Strategic planning: Mine your imagination with scenario planning

Consider a big surprise in your career or personal life, whether positive or negative.

If you had anticipated it, how would that have affected the actions you took ahead of time?

How might that have changed your experience and the outcome of the change?

Be better prepared for sharp, sudden change in the future.

Scenario analysis, a simple planning tool, can help you.

It may sound complicated, but it’s not.

In its simplest possible form, scenario analysis is a brainstorming tool.

It works because it loosens your grip on the future you expect.

Envision many possible circumstances

It opens your eyes to many possible futures, and helps you prepare for seemingly far-fetched circumstances that could, in fact, occur.

As you envision each scenario, you’re essentially beginning to rehearse how you’d handle each situation.

That improves your planning, as you consider what you might do in each case.

It also heightens your awareness of cues and data you can monitor to notice change as it is occurring, if it does.

Here’s a simple approach to use scenario planning:

Prepare

1. Define the problem.

What’s your challenge, in one sentence?

2. List the primary forces that could drive change in the situation.

For example, is availability of qualified employees critical to your team or company?

Are economic trends, regulatory issues, industry or technology trends important to you – or could they be?

What other major forces must you monitor and be ready to respond to quickly, if these forces change?

3. Create a matrix.

You’ll need at least six columns. You’ll also need enough rows for each of the primary forces you identified that could drive significant change in this situation.

In the first column, list each of the primary forces, one per row.

Across the top of the matrix, write these column headers: “Even better case,” “Best case,” “Most likely case,” “Worst case,” “Even worse case” in columns two through six.

Be there

4. Imagine, one by one, that you’re in the middle of three different scenarios,  “Best case,” “Most likely case,” and “Worst case.”

As you consider each scenario, write a few details in the appropriate boxes for what you expect would be happening with each driving force in that circumstance.

For example, let’s say you’re planning for rapid growth at your company. One force you would need to consider is the availability of qualified candidates for jobs at your company.

Let’s say, then, that you anticipate the best case is that there will always be many highly-qualified candidates for your job openings.

As a worst case, perhaps you fear that major demographic changes could reduce or eliminate future job candidates.

And as a most likely case, perhaps you think there will be little change in the number, and quality, of job candidates available to you.

5. Stretch even further.

Now, having considered the “Best case,” “Most likely case,” and “Worst case,” expand your thinking.

What circumstance would be EVEN BETTER than what you imagined for each driving force?

And what would be EVEN WORSE than what you already dared to picture?

Working through these extreme outcomes inevitably leads you to new insights.

Many companies find that creating these stress scenarios…both good and bad…accelerates and improves their preparation, teamwork, trust, and resilience.

6. Build the most likely scenario.

Having considered the extreme examples, what now seems to be the most likely scenario?

Is it the same “Most likely” scenario you originally envisioned?

The odds are very high that, having stretched your thinking, you see some new areas of caution and opportunity.

And the “Most likely” scenario probably now looks different than it did when you began the exercise.

Save and compare

By this point, you may have accomplished as much as you want to with this simple version of scenario analysis.

You can do further work, such as by gathering data and doing detailed analysis to help you understand which scenario you envision is most likely.

7. Save your work.

Whether you’re ready to complete the scenario analysis, or you’re doing more research, save the work you’ve done for later use.

8. Express key scenarios in a way that makes them easy to use.

You can capture the scenarios in some way that makes them easy to use in the future, such as through simple graphics or drawings. Or you can select a metaphor, or write a phrase that expresses the imagined circumstance succinctly.

9. After time passes, compare what actually happened with the scenarios you imagined.

You may be surprised at the quality of your crystal ball

Considering many different possibilities prepares you to some degree to be ready for them…and makes you more attentive to the key forces that may be constantly changing.

One client, an investment management firm, discovered after I led them in a scenario planning exercise, that they were far better prepared for an extreme change in the financial markets than their competitors were.

However you plan and prepare for the future, rest assured that it won’t be a simple extension of the past.

Scenario analysis can help you be much better prepared for the future, and much more resilient.

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