In most boardrooms the five-year forecast is treated like scripture. I have watched people wrap a shell scenario planning exercise around that forecast so nobody has to say the obvious thing: the number is a bet, not a fact.
The Shell story is worth getting right because it shows the line between testing a decision and performing one. Most retellings turn it into a foresight myth: the clever planners who saw the oil shock coming. The useful lesson is rougher than that, and it has nothing to do with prediction.
Shell scenario planning broke the official future inside the company and forced managers to test one live decision against the assumptions they had stopped questioning.
What Shell scenario planning actually did
Shell had a formal single-line forecasting system, a planning rhythm, and all the usual respectability that gathers around a number once enough senior people have repeated it. By the early 1970s the oil market was shifting under the floorboards. Producer governments were gaining power, and the old assumption of obedient supply was weakening. Michael Jefferson and Vlasios Voudouris lay out the background. Shell's problem was not a lack of intelligence. It was that one view of the future had been allowed to behave like settled fact.
Pierre Wack's contribution was not clairvoyance. In his later Harvard Business Review essays, the complaint is plain: forecast-led planning had stopped helping managers decide. So the scenario team did something subversive. It put other futures in front of senior people, including futures where producer power rose and cheap oil stopped being the organising assumption. Angela Wilkinson and Roland Kupers trace the sequence through 1971 and 1973. Art Kleiner reports that Group Planning circulated the possibility of oil moving from about $2 a barrel toward $10. Once that number is alive in the room, a capital plan built on permanently cheap oil stops looking sensible. It starts looking exposed.
By May 1973, five months before the embargo, internal attention had narrowed to the scenario the team called Rapids: severe turbulence in the oil market. When the Arab oil producers announced the embargo in October 1973, Shell was not starting cold. Its managers had already spent time inside a world where the comfortable forecast failed.
Once a forecast becomes the official future, budgets and careers cling to it. Challenging the number no longer looks like judgement. It looks like bad manners. The scenario team was up against the same politics I meet in every boardroom where the plan has been approved and nobody wants to reopen it.
What the copiers kept
What most companies copied was the safer half. They took the scenarios and kept the forecast, the evasion I trace in forecasting and scenario planning. The official plan still sat in the middle like a crowned head. Alternative futures were invited in as guests, then seated at the children's table. Nobody said the investment case might be wrong. They said the scenarios were "useful context," which is a tidy way of keeping the old number in charge.
Jenny Andersson shows how management literature turned the Rapids story into a foresight fable. Thomas Chermack and Laura Coons supply the corrective: Wack was trying to disturb how senior people thought the market worked, not entertain them with elegant alternatives. Once the myth became "Shell saw it coming," a small industry could sell foresight and workshop theatre to nervous executives. Useful work, if your aim is to invoice for ceremony.
I do not spend much time admiring scenario artefacts. The question is the same one running through the wider scenario planning argument on this site. Did the exercise force a live decision to confront its weakest premise, or did it merely give the organisation a more respectable story about its own diligence? The tool gets copied. The discipline gets left behind.
Shell scenario planning on a real decision
Most scenario exercises stop here. The useful work begins past them. If a client brings me a plant expansion or a long supply contract, I do not start by naming scenarios. I start with the decision, the purpose it serves, and the span of time over which the consequences will be felt. Then I ask what the business case assumes about demand, cost, or supply. Roger Estall and I came back to that question repeatedly in Deciding: what are we assuming here? It does more work than a shelf of polished scenarios because it drags the real bet into daylight.
From there the work is concrete. Test the decision against a few materially different futures. Not dozens. A handful that differ where the decision is most exposed. Find the assumption doing the heavy lifting. If demand growth is the one thing the expansion cannot survive without, attack it. If it holds under pressure, you can commit. If it breaks, you have three choices: get the missing fact, change the decision, or say no. I argue the same discipline in decision-making under deep uncertainty. Uncertainty is normal. Pretending a forecast removes it is the problem.
Then, before money moves, name what you will monitor. Not everything. Just the assumption that can break the decision. If the plant needs demand to grow above 4% for the project to pay back, watch that indicator and agree in advance what number triggers a review. That specificity is what separates a monitoring plan from a dashboard nobody reads. The indicator matters only if you already know what decision it can change, the principle at the core of making decisions with uncertainty.
The test is simple. Did the exercise change a decision, change an assumption, or change what you monitor? If it did none of those, it was decoration. I am not against forecasting. A number can be useful. What I object to is the fraud by which a forecast becomes "the base case" and everyone stops treating dissent as normal. The method starts with the decision, not the future. Shell got that right fifty years ago. Most of the people selling scenario planning since then have not.
You could keep the five-year forecast and never test the bet underneath it.
Work through your decisionNo sign-up. Just pick your decision and start.
Grant Purdy is the co-author, with Roger Estall, of Deciding (2020), and the architect of the Universal Decision-Making Method.