Forward management is one of the tenets of 4M Performance and in these turbulent times, we need it more than ever. Scenario planning is part of forward management thinking. It is a technique specifically created to guide management through an uncertain future. It is designed to do more than simply react to and recover from a setback. Effective scenario planning can help predict and position a business for the future.

What Is Scenario Planning?

Scenarios describe the future outlook of a business environment. Think economic forecasts only much broader and deeper which can predict the future. We build scenarios on three criteria…

1. Use of outside-in thinking. You start with a broad landscape (society or technology) and focus on what is going on in the world rather than just a certain industry.
2. Embrace diverse views. Seek out and learn from people who see things differently and call upon a variety of different roles, backgrounds, and experiences,
3. Take the long view. Look beyond current events and consider how today’s trends can turn into something surprising in the future.

“The greatest danger in times of turbulence is not the turbulence itself, but to act with yesterday’s logic.”

Peter Drucker, Management Scholar

Scenarios are a means to constructing a playbook as to what actions to take if a particular scenario becomes a reality. Covid-19 is a perfect example for which scenario planning comes into play. To start a scenario we focus on things we don’t know rather than what we know. For example, the severity of the pandemic and its progression, its economic consequences, how people respond.

Scenario planning enables management to consider multiple alternatives. It is dynamic and provides best, good, probable, and worst case outcomes. So, for the pandemic, the best case scenario that the virus is cured with no lasting effect. The worst case scenario is a prolonged period of contagion that forces government-imposed lock-downs, disrupted supply chains, and increased isolation.

In conclusion, use scenario planning to assess market risks, workforce levels, business expansions, new product/service introductions, etc. It identifies both offensive and defensive strategies. Moreover, it promotes bold and forward-thinking and forces us not to react to Drucker’s “yesterday’s logic”.