Why do it?

The ultimate challenge

“I have to lead for tomorrow’s world.”

With these words, Jeff Immelt, the CEO of GE, sums up the main challenge he and other CEOs face - a task that must keep a lot of top managers awake at night. After all, one of the key jobs of a business leader is to ensure that his or her organization is not only competitive now, but remains competitive 5 or even 10 years from today.

But if you don’t know how the future is going to turn out, how can you plan for it?

Undertaking a scenario planning exercise doesn’t mean that you have now successfully predicted “the” future. But if you do it right, it means that you have a better understanding of what could materialize.

And if you’re responsible for your organization’s success within its future competitive landscape, then visualizing how the future may develop is not a meaningless parlor game. It’s a vital necessity.

You need to understand today how your company is likely to be challenged when tomorrow, everything around you changes. And change it will.

 

“Our lives are defined by opportunities, even the ones we miss.”

F. Scott Fitzgerald

 

Many organizations base their plans on linear thinking. This approach may produce acceptable results for the near-term future, but beyond two or three years, the future is not likely to proceed in a nice, straight, predictable line. The road ahead is forked, curved and bumpy – anything but straight and smooth.

By mapping out 3 or 4 alternative futures that could realistically emerge if certain trends play out, you can evaluate your competitive position in each of these scenarios, and plan accordingly.

So scenario planning’s big advantage is that it gives you strategic flexibility:

  • You can see where investment opportunities will arise in each of the possible future scenarios.
  • You can also identify threats that may be inherent in one future landscape or another – and you can also recognize their warning signs.
  • Speaking of warning signs, you should also be able to see what some of the key indicators will be that will signal to you along the way which scenario is more likely to be developing.
  • You can beef up your company’s relevant capabilities in time to take advantage of the changes you foresee – before your competitors do.
  • Lastly, you and your team will learn to embrace complexity and think more creatively and unconventionally.

In a constantly changing world, one thing is certain: If your strategic plan today is essentially a bet on one specific future developing, you may find yourself taken by surprise when things turn out differently. That means falling back to regroup, losing time, wasting resources...

With scenario planning, you will not have completely accurate advance knowledge of the future (if only this were possible!), but with a response already planned out for each of several possible ways the future could unfold, you are certain to be better prepared for whichever future does begin to materialize.