Beyond Risk Mitigation: Enhancing Corporate Innovation with Scenario Planning

Abstract

When considering the challenges of conducting business in an increasingly complex business environment, the impact of exogenous shocks on business strategy and possible responses to those threats have received growing attention. Scenario/contingency planning is a tool used by firms to translate their organizational learning capabilities into preconceived operational responses designed to react to and then recover from an exogenous shock. The use of scenario planning that includes exogenous shock scenarios has become a "best practice" in many industries. This paper explores the additional potential usefulness of scenario planning as a tool for promoting innovation and corporate entrepreneurship (Ireland, Covin, & Kuratko, 2009).

Keywords: exogenous shock, scenario planning, corporate entrepreneurship, innovation