Shell’s Corporate Foresight Journey

Shell has used corporate foresight to inform and de-risk its decision-making and operations since the 1960s.

The future has always been uncertain; no one can know what exactly will happen. But the world today is full of signs, hints, or signals of how the world might change in the future. Corporate foresight is used to analyze and make sense of these signals.  

Corporate foresight is a systematic way of exploring and anticipating the future. Practitioners analyze the present to develop ideas of what might happen in the future. 

It does not predict what will happen in the future. Instead, corporate foresight allows businesses to explore the many different possible futures that may take place should different sets of events happen.

The work done is used to inform today’s decision-making and to prepare for the future. Developing a capability for corporate foresight is especially important to prepare for and anticipate potential crises.

For example, a company might interpret rising international tensions as a signal of a potential future economic downturn.  By identifying this possibility months or years in advance through corporate foresight, a company can make the necessary preparations for the impending crisis earlier and better than its competition. 

Shell is one of the pioneers of using corporate foresight to prepare its business for the future.

Shell’s pioneering corporate foresight practice: Scenario planning

Shell has used scenario planning for over 4 decades to empower its teams to make better decisions by informing them of how certain choices might affect the future of the company.

Scenario planning is a corporate foresight method that explores how different possible futures might look by telling a story of how they may unfold based on future changes, decisions, and events. 

The result is different scenarios that businesses can use to inform their decision-making to reach the most desirable outcome.

Jeremy Bentham, former leader of the Shell Scenarios team wrote “scenarios are grounded in an understanding that choices shape alternative future pathways just as much as the uncertainties in economic, political, and social systems drive change.” 

In the early 1970s, Shell’s scenario planning team identified a possible sharp increase in oil prices in the near future. A few years later, this came true. By foreseeing the 1973 oil crisis, Shell says it responded and recovered faster and better than its competitors.

With its success, Shell’s scenario planning team became renowned worldwide for its expertise in corporate foresight. In the 1990s it assisted the government of South Africa in envisioning its country’s future and the government of Singapore in building its scenario planning and foresight capability.

While Shell has been successful at scenario planning, the practice does not accurately predict the future. “Scenarios, therefore, are not intended to be predictions of likely future events or outcomes,” wrote Shell in its World Energy Model: A View to 2100 corporate foresight report

Scenarios are just meant to illustrate how the world might look in the future, and thereby guide the decisions the company will take today.

Corporate foresight at Shell today

Shell has multiple ongoing corporate foresight projects. It recently released a scenarios sketch called ‘Rethinking the 2020s’ which explores how the Covid-19 pandemic will affect the 2020s.

“We believe there will be three dramatic tensions at play in the 2020s – between wealth, security and health. People will seek all of these to some extent, but what societies choose to prioritise may differ. These priorities, along with different societal capabilities, such as public health, could shape the decade,” wrote Shell.

Among the data it presents, this scenario sketch illustrates how demand for oil, gas, coal, solar, and wind energy may recover and grow until 2030 in three different futures. 

Ultimately, this scenario sketch shows how the global energy demand might evolve and impact Shell’s primary energy business, and will most likely guide Shell’s decision-making throughout the 2020s and beyond.

“This Rethinking the 2020s scenarios Sketch contains forward-looking statements that may affect Shell’s financial condition, results of operations, and businesses of Royal Dutch Shell… Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions,” wrote Shell.

All companies need to take note of how the future can unfold and impact their business to make well-informed decisions. Corporate foresight has helped Shell weather multiple crises in the past, and it can do the same for other organizations.

Companies can partner with organizations adept at foresight to build their capability to explore the future. Embiggen Foresight can help your organization build the same capability.

With our team of corporate foresight experts, we can help you get to the future ahead of your competition.

Schedule a FREE strategy session with our corporate foresight team here.