Future Prepared

While cattle may run from impending danger, we need to be more like the buffalo and face the storm head on.? Scenario planning for multiple eventualities, however unlikely they may seem, is key to succeeding where others fail.

React or Respond

We humans learn fast and well, but this can become a limitation.?What we figured out worked for us in the past may no longer hold true in the present, never mind the future. Yet we tend to cling to our recipes for success, enjoying the comfort of the familiar.?Typically when we are under threat, our higher-level thinking shuts down, diminishing our ability to deal with complexity. Short-term survival takes precedence, danger can seem amplified, and we often believe we have less time than we really do. ?We react by defaulting to old tactics that are generally not conducive to taking advantage of any opportunities that the crisis might present.

Predictability vs Agility

Scenario Planning is a great way for executives responsible for strategic decision-making to keep their brains nimble and be better able to respond to change. Sadly, the practice is often misunderstood. Rather than predicting the future, it’s really about mental training.?It forces us to challenge our beliefs about the future and demands that we put attachment to unrealistic optimism (a tendency of salespeople and politicians) temporarily aside. Not for the faint-hearted.

A common misconception is that you only need to build a couple of scenarios based on probability, such as a best and worst case. The danger of this is that those who construct them tend to have a heightened expectations that either one will come to pass, blinding them to other possibilities, and thus biasing their responses to unfolding circumstances.

Good scenario planning yields its richest benefits when a wide range of scenarios is addressed, varying the parameters and including eventualities that have both low probability and severe consequences – like a stock market crash. ?Such negative futures are often dismissed by leaders in favour of anticipating (and even promising) the more optimistic.??

Confront or Avoid

A serious scenario planner and their colleagues will be willing to face deeply unpleasant and disruptive possibilities while in a safe environment in order to figure out intelligently – because they aren’t stressed or panicking – what could be done to cope.

This is not about being a doomsayer. It’s about having the courage to think about the unthinkable temporarily and plan how you would respond, so that if it ever comes to pass you’ll be confident that you can cope; you’ll respond rather than react. We are talking about being capable of a clear-thinking response rather than a poorly-considered knee-jerk reaction when a real organisational threat appears.

Take an example from nature. It seems that buffalo and cattle behave differently when faced with an oncoming storm. The more domesticated cattle run from it - inevitably it outruns them and their distress is prolonged. Buffalo, on the other hand, go to the crest of a hill to face the storm. They charge into it, minimising their duress. ?

Scenario Planning emboldens us to face a storm feeling more confident and prepared.?

A pioneer

In the 1970s the oil price crashed. Then something interesting happened – when the price recovered, Shell, a modest, second-league oil producer, was catapulted into the top league. Before the crash, it had already been playing with scenarios to help with their strategic planning. ?One scenario happened to include the collapse of the oil price. ?Having worked through the options for response and their consequences, it became clear (counterintuitively) that it would be good to invest in plant and equipment should a crash occur. And, in fact, even if it didn’t. Like the buffalo, when the price did crash, the business was unfazed and kept investing.?Others instinctively retrenched. The rest, as they say, is history.?

Given that this is a fairly well-known tale, it’s interesting how few organisations follow their example. ?Again, possibly easier not to.?This presents an opportunity for the wise and ambitious.

What to include

There are various schools of thought as to what goes into a scenario, but ideally you want a mix of three key elements.

1 The certain:

It’s vital to gather the relevant facts. ?This could include statistics on demographics, consumers, or your competitors’ market shares. ?Given the huge amounts of data at our fingertips this means applying care and judgement about what to research, and certainly not relying on just what’s in your head. You will have to select to some extent, and increasingly AI can help.

2 The possible:

This requires trend analysis – the gathering of sophisticated data on emerging patterns from reliable sources and research. Extrapolating trends has its risks, as any seasoned investor will know. So, play with different trend projections.

3 The unthinkable:

Such events are often referred to as ‘black swans’- highly improbable but with inordinate consequences. ?Their potentially catastrophic outcomes mean that most would just rather not go there.?Like a pandemic. Or war on the borders of Europe.?

Typically there have been warnings and signs that point to such eventualities, but they have been missed or deliberately ignored.?It’s easier (and very human) to do that rather than face the challenge to the far more comfortable belief that the norm will persist. ?

Who to involve

So long as any avoidance or blindness is unconscious, our imagination is being curtailed beyond our control.?That’s why there is benefit from having diverse participants in the exercise – people from outside the organisation and even the wider system.?Their creativity and diverse perspectives will not be curbed by organisational inculcation. ?Natural lateral thinkers are also great to invite in. ?As are stakeholders, who’ll also learn a lot, add richness to the scenarios you create, and readily buy into your solutions to the problems they may face. ?

Make sure you participate fully yourself and include senior peers, rather than delegate to juniors - there is no substitute for going through the process first hand. ?Just hearing about the conclusions someone else generated lacks the power to enhance your own mental agility.?Plus it’s more likely you will dismiss the possibly vital conclusions.

For example, take the assessment carried out by the World Health Organization in 2018.?It concluded that global pandemic plans were inadequate. ?Some governmental groups did in fact go on to conduct scenario planning-type exercises for their country. ?But neither politicians nor big business took action, reluctant to consider a highly unlikely future with such devastating consequences.?Even when respected colleagues involved in the exercises pleaded to be heard.

System wisdom

There are an infinite number of possibilities in creating scenarios, so it is important to remember that it is not about likelihoods, or simple dichotomies such as best case and worst case.?It is about experimenting with many combinations, then looking at each from varying perspectives in that future world, considering the plans your organisation might make, and then evaluating what they might mean for your organisation now. Some important themes may emerge.

As a bonus, participants gain a richer sense of the complexity of the systems in which they operate. They learn to step into different perceptual positions and see scenarios through a variety of different lenses. This helps to mitigate the unintentional but inevitable corporate blindness of those who happen to have spent much of their career in one environment.

Be brave...

Work together with diverse colleagues, stakeholders and outsiders, to create and face scenarios that include the dark as well as the light. ?In a relaxed exercise you will have your full mental faculties available to you – your neocortex will be engaged and capable of working out effective tactical responses. Then, should a future ever unfold that has elements of what you’ve already faced in the hypothetical realm, you’ll embrace them with greater pace and intelligence.?

It pays to do what you can to avoid being taken completely by surprise, or it’s more likely that, like the cattle, you’ll react and not respond, compounding the problems being faced.

Be more buffalo!

Make scenario planning a regular practice and increase your chances of confronting future challenges with confidence and agility.?Its importance has never been so clear.

If you’d like support with devising a process that works for you, please get in touch.

? Siobhan Soraghan BSc MBA

[email protected]

Founder and Director, Active Insight (active-insight.com), and host of the Innovation Network (the-innovationnetwork.com)