Get over Plan B, Here comes Plan Infinity

Over the last few years, the industry has witnessed so many uncertainties and disruptions. The question arises: could we have better prepared for these challenges? Did we overlook potential scenarios in our planning? Scenario planning plays a crucial role in business success, and with the advent of technology like Generative AI, companies can now prepare for infinite scenarios to minimize surprises and shape the future. The ability to act in the present while thinking about the future is what sets successful businesses apart in our ever-evolving world.

So, What’s your Plan B?

Many of us have either asked or been asked about alternative plans during challenging situations. Interestingly, the significance of having a Plan B is even recognized by a popular fast food and beverage chain, which goes by the same name. When other restaurants are fully occupied, Plan B always comes to the rescue for many of us.

For those of you who know me, scenario planning is embedded in me as a function: IFTTT – If This, Then That. I believe, for individuals having a plan B or even Plan C would enable them to navigate through the dynamics of life.

In case of business, that’s not enough. Businesses would have a lot of unknowns and unexpected scenarios to be prepared for. Macroeconomic factors such as Political, Economic, Social, Technological, Legal and Environment factors etc plays a vital role in how the company responds to market scenarios and microeconomic/internal factors such as industry trends, company revenue, attrition, Cost of Production, Customer Churn etc leads to how the company lives up to shareholders expectations and build solid foundation for the future. Scenario Planning has been an essential tool for CXOs to identify risks, disruptions and challenges that can have potential impact on their businesses.

Leading companies like Shell, have been using scenario planning for more than half a century now with economy, society, and environment as key factors that drive scenarios. It has built a strong foundation for leaders to be comfortable with ambiguity of an open future.

Scenario Planning: ?Why now?

Some may argue that scenario planning is outdated, but recent events such as the pandemic, wars, and economic uncertainties have highlighted its importance. Organizations must reconsider the use of modern technologies like Artificial Intelligence and Machine Learning to gain deeper insights into their internal and external data. Historically, limited data collection hindered effective scenario planning, resulting in a limited number of scenarios and potential vulnerabilities in business models. However, modern companies now have data platforms that can house structured and unstructured data, allowing for a more comprehensive analysis and preparedness for multiple scenarios.

With so many known and unknown vectors that could disrupt the businesses, it may be challenging to predict the precise nature of disruption, being prepared is crucial and companies want to go all-in. If a crisis hits a business, how prepared are the leaders? Would they need more resources or better technology or something else? A CXO would want to reduce unknowns in the plan and that can happen only through planning for not just 4-5 scenarios but infinite scenarios.

Modern companies embracing digital transformation now have data platforms that can house structured and unstructured data about their business and external data like competitor information, market trends, geo-political situation, GDP, inflation etc. Larger the company, larger is the data volume. Though, using these vector combinations may result in sparse data-driven infinite scenarios, but it helps companies to be aware of vulnerabilities and enable the CXOs to identify issues, key stakeholders, time horizon and the level of detail for each scenario. This is now possible as technology has fast emerged and a data-driven organization can learn, adapt and grow based on their preparedness for multiple scenarios.

Act in the present and think in the future

When Strategic planning exercises are done, companies set long-term goals and develop a plan to achieve them. They would have made some assumptions and would choose most possible scenario. Let’s look at scenario planning through a totally different lens that can help us arrive at quick adaptability that can enable effective strategic planning.

Short-term scenario planning enables organizations to think about the immediate future and make plan for scenarios that are driven by data (more quantitative and qualitative) and could range from 12 to 24 months.

Long-term scenario planning enables organizations to think strategically about the future of the company aligned with vision and mission. If we use 80-20 principle here, only 20% of scenarios could be known to the company. It is driven less by data and more through imagination, iteration of vision and could range from 24 to 60 months .

Despite of long-term crisis due to COVID-19, there were many sub-crisis that evolved in a very short span of time – Work from home, Learn from anywhere, Availability of beds in hospitals, Limited supply chain and so on. With time, companies planned for the short-term scenarios and are now prepared for any additional impacts.

Future belongs to modern companies embracing technology to build infinite scenarios

Even though AI has been around for a considerable time, Generative AI is currently revolutionizing the industry, and the ML algorithms can make scenario planning an invaluable tool that can create infinite scenarios that were never considered before. CXOs can access large amount of data (internal and external) and use AI models and Machine Learning algorithms to generate infinite scenarios, ask questions and even simulate solutions/strategies based on possible scenarios using digital twins. They can even monitor the scenarios and set alerts if for example inflation goes beyond double digits in a country and its potential impact on their businesses. And all, in real-time and sometimes in near-real-time. By embracing infinite scenario planning, number of unknowns become less, businesses can minimize surprises, stay ahead of competition, be agile and enhance their ability to anticipate, adapt, and shape the future as it unfolds.

A CXO of supply chain company that is decentralized and has global networks can embrace Generative AI and create a playbook to prepare for disruptions. First step would be to build a culture of Data and Collaboration. Second step would be to have Generative AI driven capability for their control towers/Command centres, Supply chain officers. This would enable them to communicate risks across the board quickly and coordinate execution of plans based on the identified scenario in the infinite scenarios’ playbook accordingly.

Embrace diverse minds to prepare for diverse infinite scenarios

To effectively prepare for diverse future scenarios, challenging the status quo and embracing diverse perspectives is essential. A CXO can formulate a solid response team that comprises of:

·??????Diverse leaders to get different views

·??????Futurists, Forward Thinkers, and Strategy Formulation teams

·??????Strategy Implementation Specialists

·??????People from all levels, across functions

Reverse mentoring could be a great tool for executives to stay connected to on-the-ground team and listen to their perspectives, way of solving problem. Last year, we concluded a reverse mentoring program that was set up between many Senior Leaders across the company and Gen Z associates. The results were enlightening and the whole program paved way for some more such programs.

Scenario planning should remain an integral part of strategy process. As decision-makers increasingly leverage technology to plan for infinite scenarios, they become more adaptable and responsive to unfolding circumstances. However, it is crucial to remain open to change and establish appropriate governance, privacy, and ethical frameworks for Generative AI. By doing so, organizations can fully utilize technology to prepare for an uncertain future and navigate through the unknown with confidence. ?

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References:

https://hbr.org/2013/05/living-in-the-futures

https://hbr.org/podcast/2020/07/future-proofing-your-strategy-with-scenario-planning

https://www.gep.com/blog/strategy/supply-chain-scenario-planning-importance-process-improvements