In this episode of Zeitgeist Leadership Pulse we look at scenario planning, what it is, and how to conduct this within your team. Scenario planning is an essential part of a leader’s toolkit.
It is through scenario planning that strategies become rich in innovation and lateral thinking. Whether you are looking at how to move on and through COVID-19 or whether you are planning the way for your business whatever the season might be.
Zeitgeist Communication’s consultants offer clear, straightforward strategy advice and scenario planning sessions to help you and your leadership team make decisions which drive growth.
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In this episode we discuss the first three of 5 building blocks leaders must consider when re birthing their business strategy as a result of Covid-19. A free resource with focus questions accompanying this episode can be found at http://www.zeitgeistcomms.com/focus-questions.
(This is a transcript created with an AI and is not 100% complete. If you have any questions, contact us at firstname.lastname@example.org. We’re here to help. )
Transcript (note, this transcript has been created with AI, it is not complete nor word for word. If you have any questions, do contact us at email@example.com – we’re here to help.
Welcome to Zeitgeist Leadership Pulse. In this podcast we provide the conversations and resources to help leaders explore the strategies and the strategic mindset they need to be successful in an increasingly complex and digitally driven wild.
Good morning and welcome to another episode of zeitgeist leadership pulse today we’re talking about scenario planning to have a look at this and why it matters.
Right now we live in in this scenario being played out and none of us saw this coming but on one hand we see some businesses while they weren’t able of course to predict the situation that they’re now in a coping better than others.
So how does scenario planning tie in with strategic planning Jutta?
Thanks for the question James – strategic planning is essentially no more than the creation of the straightest line of actions towards a certain goal.
The problem with that is that neither life nor business is linear – the strategic process works on the premise that transactional elements of the planning process are predictable.
While they’re not fully predictable, we work with approximates so we sort of assume a certain thing with the most likely outcome, so we work with probability.
Probability here refers to the idea that there’s a type of measurement you can apply as part of your forecasting.
Scenario planning however ads in the idea that there are unpredictable but plausible future settings.
We then work with both probability and plausibility – the further we go into the future the less measurable and tangible things become which creates a sense of insecurity.
The sense of insecurity on the other hand is that what makes our planning effective so we actually want to feel a bit insecure it means that we’re forced to think in the space in which we only have limited information for.
So essentially what you’re saying is that scenario planning helps us to think outside of our boxes and how important is that bility and therefore as a result scenario planning must be part and parcel of a leader’s tool kit.
Yeah absolutely it’s completely important in fact it is more important now than ever. We hear about the VUCA world and we heard about it before COVID-19 so meaning volatile uncertain complex and ambiguous – you know it’s a world that we cannot predict and I’m sure we can all relate to all of that particularly now.
The acronym stems from language used in war but now we relate it to business as well as it does not only describe a potential future but something we have and continue to experience through the COVID-19 a pandemic so we do have quite a bit of a glimpse of it.
The world through globalization has become more complex not more simplified. We think it becomes easier but the opposite is the case it means that our supply chains are connected across borders we’re communicating several languages and across cultures it also means that we have become dependent on players in the market who might be miles away.
In addition we’re faced with an increase of uncertainty created through environmental and technological changes or uncertainties – so with more technology we also create more risk for example.
So leaders, and I’m not just referring to internationally operating leaders, need to have a much richer tool kit. They need to be able to maneuver new technologies with the continued importance of online business they need to manage a less loyal consumer base and ensure that their businesses and staff are healthy enough to move forward flexibly through Covid.
And in our current situation obviously there are massive market changes so scenario planning while it’s not a tool of prediction is an essential tool to help leaders make better strategic decisions with the ability to shift built into that.
How do leaders go about scenario planning what tools would you recommend where should they begin is it a question of having the end in mind?
Yeah that’s a very good question it’s not the same procedure as with a strategic plan around the vision or a specific goal so it is not about stepping into the future but rather we’re accepting the fact that the future is unfolding in our present – so it’s coming our way. I hope that makes sense.
So the scenario planning process is about envisaging what is already developing and getting to grips with that.
The aim is to create several scenarios.
Generally we will want to create more than three because humanly speaking what we tend to do if we have three for choices – we will generally choose the middle one so we don’t want to do that so four is a good number in terms of how many scenarios to create.
Please outline for us some typical steps the scenario planning.
Sure so step one we will need to be clear about the purpose of the planning While we are doing it we can envisage all kinds of scenarios such as you know the universe will expand one day but clearly that’s not going to be important right now for business so I’m not trying to be flippant but we do need to have a clear purpose in mind it could be around staffing around skills around technology.
And then we move into step two so we look at what are the external impacts on future planning.
This relates to the transactional and out of our control elements so we will need to look at sifting through first of all our transactional elements that is things you know that are interactions with people, so with suppliers with customers, partners investors and the wider supply chain.
But then we add in factors that we have little control over and that we can’t easily access so that could be the wheather, a disaster, medical pandemics shifts in consumer behaviour, political disasters war etcetera etcetera.
So essentially what we’re trying to do is to try and capture all the things that could change and that’s why we do this planning best in a group, use other people, the more heads the more ideas but equally sometimes that can be confusing with many voices, which one is the right one so help us a little bit with this…
Yes you’re you’re right, t can get confusing and really what you want ideally is to have someone draw alongside you to facilitate that scenario planning It happens in the group because you can’t really do this on your own, we need to be looking in from different angles, and different people will see different things so in order to avoid confusion we need to, as I said, have a clear purpose potentially you can assign certain focus points across the group so you might have people spread out into smaller groups and looking at different areas.
Which takes us neatly to step three and once you have these you go into kind of a sifting modes so if you have fifty elements of impact for example you need to sort out which of these create value in the discussion making, help us with that please.
Yes so just use a simple scoring mechanism, people score each item in terms of importance so let’s say on a scale from one to ten then as a group you sift through those and identify the top four.
Once you have these top issues you then move into scenario creation here you essentially juxtapose four factors for example you might look at an increase in online demand for medical products to an extent where we will see eighty percent of all consumers purchase their medical products including prescriptions online.
Well the opposite of that is that there would be a decrease in online demand for that.
And then you might also look at an increase in sophistication around the medical supply chain with less legal barriers for transport across borders and again you create the opposite about ideas so there’s a stricter the stricter guidelines or barriers impeding the supply chain.
That can then be put into two by two matrix for each with an indicator of the main factors which we created with the scenarios.
We really hope you’ve enjoyed this edition of Zeitgeist Leadership Pulse. Join us again next time, stay safe.
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