Shaping a preferred future is the work of leaders. Steward Brand wrote “This present moment used to be the Unimaginable Future.” The future will happen if you’re passive; a better future can happen when you act consciously.
Scenario planning is a useful practice for leaders operating in VUCA environments. (That’s everyone reading this.)
A scenario is fundamentally a story about a future state – the who, what, were, when, and why.
All our knowledge is from the past; all our predictions are about the future. Be humble about the constraints on our knowledge:
(Image from https://www.smartinsights.com/managing-digital-marketing/planning-budgeting/scenario-planning-marketers/)
There are 4 types of future states:
- Possible — “might” happen (future knowledge)
- Plausible – “could” happen (current knowledge)
- Probable – “likely to” happen (current trends)
- Preferable – “want to” happen (value judgments)
Don’t make the mistake of confusing these interrelated but independent elements of scenario planning:
- Strategic Thinking (exploration to generate options)
- Strategy Development (assessing options to make decisions)
- Strategic Planning (implementation actions)
Be sure you have a powerful WHY to carry you through the work. Curiosity helps immensely, as does working with smart people you enjoy and respect.
Leverage the experience of others to manage the HOW process. Effective scenario planning is not a 30-minute exercise by one person. Success comes from discussion in the context of deliberate practices. This sequence will give you the best results:
- Identify the focal question and timescale
- Scan the internal and external environment (challenge assumptions!)
- Select and rank the change drivers.
- Identify wildcards.
- Build the scenario matrix (possible, plausible, probable, preferable)
- Flesh out scenarios with more detail
- Consider the strategic implications with stakeholder group(s)
- Decide, then create execution plan. Revisit externals and assumptions periodically
Recommendations for each step:
