Consumer behaviour has changed as a result of the pandemic – some behaviours will have changed for good and some are likely to revert to pre-pandemic norms. The pandemic has accelerated digital adoption, the growth in online grocery shopping has boomed, for example. And it’s likely (in my opinion), that those customers will continue to grocery shop online post-pandemic. However, the outlook is probably less clear for international leisure travel.
Leadership teams need to adapt to these changes. And with the levels of current uncertainty, leadership teams need to plan for multiple outcomes.
Scenario planning helps prepare your organisation for whatever might happen – it’s a disciplined and iterative process of envisioning possible futures and examining what each might look like. Scenarios are hypotheses about what could happen. Planning for multiple outcomes gives the organisation and all of its stakeholders a degree of confidence in its decision making.
Leadership teams should consider how they can make scenario planning a collaborative process within their organisations to ensure the best insight and perspective is gained to define the scenarios.
Key steps in scenario planning
- Agree scope and time horizon: Agree the scope, and an appropriate time horizon for the scenario planning focusing on the short term (say the next six months).
- Identify external drivers: Consider the external drivers of change that may impact the organisation. These will include changes in customer behaviour, competitor activity and access to funding.
- Identify internal drivers: Explore the drivers inside the organisation that may give a level of uncertainty. This could include decisions about key projects, hiring or marketing investment.
- Develop scenarios: Create short, detailed scenarios describing future states based upon the previous steps. Keep the scenarios to a manageable number (maximum five) ensuring that there is a breadth of possible alternatives.
- Assess the scenarios: Evaluate which scenarios and courses of action are most viable. The SFA (Suitability, Feasibility and Acceptability) Matrix is a good framework to evaluate scenarios. Suitability looks at whether a scenario aligns to the purpose and ambitions of the organisation. Acceptability looks at the areas of risk, return and stakeholder reactions. Feasibility essentially asks if the business is able to execute the scenario effectively. Each scenario will need to be scored against appropriate metrics within SFA.
- Monitor and iterate: Review performance and iterate scenarios as the drivers change.
Scenario planning helps plan for various outcomes – once evaluated, these should be used to stimulate discussions, agree decisions and engage employees and stakeholders.
When the future is uncertain, scenario planning is a necessary tool for organisations to navigate their future.
For help in building your organisation’s resilience through scenario planning, we would welcome the opportunity to discuss how we might provide an independent external perspective to support you.
Established in 2012, Whitecap Consulting is a regional strategy consultancy headquartered in Leeds, with offices in Manchester, Milton Keynes, Birmingham, Bristol and Newcastle. We typically work with boards, executives and investors of predominantly mid-sized organisations with a turnover of c£10m-£300m, helping clients analyse, develop and implement growth strategies. Also, we work with clients across a range of sectors including Financial Services, Technology, FinTech, Outsourcing, Consumer and Retail, Property, Healthcare, Higher Education, Manufacturing and Professional Services, including Corporate Finance and PE.