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Oliver Wight Blog

Scenario planning; getting ahead of the game

By Stuart Harman, Partner at Oliver Wight Asia Pacific

29 April 2019

With campaigning underway in the upcoming Australian Federal election, the media is full of commentary speculating about what the future will look like should the respective political parties gain power. Known events such as elections can frequently present significant risks and opportunities to companies, depending on the policies of the political parties involved, but frequently, businesses find themselves surprised and disadvantaged by the outcome. 

The Brexit vote in the UK is an example where, despite there only being two outcomes – for the UK to either stay in or leave the EU – many companies were surprised by the outcome, even though a ‘leave’ vote would have a significant impact on their business.

Has your organisation considered and made plans for the alternative outcomes that might arise?

When I work with clients to improve the scenario planning processes in their organisation, I frequently hear, "We are too busy to create scenarios and plans for everything that might come at us". That’s not what I’m suggesting.

My guidance is to focus scenario planning efforts in two areas.

1. Create scenarios and plans for the things that are most uncertain in your organisation’s view of the future.
2. Create scenarios and plans for the things that will have the greatest impact on your business, both negative and positive.

Scenario planning enables an organisation to think about multiple future outcomes AND to put plans in place for them. 

The benefits of this approach were identified by Jim Collins in Great by Choice*. Collins outlined how the '10X organisations' (that outperformed their peers by a factor of 10) shared a common trait amongst their leaders; a 'productive paranoia' about the future that saw them obsessively ask, “What if?” and to plan continuously for multiple outcomes. Collins concluded that this gave them the benefit of agility – they were able to move and react quicker than their competitors, handling disruptions from a position of strength and flexibility.

The real power of scenario planning comes when organisations take their thinking about multiple future outcomes and do something with it, i.e. creating alternate plans for dealing with the multiple future outcomes. This can be taken a step further; by sharing these multiple outcomes with the people in the organisation that would execute, businesses can create an environment that is ‘future ready’. As Collins highlighted in his research, this can drive significant competitive advantage.

At Oliver Wight, our experience is that organisations that incorporate scenario planning into a robust, monthly, Integrated Business Planning process that plans out at least 24 months into the future, become, and feel far more proactive as they detect key issues and uncertainty early enough to be able to prepare alternate plans and take cost-effective action.

So, as Australia prepares to decide on its government for the next three years, how prepared is your organisation for the possible outcomes?

*Great By Choice – Jim Collins and Morten T. Hansen