What are some effective ways to use scenario planning to evaluate potential outcomes?

1 Define your focal question

The first step in scenario planning is to define a clear and specific question that you want to answer or a problem that you want to solve. This will help you focus your analysis and avoid getting overwhelmed by irrelevant or trivial details. For example, you might ask: How will the COVID-19 pandemic affect our customer demand and supply chain in the next six months?

3 Generate plausible scenarios

The third step is to use the key drivers and uncertainties to generate plausible scenarios that describe different ways the future might unfold. You can use various methods, such as brainstorming, matrix analysis, or morphological analysis, to combine different elements and create coherent and consistent stories. You should aim for at least three or four scenarios that cover a range of possibilities, from best case to worst case, and that challenge your assumptions and expectations.

4 Analyze the implications

The fourth step is to analyze the implications of each scenario for your focal question and your organization. You can use various tools, such as SWOT analysis, PESTEL analysis, or stakeholder analysis, to assess the strengths, weaknesses, opportunities, and threats of each scenario. You should also consider the impact of each scenario on your vision, mission, goals, and values, and how they align or conflict with them.

5 Develop strategic responses

The fifth step is to develop strategic responses that can help you adapt to each scenario and achieve your desired outcomes. You can use various frameworks, such as VRIO analysis, Porter's five forces analysis, or Ansoff matrix, to identify your resources, capabilities, competitive advantages, and growth strategies. You should also consider the trade-offs, risks, and contingencies of each response, and how they fit with your current and future plans.

6 Monitor and update

The final step is to monitor and update your scenarios and responses as the situation changes and new information becomes available. You should track the key drivers and uncertainties, and compare them with your assumptions and predictions. You should also evaluate the effectiveness and relevance of your responses, and adjust them as needed. You should also communicate your scenarios and responses to your stakeholders, and solicit their feedback and input.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?