As we all do our best, both personally and professionally, to move forward – despite the challenges we are facing with the pandemic and the economy – I’ve found myself thinking more and more about the value of scenario planning. I know it is tempting to just freeze in place and to “wait and see” how things pan out before taking on anything strategic. The changes that are underway feel so significant, and the ambiguity of what’s ahead makes it hard to know what actions to take. But scenario planning can help bring strategic foresight to the never-ending uncertainty. That makes it one of the most important and pragmatic things you can do to help prepare your business for the unknown odyssey that this pandemic is taking us on.
We used scenario planning at Thought Ensemble, a Pariveda company, over the last few weeks, and it was a very helpful perspective to bring into our quarterly strategic planning. It helped us open up our minds to what’s potentially ahead of us and get clear on what we need to take on next. While we still don’t know what the pandemic and associated economic challenges mean for us long term, we are clearer and more confident about what actions we can take in the next couple of months.
A Very Brief Overview of Scenario Planning
I’m not going to dive super deep into the history or “how-to” of scenario planning, but if that is something you are interested in, here is a Wikipedia article that outlines the basics, and here is an HBR article that goes even deeper into the history.
Scenario Planning was popularized by Shell in the 1960s as a way to preemptively develop business strategies that could address uncertain futures. It has been used effectively across many businesses, so there are countless variations on exactly how to do it.
In my opinion, it is a more helpful practice once your basic business needs are under control. With COVID-19, many businesses are fighting just to stay afloat and having to make extremely difficult decisions to do so. There are better tools for addressing those types of situations, but for those who are fortunate enough to not be completely consumed by firefighting, scenario planning is a great way to get more strategic.
Scenario Planning Step by Step
If you search the web for “scenario planning,” you’ll find a lot of different ideas on how exactly to do it, but below is a very quick overview of the process that we have found works well for us:
- Start by listing all the future uncertainties that could impact your business
- Pick the top two uncertainties that, when combined, are most likely to cause the greatest disruption to your business – For example, how severe the pandemic will be and how heavily the economy will be impacted
- Plot the extremes of those two uncertainties on a 2×2 matrix
- Describe each of the quadrants as a plausible future scenario using a few sentences or bullet points
- Create an easy-to-reference name for each scenario
At this point, your scenarios are drafted. Now you can use them for strategic planning by considering:
- How each scenario impacts your customers and other external stakeholders
- How you could shine in each scenario
- What strategic actions might you want to take in each scenario
Scenario planning is not intended to be a decision tree, where you develop a plan for each scenario and then pull it out and use it like a playbook once that scenario happens. The actual future is unpredictable and will likely involve a combination of elements from a variety of scenarios you develop. The purpose of scenario planning is to help open your mind to these possibilities and to inform strategic planning based on that.
Some Additional Thoughts and Resources
If you think all this sounds interesting and want to read more, I have a few resources here that might be helpful.
First, one of my friends sent me this link from Kantar about a month ago with the tag, “This is right up your alley.” Sure enough, I devoured it. It was perfect timing – we were just starting to think about doing a scenario planning exercise for Thought Ensemble. I knew I wanted to use a framework like this but hadn’t seen scenarios specific to COVID-19 yet that I liked. I like these a lot, with the caveat that they really have three dimensions in here (versus the typical two), and neither of their two approaches aligned quite right with our business because Kantar has a People (consumer) point of view, as well as an Institutional point of view. But, for B2C companies, the People angle is very interesting.
Second, Deloitte and Salesforce also just published a collaborative effort they did on scenario planning. Their dimensions were a little different – they looked at the severity of the pandemic versus collaboration within and between countries. They also didn’t use a pure 2×2 view, but the outcome is similar.
As you can probably tell, I absolutely love this topic. So, if you have any questions, thoughts, or just need a resource to bounce ideas off of, feel free to reach out as I love to talk scenario planning!
