In the late 1960s, Royal Dutch Shell hit a speed bump. The global oil giant suddenly struggled to forecast cash flows—a key element in budgeting and strategic planning.
After a series of consultants failed to provide solutions, Shell looked internally for help. An eccentric manager named Pierre Wack stepped up.
Wack (1922-1997) ran the business environment division of Shell’s planning unit. Within the company, he was known for burning incense at his desk and taking annual retreats to India to meet with his guru.
In a corporate culture dominated by scientific number-crunchers, Wack stood out as an oddball. But Shell’steam was desperate.
The conventional approach to improve forecasting would be to find ways to remove uncertainty to make more accurate cash flow projections. Most analysts sought to limit or drive away unknowns so that they could assess hard, cold numbers and other predictable variables.
Wack, by contrast, embraced uncertainty. Rather than devise models that focused on elements within Shell’s control (such as production planning), Wack welcomed uncertainty as his starting point. He also accepted complexity rather than trying to minimize it.
Specifically, he imagined a series of potential outcomes. Not knowing which ones might unfold didn’t stop him from raising awareness for all these outcomes, which he called “scenarios.”
As a result, he introduced scenario planning as a strategic tool for large corporations. His methodology helped Shell anticipate fluctuations in the oil market, which in turn enhanced the company’s drilling projects.
Wack became known as a futurist. His ability to identify far-ranging scenarios shows us that the best way to plan for unknowns is to imagine what could happen and how we'd respond.
— Adapted from Anticipate, Rob-Jan De Jong, AMACOM.