Conditional Scenario Planning¶

Why It Matters¶

Humans crave single-number predictions and waste time debating probabilities when the real question is "what should we do?" Conditional planning separates prediction from preparation, enabling action under uncertainty. It identifies which uncertainties actually matter for decisions (those that change optimal action) versus which are irrelevant (same action regardless).

The Key Move¶

List the key uncertainties in your situation. For each uncertainty, ask: does this change what we should do? If yes, it's decision-relevant; if no, ignore it. Generate scenarios spanning the decision-relevant uncertainties - usually 2-4 scenarios suffice. For each scenario, identify the optimal strategy. Prepare conditional plans: leading indicators to watch, trigger points for switching strategies, actions that work across scenarios (robust choices). Execute based on which scenario unfolds, not on advance probability weighting.

Classic Application¶

Hurricane preparedness. Forecasters provide scenarios: direct hit, near miss south, near miss north. Emergency managers prepare conditional plans: if direct hit, full evacuation; if near miss, partial evacuation; if distant pass, shelter in place. Pre-positioned resources and decision triggers enable rapid execution when the scenario becomes clear. The probability distribution matters less than having plans for each outcome and knowing the trigger points.

Surprising Application¶

Career development at skill bifurcations. You're uncertain whether your industry will automate or augment human workers. These scenarios require different strategies: automation → reskill for complementary tasks; augmentation → deepen current expertise. Instead of betting on a probability (60% automation?), identify leading indicators (what tools are being adopted?) and prepare both paths partially. Invest in skills that work in both scenarios (meta-learning, judgment), while building option value for scenario-specific pivots. Execute the conditional plan based on how the scenario unfolds.

Failure Modes¶

Too many scenarios - more than 4-5 becomes unmanageable; focus on decision-relevant dimensions. Scenarios too similar - if they don't change your action, you don't need separate plans. Ignoring scenario probability - rare scenarios sometimes warrant preparation if consequences are severe (fat tails). Static scenarios - failing to update as information arrives. Missing robust actions - opportunities that work across scenarios are usually higher value than scenario-specific bets.

Go Deeper¶

Schoemaker, "Scenario Planning: A Tool for Strategic Thinking," Sloan Management Review (1995); Wilkinson & Kupers, The Essence of Scenarios: Learning from the Shell Experience (2013).

Option Value - Information Economics: Reasoning Under Asymmetry and Uncertainty