Stay sharp with scenarios

How will we communicate with each other in 10 years? How much will a barrel of oil cost in 2025? What is the interest rate in 5 years? Which jobs will artificial intelligence replace? To what extent will 3D-print change the world? Will driverless cars and ships become the norm – and when? Questions that are difficult to answer and that you have to wait a long time to have fact checked.

 And, as is well known, nothing is more difficult than to predict the future. However, as a leader you must constantly relate to the future. “Fixing the future” are currently taking on thousands of board members and executives, and this were also a controversial topic during this year’s BCG Academy in Copenhagen. How do we safeguard the company for the future – and how can we ourselves help define the rules of the future. In my experience, leaders and companies can come far by systematically working with trend spotting and scenarios.   

 Let me briefly introduce an exercise that can be a useful tool in this context. The exercise requires an open mind and willingness to doubt the entire company, products, customers and the way you are doing things today. There are three steps:

 Take control of trends

Start by involving employees across the company (diversity and a wide variety of perspectives yield far better results) and make a list of trends that, you consider, will have crucial impact on the world’s development over the next 5-10 years. You must disregard transient trends. Focus must be on megatrends. Meaning trends that are so powerful and that over time and across cycles can fundamentally change opportunities and risks for companies.

 Once you have the gross list in place, the list is reduced to only contain the trends that you consider most relevant to your particular business. Here you should be aware of a typical pitfall associated with “trend- spotting”, namely the inclination to underestimate the impact of megatrends. This is because they are often long underway before they seriously break through. 

 Formulate and understand the scenarios 

With focus on the prioritized trends, formulate 3-4 future scenarios in which your business is included. An example could sound as following: Imagine a world in 2025, where you drive your children to school in an electric car, shared by the parents in the area. Taxation on fossil fuels is sky high and they can no longer compete with electricity from renewable sources. Then you go to the supermarket to purchase local goods as externalities such as environmental costs have made global products much more expensive. You go home and attend a video conference with the London office via your wristwatch.

 Now you should consider what has driven this development. What has driven shared cars? What made the price on fossil fuels increase so aggressively? Why is there so much focus on the environment?

Prepare yourself for the scenarios

Finally, look at how your company will be best equipped to handle these scenarios. The needs of the customers must be uncovered. You should also relate to the success parameters across your value chain – Product Development? Sales? Marketing? Operations? And of course, there is the question of which specific initiatives are required by the scenarios. What should you do differently? What should you stop doing and what should you continue to do?

The initiatives are divided partly on the likelihood of implementation and partly on their impact on the current business model. The combination of high probability and high impact on the business model indicates that time is for transformation.           

Of course, not all future scenarios come true. But the exercise will help you and your employees to plan for a future that already in a short amount of time looks very different than today. And the capability to do so is essential to ensure that your business do not fall behind or end up in the history books. It is about grabbing the future and not be absorbed by it.