Future-Proof Your Strategy: Scenario Planning

In this series, we detail four foundational analytical tools to help any organization future-proof its strategy. This installment follows Tool No. 1: Competitor Analysis, Tool No. 2: Environmental Analysis and Tool No. 3: Capabilities Analysis.

Who could have known in 2019 that a novel coronavirus would shut down businesses, communities, industries and economies all over the globe within a matter of weeks? Or that the shift to digitally powered online working, learning and communicating would be executed virtually overnight as a result?

A good strategist understands that the future unfolds in ways that are unforeseeable as frequently as they’re predictable. The Scenario Planning Tool has the benefit of forcing all decision-makers to set aside their assumptions about the future and to embrace contingency planning for multiple possibilities, for exogenous shocks and for crises, considering the risks and opportunities they may entail. Decisions influenced by multiple sources of uncertainty or in which a high-consequence, low-probability event might significantly influence the outcome are well suited for scenario planning.

SCENARIO PLANNING

This step-by-step framework empowers you to:

• Mitigate groupthink around a single possible future

• Facilitate contingency planning for multiple possible future contexts

• Develop a strategy that is as robust as it is resilient to change and future shocks

How do we do it?

Step 1: Gather information.

Start by pulling together a diverse team of stakeholders with whom to brainstorm the key issues or the strategic decisions that you and your organization will need to make in an uncertain environment. Ask yourselves this: What are our chief concerns with respect to the future? Maybe it’s about how customers will purchase your goods or how their expectations or habits might change. Perhaps you’re concerned about how technology will affect your manufacturing capabilities or what changing environmental regulation could mean for your business. Whatever it is, set a time horizon for how these concerns might pan out. And set it far enough in the future that uncertainty is there, but not so far that you become prone to unrealistic or wishful thinking. Whether it’s 18 months or five years, remember to factor in economic and industry cycles — things like the approvals processes for the pharmaceutical sector, say.