Preparing for the unknown
In his critically acclaimed book, The Black Swan: The Impact of the Highly Improbable, essayist and philosopher Nassim Nicholas Taleb talks about the extreme damage caused by the most random of events.
Taleb uses Black Swans as a metaphor for rare, high-impact events; like seeing a black swan after asserting the old-world presumption "all swans are white".
The main idea in Taleb's book is not to attempt to predict Black Swan events (because it is futile) but to build a resilience against those which do occur.
The role of good scenario planning
This is why the role of scenario planning is crucial for any business – it opens a constructive space in which to index all the possible risks which could disrupt your organization.
It then fosters a discussion on how best to allocate your resources to cushion or leverage the impact of these disruptions should they play out.
The greatest strength of well-executed scenario planning is its ability to expose the events which may collide with your business plans or strategies. After all, the one thing we all know about the future is that it is impossible to predict.
Watch this livestream and see exactly how you can create organizational resilience with scenario planning during your strategic planning process or as a general organizational activity.
The following matrix (which we have termed "possibility casting") can be used to identify your current business environment and the external forces at work.
Fill in the nature of your business, or your sector, at the top. For example, you may be a nonprofit addressing the issue of homelessness in urban areas.
Step 1: Populating the matrix
Working from left to right, begin in the first empty column and ask yourself what trends and ideas in science and technology are occurring right now in relation to homelessness?
You may consider the uptake of mobile phones among individuals in the lowest socioeconomic bracket, the prevalence of social media etc.
Then ask yourself what could be happening in five years time in regards to science and technology as it impacts homelessness? Then extend your mind 10 years into the future.
The ideas you write down should not be debated or verified for legitimacy. There is no right or wrong: follow your train of thought and develop a cross section of ideas.
Remember, according to Taleb the future is created through acts of randomness. You should never expect a linear procession of environmental risks to unfold one after the other.
Move your way down the far left column to:
Perception shaping events: What events are, or could, sway public perception of your sector?
New fringe ideas: Consider the weird, whacky and strange ideas happening domestically and overseas in your sector.
Economic developments: What is happening in the economy that could have an impact on your ability to carry out planned strategies?
Political developments: How could a change in policy impact your operations or sector? What do you need to be aware of?
Environmental developments: The use of gas, energy, water, land use etc. How might natural resources have an impact on your sector?
Step 2: Creating mini-scenarios
Once your matrix is bursting at the seams with ideas, hazards and trends it's time to create a mini-scenario.
Take one item from each of the columns: now, five years and 10 years.
String those three items together and create a story or picture that links those items in some way. This is a scenario.
Evaluate the effect this would have on your organization if it were to occur. Then ask your planning team "What would we need to put in place now to be prepared if this scenario played out?"
Again, resist the urge to play down the likelihood of this event actually occurring. The strategies your team come up with during these sessions is an important indication of how strategically minded it is, especially with relation to critical problem solving. Your strategies should be robust enough to deal with any of the scenarios that you develop.
An example from for homelessness may look something like this:
(Now/ political developments) Public funding for homeless shelters/ commission housing is reduced.
(5 years/ science & technology) Cheaper, more efficient ways of treating drug abuse & mental illness are developed.
(10 years/ new fringe ideas) Unemployment for unskilled workers rises with greater machine automation.
If this cluster of events were to occur simultaneously, what are the implications for your organization?
What would you need to do in preparation for this scenario right now? What do we need to put in place to leverage this scenario, even if it didn't occur?
This exercise will begin to open up discussions around who your key stakeholders are, especially those you may have overlooked. The same applies to other organizations you may share a common vision with.
The strategic implications of prudent scenario planning
Even if this scenario doesn't occur, this"possibility casting" is constructive in identifying and preparing resources before you may need them.
This type matrix is meant to be changed, amended and updated not filled out once and forgotten about. Ideally, the planning team which devised your scenario planning matrix should have included your A-team: The Board, the Chair, senior executives and key stakeholders. It makes sense to use this document more than once a year to develop further scenarios.
We recommend creating a new mini-scenario from your matrix every six months (this should only take 30-45 minutes).
Take the newly created scenario, map it against your current strategies and take a step back.
What you will find is an entirely new way of approaching your strategies, a new perspective on your alliances, programs and the potential for new revenue streams.
The beauty of scenario planning is that it takes your thinking out of the here and now and plants it into the future.
As demonstrated by the idea of the black swan, we can never know what the future will bring. But being prepared to act regardless, will separate the agile organizations from the rest.
How do you practice scenario planning? We'd love to hear it in the comments below.