Strategic work, by its very nature, requires the intellectual capacity and willingness to entertain the unknown. It is clearly not for the faint hearted, as the only thing we can say for certain about the future is that it is uncertain. The last few weeks have demonstrated to us all once again the speed at which our global, interconnected world can be subject to dramatic change.
Whilst many of us in the West observe the invasion of Ukraine by Putin’s regime with disgust, sorrow and dread, it does serve as a timely reminder that uncertainty, no matter how improbable, is never that far away.
If we thought Covid was the leading disrupter of the 2020’s we may need to think again.
The reaction of many in times of great uncertainty and risk is to shorten planning horizons. You see this in the terrified faces of the refugees. Getting through the day is their greatest challenge, as they no longer have the luxury of short term planning, let alone strategic planning.
For those of us fortunate enough not to be in immediate danger, it is incumbent on us to continue to plan for a brighter future, even if the risks and uncertainties are acutely amplified. Leaders always carry this responsibility, as the gap between current reality and future aspiration is the leaders’ playground.
The use of scenario planning, (sometimes referred to as strategic war-gaming), is the strategic tool of choice when uncertainties and risks abound. Taking the time to craft scenarios that are tuned to represent the various extremes the future may bring, and thinking through their implications so that your organisation is on the front-foot, is what is needed at this time.
It has been impressive to see the number of large global corporations that have acted swiftly and decisively in the current crisis in Ukraine. Given the scope and impact of these actions, it is highly unlikely that these actions have not been pre-planned by using such strategic scenario planning tools.
Global businesses have long recognised the value of having several versions of their strategic playbook. They develop contingency plans by stress-testing their thinking and assumptions, enabling them to act swiftly, deploying prevention and mitigation actions in a controlled and calm manner, no matter how devastating the consequences to their aspirations and plans. In this way they remain in control and can present to their people and their customers as confident and assured.
A Call to Action
This level of strategic thinking is not, or at least should not, only be the preserve of large corporates. All organisations, from one-man bands to large SME’s, need to carve out some time to entertain ‘what-if’ scenarios using a strategic mind-set.
The price of not doing so is high. To be caught in reactive mode, where the sheer scale of the implications are terrifying, and the costs eye-watering, can lead to outcomes that threaten the very existence of your organisation.
Leaders need to collect their best strategic thinkers together, (this is not a job for one person), and set aside some time to do this work. This is not a huge investment in time, or resource. I have facilitated many such sessions and the pay-backs are huge. Not least such sessions educate participants as they are forced to look up and out and see the potential icebergs ahead. Such sessions help them come to terms with how to steer a course that avoids any significant impact, or at least prepares them to act if an iceberg hits.
There are 3 variables to think about in all scenario planning sessions. They are:
- Impact – positive to negative;
- Probability – unlikely to certain; and
- Time – the future period you want to imagine you are in.
By carefully tuning these variables it is possible to create at least 4, (more if valuable), scenarios that, in your session, you should assume have already happened. This taps into the reaction, troubleshooting and problem solving mind-set that we are all well practiced using. Such thinking can flush out ‘if only we had known’ insights that in reality you still have time to implement.
Whilst the precise future will always remain opaque, so agility will always be needed, some future states are entirely predictable and are more than mega-trends, they are already baked into the future. For example:
- We are all about to face a dramatic increase in energy costs leading to a growth in inflation;
- The population in the West is ageing fast;
- The tax burden for citizens and companies will increase soon and is likely to remain for some time to come;
- The availability of the talent you need to fuel growth will remain scarce.
Other future states can be predicted with high levels of probability, and some are far less probable.
Interestingly, the less probable ones are where the opportunity for new thinking tend to lurk. For example; no one predicted the Covid pandemic and the unintended consequence of 10 years digital development in 10 months. This coupled with the sudden acceptance of remote, flexible working shows that most clouds have a sliver lining. Even if some clouds are so large the silver lining can be hard to see.
If you are interested to learn more about our strategic scenario planning process please contact us.