N‐Factorial Scenarios: A Systems‐Theoretical Approach to Scenario‐Planning

ABSTRACT Scenarios are among the most popular techniques for managing the uncertainty and complexity of the future. Even the more sophisticated scenario designs, however, often reduce the future to a narrow set of typically only two key factors that are arranged into a four‐square matrix representing four distinct yet interrelated scenarios. Consequently, scenarios have been criticised for being simplistic or reductionist by design. In this article, we address these criticisms by proposing a basic design for n‐factorial scenarios. Following a short discussion of the procedures and limitations of classical scenario design, we draw on the example of a standard 2 × 2 matrix titled ‘Four Scenarios for the Digital Transformation’ to illustrate the limitations of the standard approach and demonstrate the potential of a digital approach to scenario building. We conclude that standard scenario planning is often characterised by a systematic omission of potentially critical scenarios, which our proposed digital approach can detect and map out.