Arie P. de Geus was Head of Planning for the Royal Dutch/Shell Group when this article was published in March-April 1988.This article is based on a survey of 30 companies that had been in business for more than 75 years. "What impressed us most was their ability to live in harmony with the business environment, to switch from survival mode when times were turbulent to a self-development mode when the pace of change was slow." The author believes that successful adaptations depend on learning, or, more precisely, on institutional learning. Therefore, Shell asked theirselves two questions: How does a company learn and adapt? and What is planning's role in corporate learning? In normal situations, pain makes people and living systems change. However, this is a dangerous way to manage for change. The challenge is to recognize and react to environmental change before the pain of crisis. This is where the successful companies excel. "The ability to learn faster than competitors may be the only sustainable competitive advantage." Shell uses scenarios to trigger institutional learning. They found out that changing the rules, or suspending them, could be a spur to learning. One method Shell used was ways to learn by playing, using different models.
Great article by Arie de Geus, which resulted in a revised planning model. This revised planning process makes use of scenarios, which aims to increase the management's ability to learn faster. This in turn should result in shared mental models of their company, their markets, and their competitors. There are some good suggestions on how to approach this process and what the pitfalls are. For people who enjoy this article, I also recommend Arie de Geus' book 'The Living Company' (1997) and Kees van der Heijden's 'Scenarios: The Art of Strategic Conversation' (1996).
