Scenario Planning for an Uncertain World

2020.05_Blog-Scenario-Based-Strategic-Planning

Well over a month into this global pandemic, your organization is in full crisis management mode, likely in one of three categories – surviving, idling, or thriving.  

Despite years of experience managing a wide range of challenges, nothing has prepared you (or any of us!) for the circumstances of this moment. Without a playbook to reference, you and other leaders around the globe have been rising to the occasion to keep your organizations stable and your employees safe. 

While we don’t have any solid information on what will happen in the next two weeks, two months, or two years - we do know that at some point we will emerge into a post-pandemic world and that we must somehow plan for this uncertain future.  

Have you planned for what the future could look like?

The uncertainty of the future means there is further work to do while there is still time to do it. Business continuity plans are designed to plan for and manage through disasters, but these plans typically have an assumption of a return to normalcy once the crisis subsides.  

Will the post-pandemic world return to the way things were? The most likely answer is somewhere between “not at all” and “not even close” - we can only guess at what the world might look like. This makes it imperative we simultaneously consider the range of alternative futures now, to ensure the human capital decisions we make today do not destroy the long-term growth of our organizations.

If we can’t predict the future, what can we do now?

While we can’t peer into a crystal ball, we can explore a range of possible futures using an innovative technique called scenario planning. This is an approach that helps manage uncertainty by providing alternative views of the future that we can test our strategies against.

One thing we have learned from this pandemic is that we must keep one foot in the present and one foot in the future. Planning for what is possible means planning for multiple scenarios, and defining a clear, proactive, and aligned decision-making process. 

Creating a strategic plan for the future

Scenario-based strategic planning is a tool you can use to identify potential threats or opportunities that then become the foundation for any contingency planning you undertake. 

For example, you may identify potential future scenarios like:

  • working from home impacts productivity
  • social distancing implications when there is a full return to workplace
  • the supply chain disruption will impact revenue 
  • employee engagement increases due to increasing trust in the capabilities of senior leadership

Developing these scenarios, and creating plans around them is best done by an operational scenario team. This helps ensure that all the risks and opportunities are captured. 

The Four-Step Scenario Planning Process

This process is designed to help you identify forces most likely to impact the issue you are considering.  This enables you and your organization to identify the most likely scenarios that could happen and prepare for them. 

1. IDENTIFY DRIVING FORCES

With your team, make a list of any trends, market movements, or activities that will impact the environment within which your team or organization does business. Typically, these driving forces fall in one of these six categories; political, economic, societal, technological, legal, and environmental. It’s important to engage in the brainstorming process as the identification of a driving force often uncovers another, and the combination of factors may hint at others. There is no limit to the length of this list, but every item must be plausible, not just possible. 

2. PRIORITIZE UNCERTAINTIES

As a group, decide which of the forces on the list are the most important and the most uncertain. These uncertainties are unpredictable and unstable - like whether or not consumers will feel comfortable returning to your stores, or whether government regulations will change the nature and layout of your workplace. Your goal is to determine which two driving forces could have the largest make-or-break impact on your organization’s future success. 

3. PLOT EXTREMES

Now identify the most plausible best-case scenario and the most plausible worst-case scenario. You will want to identify the extremes. For example, research and put numbers around the length of time it will take to have a viable vaccine or life-saving treatment protocol. Once you have identified both the critical uncertainty and the extreme outcomes, you will plot them out on an axis to form four possible scenarios. 

Scenario #1_ Extreme High(2)

4. DEVELOP SCENARIOS

By the time you reach this point, you will have four scenarios to work with and this is where the strategy planning begins. For each one, get descriptive and paint a picture of each scenario. Describe the positive and negative characteristics of each future presumption. Identify opportunities and challenges. From here, create a strategic action list for how to prepare if the scenario ever emerged.

Scenario Development Example 

Let’s illustrate the first few steps of this process with a simple example that is not related to the uncertainty of your organization’s future, but to a personal future goal, of hiking the Appalachian Trail for the first time. 

1. Identify Driving Forces: 

  • personal motivation
  • weather 
  • support system 
  • physical fitness 
  • mental toughness 
  • hiking experience
  • training time
  • time off work
  • health insurance 
  • equipment

2. Prioritize Uncertainties:

  • Weather
  • Mental toughness

3. Plot Extremes:

Now we plot the contrasting extremes on each axis:

Scenario #1 Extreme High(5)

 

4. Develop Scenarios:

In looking at the axis, four clear scenarios develop. In this example, I have named each of the scenarios and now I can describe the characteristics for each, and determine the opportunities and challenges for each. Then I can create a strategic plan of actions to take now in order to prepare for each scenario should the need arise. For example, I may practice meditation daily, insist on packing extra supplies, and I may prepare for additional time off from work as a contingency plan if severe weather impacts the length of my journey.

 

Plan for the Possibilities

As leaders, it is your strategic responsibility to ensure your organization does not make short-term decisions that destroy your long-term growth. Scenario planning can help align your organization to the new, yet to be determined, normal!

 

Erin Ellis, Director, Business Development & Executive Consultant at Stewart Leadership, is an experienced leader with a diverse background in Human Resources. She has worked with hundreds of clients, successfully identifying and creating solutions for their unique needs. She has developed a reputation as a trusted advisor and brings passion for partnership and solutions discovery to every client engagement Connect with her on LinkedIn.