Scenario Planning is a tool for harnessing anxiety about the future and translating it into actionable plans. The scenario planning process can be as simple as a whiteboard session or as complex as a multi-day retreat-style, and your process should match the size and complexity of your organization. However involved your process, the basic steps are the same.
- PREPPING – Prior to a Scenario Planning process, you and your team would gather and review all the typical information you would use for any strategic planning process – year-to-date financials, year-on-year financials, product roadmap, customer segmentation, SWOT (or SOAR) analysis, and any other relevant data on your industry and your company performance.
- ENVISIONING ALTERNATIVE FUTURES – The next step is to generate MULTIPLE PLAUSIBLE FUTURE SCENARIOS. Consider any elements that could impact the market for your current product/service – Politics, stock market, regulatory change, infrastructure disaster, social upheaval, environmental disasters, etc. Create several narratives that combine positive and negative changes along multiple dimensions.
For instance:
Ongoing tensions between U.S. and China result in a trade freeze with container ships called back to their respective domestic ports. In response, small batch 3-D printing manufacturing facilities spin up across the country to supply reasonably priced parts with low shipping costs.
While you’re at it, you might as well take one or two scenarios beyond the limits of plausibility. (Reminder: Who in Nov 2019 thought we’d be in a pandemic by Feb 2020?!)
Continued drought drops the Colorado River below the level required to generate energy at the same time Texas experiences outages due to another winter storm, resulting in a sharp demand spike for the national energy grid and suspended operations across multiple industries.
3. WHAT-IF THINKING – Finally, for EACH potential future, develop the outlines of a path forward. What would be most negatively/positively impacted, and how would you respond? Consider Product sourcing, manufacturing, distribution; Pricing strategies; Marketing and Sales; HR strategies; Business models, etc. If your company is big enough, you can assign each scenario to a cross-functional subgroup. If you’re a single team startup, choose 3 scenarios that are different enough to force you to stretch your thinking.
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- Defensive Thinking – For a variety of reasons, our first level of thinking is typically defensive, that is, how do we keep the lights on and keep making money doing what we’re doing in the face of disruption. That’s great – we do need to keep the ship afloat.
- Generative Thinking – The next level of thinking is to focus on the opportunity for new products, ventures, business models, etc. in each scenario. For instance, what formerly “closed” market sector might be more receptive to a partnership proposal under the envisioned scenario?
4. ACTION PLANNING – Now it’s time to make all that thinking actionable.
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- Review your envisioned responses to each scenario for recurring themes. For instance, do you notice that each one requires a different business model? If so, what anticipatory actions could you be taking to enable easier shifting from one business model to the next? Will you need more flexible accounting processes? cross-trained personnel?
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- What are the “early warning signs” for each scenario? What are the implications for market monitoring?
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- Did generative thinking about any of the scenarios make you aware of a previously overlooked opportunity that you could begin pursuing today to increase your resilience?
It’s unlikely that reality will match any of the envisioned scenarios exactly, but going through the process will increase your collective capability for adaptive collaboration. Good luck!
As always, a no-pressure Discovery Call to explore new options for your company is always free. Click or call (+1 512-497-9097) to schedule.
