The last decade saw managers and business leaders struggling to keep up with disruptive and ever-changing technologies, reduced oil production, globalization, wars, supply chain issues, and inflation. In 2020, a global pandemic entered this already complex equation and threw everyone off course. Every leader had to swim through millions of possible outcomes to stay afloat. This makes us wonder whether business owners are ready for unforeseen future circumstances. The pandemic made sure it exposed the planning fallacy followed by most organizations.
The planning fallacy is that you make a plan, which is usually a best-case scenario. Then, you assume that the outcome will follow your plan, even when you should know better — Daniel Kahneman
However, if the global pandemic has taught us anything, it’s that economic uncertainty, unexpected social or political events, and disruptive innovations cannot be predicted easily. But making swift decisions to adapt to changing scenarios can be a game changer. Being prepared and strategically ready by analyzing past occurrences and future threats as well as opportunities is the only way to go. Read on to learn how scenario planning can be used in the workplace to prepare for what lies in store.
What is scenario planning in the corporate world?
Organizations do not function in silos. Being part of the larger ecosystem businesses are often impacted by economic, political, environmental, and social changes. Scenario planning is an approach to planning that considers the past and the present to predict the future. This strategic planning method is used by organizations in all sectors to make flexible long-term plans. Owners of organizations are increasingly adopting scenario planning as it helps them create different courses of action to implement based on potential circumstances.
Forward-thinking organizations have slowly started planning for the new normal, i.e., the post-COVID-19 world. Is predicting this new world going to be easy? Not likely. The world will never go back to the way it was pre-2020. Due to rapid technological advancements, recent history has not provided us with enough references from which to learn and infer. Without having faced a similar crisis in the past, it is extremely difficult to prepare for one in the future, especially in the workplace. Though it might be hard to predict the new landscape, it will be highly prudent for organizations to plan for it. Using scenario planning, leaders can leverage what they know, learned, and inferred to prepare for multiple hypothetical future scenarios at once.
How can business leaders use scenario planning?
Scenario planning in the corporate world is an adaptation of the classic methodology used by military intelligence. Just as military forces use what-if analyses to prepare for unforeseen situations in the future, organizations must build and analyze plausible scenarios. This helps business leaders gain a strategic advantage over their competitors and stay ahead of the curve. Scenario planning also helps organizations build true resilience during any kind of disruption.
To build a successful scenario plan, business leaders need to:
- Augment, rather than replace, strategic planning
- Develop the mindset to plan and prepare well in advance
- Identify future threats, risks, and opportunities
- Collect relevant data and carefully analyze it
- Create an approach to mitigate the impact of behavioral bias
- Include technology, artificial intelligence (AI), and machine learning (ML) in all plans by exploring potential applications
Why is there an urgency for scenario planning?
In this new normal, business leaders need to be able to identify driving forces. These could include technology upgrades, legal regulatory challenges, demographic shifts, and societal and environmental changes, to name a few. Successful leaders will play devil’s advocate by measuring these forces against their organization’s core competencies and industry advantages. Without scenario planning, organizations will fail to create plausible developments in their potential future. They will not be able to assess the role artificial intelligence (AI) and machine learning (ML) could play in creating value going forward, and this will result in heavy financial losses.
Organizations need to respond to disruption with speed, confidence, and agility, not just in order to survive, but also to stay ahead of the competition.
Can your learn and implement scenario planning in your organization?
The short answer is YES.
Scenario planning is no longer a good-to-have aspect of a business plan. Leaders across the world are trying to learn and master this skill as it is now a make-or-break strategic approach for all kinds of organizations.
In collaboration with Emeritus, the renowned Columbia Business School is now offering a special online program on scenario planning. The program focuses on the practical application of scenario planning in a workplace setting. Learners dive deep into case studies involving top global brands, learn different approaches to strategic planning, and develop a customized strategy that prepares their organization better for unknown disruptions in the future.
The program is ideal for:
- Senior finance managers
- C-suite executives
- Founders and leaders of organizations
- Financial advisors
- Financial consultants
The objective of the program is to help business leaders identify risks and opportunities in potential disruption circumstances. Moreover, consultants and advisors can also take advantage of this program if they wish to help their clients prepare for contingencies.
With a special focus on peer-to-peer learning, a market-relevant curriculum has been developed for this program. In the globally connected online classroom, learners will have the chance to interact with and learn from top professors, program leaders, guest speakers, and knowledgeable peers.
By Manasa Ramakrishnan
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