If we learned anything during the past 12 months, it’s this – uncertainty can come into play quickly and alarmingly.
I clearly remember a corporate business continuity exercise where we talked about issues that could strike and debilitate our workforce. The things that were top of mind for me included things like fires, a major change to specific government regulations, a data hack or a CEO/leadership scandal.
Things that I kind of laughed off and considered highly unlikely? A pandemic or a blizzard.
Now as a marketing agency in Texas, we’ve had the unfortunate opportunity to experience both during the past several months.
While you don’t have to plan for every potential outcome, scenario planning for your business can help you to find common threads of strength, weakness or opportunity, and build a more resilient, nimble organization.
Here’s a rundown on how to get started:
Look for areas of uncertainty in your current and future business environment.
As you consider scenarios, what are some of the first items that pop into your mind? It may depend on whether you’re a B2B or B2C company.
B2B organizations might worry about another type of software outpacing theirs or about massive regulatory changes that would affect their ability to do business. B2C organizations might be more focused on events that affect their supply chain or limit their foot traffic.
As you identify some of the top issues that might derail your business efforts, map them out on an X/Y axis.
Consider which issues might arise from the most extreme of the extenuating circumstances. For example, if you lead an educational resource company, you might be strongly affected by:
- A pandemic that shuts down in-person tutoring as an option.
- A local college’s decision to host more classes online, reducing the pool of tutors available to staff your organization.
Estimate how long each of the situations might last (in an extreme case), then consider the scenarios available to keep your business running in each situation, or to make your company more situation-proof.
For example, a common thread between both of these cases might be the option to have more tutors/tutoring available to connect online. As you consider this scenario, you must evaluate different factors that could have an impact on your success.
- Will families feel like they’re losing some of the personal connection that makes your product unique/differentiated?
- Will you need to ensure a certain level of technology is at the tutor’s disposal, thus increasing your costs?
And, you might also find new opportunities to grow and expand your business based on this evaluation. If you find that families like and appreciate the online option, do you have the potential to expand and begin serving new communities? If you can pull tutors from outside your area, does that mean you have access to a bigger and better talent pool?
What’s the Biggest Benefit of Scenario Planning?
Some of the earliest scenario planning efforts were very hazy looks into the far-future, intended to help the organization develop better long-term outlooks and use their resources more responsibly. Shell used scenario planning in the 1960s to create a “Year 2000” report – and to envision a future that looked different from the present.
If you’ve worked in any kind of corporate environment, you’ve been exposed to an attitude of “but that’s how we’ve always done it.” That’s the point of scenario planning – to be aware that there’s no certainty that the future will look anything like the present.
Scenario planning shakes you free from the notion that it will be business as usual for the foreseeable future.
You don’t actually build your business or adjust your plans based on any one scenario. Instead, you change your strategy based on the commonalities across all scenarios. As another example, financial institutions are among the most highly regulated entities.
At financial institutions, leadership must prepare for a wide variety of scenarios, including:
- Major adjustments in the economy
- Loss of consumer lending revenue because of a sharp decline in auto purchasing
- Sweeping regulatory/consumer protection changes that decrease revenue from certain channels (like checking account fees or debit card “swipe” fees)
Looking at these potential scenarios, you can find common threads across each, like the need to up the number and value of revenue-generating products you provide, to increase the number of products per customer/member, or to find ways to reduce overhead.
Scenario planning shouldn’t be tactical and focused on things to shift immediately, although some of your findings/recommendations may be applicable right away. Instead, its focus should be on finding ways to be more sustainable and successful long-term.
The future can feel very uncertain right now, but the reality is — we are always headed toward an uncertain future.
Mad Men-era marketers never envisioned a world with internet. In their day, even having a shared telephone in the office was considered a distraction (although, somehow, the full liquor cart wasn’t.. but that’s another story!). Early .com professionals wouldn’t recognize the world of SEO, Facebook, Clubhouse, TikTok and any of a dozen other online must-knows that spring up on a regular basis.
One of the best things about scenario planning is that as the world turns toward one of the paths you planned for, you already have sketched out how you want to shift your business. It builds flexibility into your business processes and attunes you to early changes in your environment that may impact your business.
Want to start planning for your business’s future? Let’s talk about strategy and how we can support you as you reach short-term goals and plan for long-term outcomes.
