure inside a large organisation acquires a template, a supplier and a slot in the calendar.

Through the lens of organisational theory, the book is strong on cognition and quiet on power. Its remedies are informational: better conversation, wider reading, more remarkable people in the room. But the failure it describes is distributive, because the alternative world usually implies moving money away from the unit that currently earns it. Chris Argyris would point out what sits underneath that. The espoused commitment to open enquiry runs alongside a reward system that punishes whoever names the uncomfortable scenario. Schwartz’s answer is senior sponsorship, which is true, and is also the thing a firm cannot buy from a consultancy.

Through the lens of political economy, the author’s position deserves the same scrutiny the method demands of an official future. Schwartz built the founding scenario-planning consultancy the year after leaving Shell, and the book is both an argument and a prospectus. That does not make the argument wrong. It does mean the Shell case is being narrated by an interested party, and that the method’s central evidentiary claim rests on one firm in one industry across one decade, told largely by participants. A discipline this influential should have accumulated a broader base by now, and the absence is itself information.

Refracted through these lenses, the critiques above are not objections to Schwartz’s perspective. They are scaffolding the reader can build around the book’s argument, places to anchor their own engagement and test the framework against disciplines it touches. What he built survives the engagement, and the reader gains a firmer grip on why it does. The official future, the two-corner sort and the signpost discipline are durable instruments that a competent team can run without a consultancy; what the lenses expose is that the book is strong on how to see and thin on how to move money, and that the money is where scenario planning either becomes strategy or becomes literature.

09 · Adjacent readingWhere to go next

10 · ClosingWhat the rehearsal was actually for

Schwartz offers an image for what the whole method is doing, and it is better than his acronyms. An actor rehearses three different plays at once, not knowing which will be performed, and finds out only on opening night by walking onto the stage and looking at the scenery. The rehearsal has not told the actor which play it will be. It has made every one of the three performable. That is the honest account of what happened inside Shell in the early 1970s, and it is the standard against which any scenario exercise should be judged: not whether the story came true, but whether the organisation could act on the day the scenery went up. Most firms buy the script and skip the rehearsal, then wonder why they are reading from the wrong play in front of a full house.

Which of your three scenarios has a budget line, and what does the answer say about the other two?

11 · What to carry away

12 · ReferencesSources for the claims and figures used above

Interior text of this book was not independently accessible during synthesis. No direct quotation from the book is used; the framework’s structure and its named scenarios have been cross-checked against multiple independent accounts, and biographical and business claims link to primary or reputable sources.