I was introduced to the concept of scenario planning during my participation in ACEC’s Senior Executive Institute. Our instructors instilled the importance of using this concept as an anchor of an engineering company’s overall strategic plan.
Any successful company has a strategic plan that guides its course to future growth and sustainability. Whether your company’s strategic plan covers the next two years, the next 10 years, or more, strategic decisions are more likely to bear fruit if they have been truly vetted by imagining how they will play out within a variety of alternative futures. Scenario planning is the tool for imagining those possible futures. When we consider a range of possible futures, we are far better prepared than if we operate under an assumption of one official future. If your company is not agile enough to anticipate alternatives in its strategic plan, then you are destined to fall short within our ever-changing environment. If you don’t believe me, just think of the varied circumstances this past year has thrown at us. How could scenario planning have helped us adapt to a global pandemic?
The basic premise of scenario planning rests on the idea that you cannot predict the future, but you can prepare for it…so how do we start preparing?
Step 1: Scenario Planning Roadmap
First off, we need to have an awareness of our surroundings. Before we can develop scenarios, we must first research the drivers within our Societal, Technological, Economic, Environmental, Political and Industry context (STEEPI). Our main focus here should be on the trends and driving forces that will form a pattern of events that may happen over time.
Step 2: Generate Scenarios
- Define what decisions you are considering and when is the analysis.
- Identify the major stakeholders.
- Who has interest in the scenario?
- How might they influence the situation?
- What is the future outcome?
- Identify pre-determined elements—these are things we know for sure.
- Consider surprises and critical uncertainties.
- What could change our fundamental assumptions?
- What are the risks of being wrong?
- Construct the scenario.
- Consider scenario plausibility.
- Clearly differentiate between scenarios.
- Challenge organizational wisdom.
Step 3: Application
We then apply what we’ve learned in the last two steps by analyzing the scenarios and asking the following questions:
- What red flags did the scenario identify and how do we avoid and/or mitigate?
- Do we need to alter our strategic plan?
- How does this impact what we know?
- What opportunities have been identified?
Now that you know the steps to successful scenario planning, make sure you add this to your strategic planning toolbox. With the significant changes our industry is currently experiencing, preparing for the future will be key to your company’s ability to thrive and survive in the long run.
