Four Ways to Use Scenario Planning To Overcome Uncertainty

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Uncertainty is scary.

Especially for leaders who are supposed to simplify the complex and provide all the answers.

The only problem?

We don’t have all the answers! And if the pandemic taught us anything, it’s that we need to be prepared to face situations that are uncomfortable?and that we’re unprepared for.

During Tuesday’s livestream, I shared how disruptive leaders can find new ways to prepare for the next curveball that will come flying our way. We can be prepared for the uncertainty –?without VUCA swooping in and messing with us!

Wait – What’s VUCA?

VUCA isn’t a mythical monster! (Although it can certainly feel like a real beast.)

VUCA stands for volatility, uncertainty, complexity, and ambiguity. And we all have VUCA in our lives to some degree.

As leaders, we’re experiencing lots of VUCA right now, between The Great Resignation, the ongoing pandemic, and supply chain issues – but we can’t afford to freeze. We have to deal with the uncertainty, and one powerful tool I always recommend is scenario planning.

A Powerful Tool to Battle Uncertainty

Now, scenario planning is very different from traditional planning.?

Let’s say you’re looking at your budget. With traditional forecast-based planning, you’d ask yourself: How much am I going to spend next year? You allow yourself a deviation of maybe 10% from the norm because you know what’s happened in the past will likely happen in the future – with a few small changes.

That doesn’t work in a VUCA world (unless you have a crystal ball)!

With scenario planning, you admit that you don’t know what the future holds but you have to act anyway. So, you start putting together scenarios of what could happen.?

Try to limit yourself to three or four scenarios max – keeping things simple will help you track your decision making.

Then, ask yourself, “What would I do if Scenario One happened? If Scenario Two happened?”

(Think back to a few years ago. The organizations that used scenario-planning to anticipate natural disasters and had plans for taking their workforce fully remote weathered the pandemic much more easily than others!)

Once you’ve developed your strategies and made them robust, you can review the actions you’d take and identify the tactics you’d use to address each of the scenarios. If you find commonalities across all your scenarios, you can start building those factors out so you’re prepared for every situation.

Remember: You aren’t trying to make a decision without data. As the future unfolds, you’re looking for indicators or triggers that one scenario is developing. You’re looking for proof that you’re moving in the right direction and activating a strategy quickly while always remembering you can change course if the situation evolves.

Trium Group has a powerful scenario planning strategy workbook that you can use to develop or refine your scenario planning process.??

Using Scenario Planning Effectively

One of the questions I often hear is, “Who has time to sit down and develop multiple strategies?”

Responsible, effective leaders, that’s who!?

If you’re dealing with a lot of VUCA, you have to develop alternative strategies. You can’t simply jot down a surface-level plan and hope it will work.?

Here’s how to use scenario planning to bring a little certainty to an uncertain world:

1. Plan at a robust level. Again, this isn’t a basic list on the back of a meeting agenda! It’s buttoned up and kept in a file so it can be easily activated. Ask yourself: What would I really do? Who would be responsible for what? What technologies can we use to make this happen? How do we communicate about this? Go into as much detail as possible!
2. Start with smaller uncertainties. Instead of using scenario planning for the biggest problems your organization is facing, try applying it on a smaller scale. Maybe you want to hire a new team member. What scenarios could happen during the hiring process? Practicing with smaller decisions will make longer term planning and bigger uncertainties feel more manageable.
3. Practice good postmortems. Go back and look at what’s happened. How did your strategy work out? Was your scenario planning robust enough? Did you make the right calls at the right times? What would you do differently? To get better at scenario planning, you have to review the past and get honest about what worked – and what didn’t.
4. Identify clear signals. It’s important to clearly understand the trigger points that indicate what scenario is unfolding. When you know exactly what you’re looking for, you can take action quicker. Review your signals on a regular basis – weekly, monthly, quarterly – so you can understand how the future is unfolding and what you need to do to prepare.

As a leader, this is your job: making good decisions, figuring out what the future holds, creating strategies that drive change. No one else will do it for you. You have to step into the void of indecision, make the call, and inspire action. That’s what leaders do.

Leaders also innovate (yes, even in the face of VUCA!) – and that’s what I’ll be talking about next week. Click to join me on Tuesday, February 8 at 9 a.m. PT / 12 p.m. ET for a discussion on the contradictions between operational excellence and innovation. See you then!

Your Turn

Living life during a pandemic has left many of us with mounting uncertainty about our futures. As leaders, we’re supposed to be the certain ones, but that isn’t always the case. What are you feeling uncertain about? Are you worried about how we’re going to continue our lives normally in light of this pandemic? Are you concerned about health issues or feeling prepared for the unknown? I’d love to hear your thoughts!

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