Scenario planning: what’s the right process to follow?

Following a robust process is an essential part of scenario planning. Otherwise, you’ll be open to objections around the validity of the outputs, and around their purpose within the business. Set against this is a need for efficiency – no one wants to create unnecessarily cumbersome, bureaucratic and lengthy processes, especially when the whole point of scenario planning is to increase agility.

To help get the balance right, White Space Strategy has created a simple 5 step scenario planning process and shared it on Whiteboard:

1. Define goals & timeframe
2. Identify change drivers
3. Create scenarios
4. Action plan
5. Revisit & refine

These five stages align with White Space Strategy’s scenario planning workshop template, which is also available for free on Whiteboard.

Step 1: Define goals & timeframe

Why are you scenario planning? What is the desired result or benefit? There are many possible reasons and benefits, and having clarity up-front will ensure the scenarios you develop drive towards them.

For instance, your company might be heavily focused on international expansion. Scenario planning could help identify the best markets to move into, requiring a longer term view of how these markets might develop politically and economically. Another company could be faced with existential threats from new entrants and disruption. Their scenario planning would focus more strongly on the competitive environment, based on a shorter-term timeframe.

Defining the goals of scenario planning is likely to involve identifying the end users of the outputs up-front, and then consulting them: what are their strategic goals, and how could scenario planning help achieve them? Holding these discussions up-front is a great way to gain buy-in to the overall process. It also provides an opportunity to set expectations around the nature of scenarios themselves: they represent possible versions of the future, and are not predictions. Ensuring everyone’s comfortable with this early in the process will help ensure stakeholders buy into the outputs, and use them to achieve the goals of the business.

Step 2: Identify change drivers

It’s tempting to jump straight to scenario creation without spending too much time gathering facts and insights about how your world’s changing. In our experience, everyone has an opinion about what might happen in the future – but are these opinions grounded in evidence, and has anything significant been missed out?

It’s useful to open people’s minds to a broader range of possibilities. To do this, we focus on identifying key trends that are driving the future of a market. Specifically, we’re interested in what’s creating change. These ‘change drivers’ typically fall into 2 groups:

• Market drivers: relate to customers, suppliers, competitors and disruption
• Macro drivers: relate to social, legal, political, technology and environmental trends

At this stage, you’re looking to identify a long-list of forces, developments or events that could change the future of your company’s market. Identifying change drivers might require market research – or the knowledge required might already exist in your business. Either way, creating a knowledge base as a foundation for scenario development is vital to ensure outputs are credible, fit-for-purpose and actionable

Step 3: Create scenarios

Once you’ve developed a solid understanding of future trends and change drivers, you’re ready to translate this into scenarios. This is best done collaboratively in a workshop, starting out with discussion and prioritisation of the future trends: which ‘change drivers’ do people think are most likely to happen? Which would be most impactful? This will allow you to create a broad range of scenarios, which are more or less likely to happen, with greater or lesser potential impact.

We recommend creating 3 – 5 scenarios, covering a range of different possibilities. In a workshop, this can be achieved through breakout groups and asking each one to create a different kind of scenario:

• Evolutionary: Your market evolves largely out of trends that are already visible and in train today

• Revolutionary: Your market is heavily disrupted by new technology, new ways of buying or by far-reaching global megatrends. Many developments are not yet visible in your market

• Left field: Unexpected and unlikely events/ forces emerge in the 2020s. This leads to radical new opportunities and threats, which were very difficult to foresee or predict

At this stage, creativity and lateral thinking are really important: if x, y and z change drivers happened together, what might happen in practice in our market? It’s these potential consequences that will become the focus of the scenarios themselves.

Step 4: Action plan

The next stage of scenario planning focuses on action planning. This ultimately focuses on two questions:

1. What should we do right now to prepare ahead?
2. What would we need to do in the future if the scenario happens?

The starting point is looking at each scenario individually, focusing on implications: what would the scenario mean for your business if it happened? What opportunities and threats would be created? What action would you need to take? And, given this, what kind of business would you need to be to succeed in this eventuality? Working backwards from this point will allow you to identify capability gaps and actions to prepare proactively.

Having looked at each scenario individually, take a look at them all together, alongside each of the scenario action plans: what are the common threads that run across multiple scenarios and multiple action plans? Which capabilities and actions would help you in all of the scenarios?

Having identified a full set of potential actions, you’ll need to prioritise them. Lower cost initiatives that will be helpful in multiple scenarios will be the obvious candidates for investment. Others, that head off any existential threats or unlock potentially game-changing opportunities, will also be high on the priority list. Gaining some high level information on each of the potential actions, will be helpful at this stage, focusing on:

• Costs
• Benefits
• Lead time

With this information to hand, it should be possible to create an overall action plan that commits to key initiatives immediately and holds others ‘in reserve’ for deployment in the future, if triggered by specific market developments.

Step 5: Revisit & refine

Scenarios should be communicated and used across the business – and revisited over time. This may happen naturally, or you might need to schedule check-ins to consider whether certain scenarios are becoming more likely or threatening, and whether trigger points have been hit which require pre-agreed actions to be brought into play. You might also be able to refine and develop the scenarios, as time passes and more information comes to light on how key trends are unfolding.

The need for agility

Ultimately, scenario planning is about increasing agility. By thinking proactively about the future, and creating action plans in advance, a business is able to act decisively and at the right time.

Agility requires flexibility, but this can be helped by process. The five step scenario planning process outlined above should help provide this, allowing your business to prepare for the future efficiently and effectively. White Space Strategy’s scenario planning workshop template can also help with this – it’s available as a free download on Whiteboard and includes a full pack of workshopping resources that can be used ‘drag-and-drop’ by any organisation.

If you’re looking for external support, White Space Strategy has a huge amount of scenario planning expertise to draw on. Our workshop facilitators, strategists and digital design partners have worked with many of the world’s leading companies, helping them imagine the future and plan ahead for all eventualities. For more information, contact Managing Director John Bee on john.bee@whitespacestrategy.com.

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