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Scenario Planning: Seeing Threats as Opportunities

By Alexandra Reese

The world is changing more rapidly than ever before. The question “How do we handle increasing uncertainty?” has been on our minds here at Coraggio. Often, we treat uncertainty as an obstacle to overcome—something we need to neutralize to achieve our strategic imperatives. But, what if we shift our thinking? What would be possible if we treated uncertainty as a welcomed opportunity rather than a threat to endure? What if we saw uncertainty as a tool to improve both our strategy and its implementation?

How to Make Uncertainty an Asset 

Scenario planning is a tool that embraces and responds to uncertainty. A scenario planning process begins with the identification of drivers of change—facets of the future, like technology, that will fundamentally shape an organization’s trajectory. Typically, planners will identify the top two to four drivers, describe two opposing outcomes for each driver, and then create stories of how the future might look based on different combinations of outcomes. Those stories are scenarios.

Why do Scenario Planning?

Scenarios uncover blind spots and create breakthroughs. In imagining futures that diverge from the expected, an organization can uncover hidden blind spots—internal and external challenges and opportunities that it otherwise would have overlooked. Leaders who encourage their organizations to explore these blind spots by asking, “How can we accomplish X, if Y happens?” can facilitate strategic breakthroughs by eliminating ill-informed assumptions and imagined limitations.

Scenarios yield better strategic plans. An organization can use scenarios to test the resilience of its model and strategy. In doing so, it can distinguish Core Initiatives—those likely to yield positive outcomes under the range of futures—and Contingency Initiatives—those that an organization can implement to capitalize on a major disruption in the operating environment.

Scenarios improve operations. When it involves all levels of an organization, the process of scenario planning improves the capacity and readiness for change. It instills confidence among employees that change is manageable, and creates a clear path for tracking and responding to change. Once an organization identifies key drivers of change, it can develop specific indicators to track change and signal a pivot in strategy. When change happens, an organization can quickly adapt by implementing one or more of its Contingency Initiatives.

Scenario Planning in Action

Cisco, a global leader in IT and networking, completed four scenarios for how the Internet might evolve by 2025. Cisco based its scenarios on the potential outcomes for three influential drivers of change—network build-out, technological progress, and user behavior.

It systematically combined different driver outcomes to build scenarios. Cisco followed two notable best practices in the creation of its scenarios:

  1. It developed divergent scenarios that portray the range of possible futuresboth desirable and undesirable.
  2. It systematically changed one driver outcome in each scenario to better isolate the impacts of specific changes.

Source: https://newsroom.cisco.com/dlls/2010/ekits/Evolving_Internet_GBN_Cisco_2010_Aug.pdf

How you can Apply Scenario Planning

An organization creates its strategic plan based on the best possible information about current and likely future conditions. A high-performing organization will continue to gather information about operating conditions and adjust its strategic plan accordingly. In that sense, strategic plans should be flexible, but their foundations should be solid.

Scenarios are an important element of this foundation. When organizations use them to develop Contingency Initiatives, identify and track indicators of change, and signal potential disruptions, organizations can adapt their strategic paths to stay on track.

Regardless of where your organization is in the strategic plan development or implementation process, you can use the principles of scenario planning to improve your work:

  • If you are just beginning the planning process, think about inserting scenario planning sooner rather than later to ensure you’re equipped to respond to changes in the future.
  • If you already have a plan, or do not intend to go through a planning process in the near future, try forming a cross-functional team to identify major drivers of change and evaluate the risks and opportunities of your current strategy or business model through that lens.

We can’t completely shape the future. We can only choose how to prepare for and respond to it. Prepare now for the unexpected, so you can respond quickly when it arrives.

 

click here to learn more about Alexandra Reese

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