Scenario Planning Back in Fashion
Developing Robust Strategy with ‘Wild Card’ Scenarios
by Idris Mootee
Every executive wants to know what the future will be like or what will likely to happen to their industry and what the most disruptive forces are that will impact their bottom line or even survival. That’s why we use ‘Wild Card’ to paint scenarios. Wild card scenarios are in theory, things that are not likely to happen, but most likely to create the highest impact and disruption should they occur. The idea of wild card scenarios is not to predict or calculate which scenario will occur, but to identify, where possible, important surprises that could occur.
I wonder how many banks had the current financial crisis as part of their wild card scenario. Did someone paint this scenario in advance of the actual financial crisis? Or did anyone ever paint a scenario of an African American US President the last 20 years? Or the influence of social networks? Any good forecasters and long-range planners recognize that there are innumerable plausible futures to consider in any industry context. No finite set of future scenarios can ever hope to completely cover all possible surprises. You can develop a set of wild cards, but might be missing the ‘wild wild cards’. So how do we do this? Here’s a 5-minute crash course.
The art of generating scenarios must include assumptions about what will (and won’t) occur – what trends are likely to continue, what changes are likely to occur, what events are not likely to take place, etc. From a small, reasoned set of assumptions, a set of scenarios can be developed to address the remaining uncertainties and can be used for their intended purposes. Whether you apply it in the media industry or auto industry, it is by nature a strategic creative exercise. In the long range planning arena, assumption-based scenario exercise is basically built on the notion that a set of wild card scenarios should be developed for purposes of making more robust the plans that have been developed. It is a mechanism to test your strategic plan. Those plans have made assumptions about the future, not all of which are certain to come depending on many external factors.
The number one purpose of the wild card scenarios is to help strategic planners develop signposts for indicating that an assumption is being violated, shaping actions to keep the assumption from failing (to the extent possible), and hedging actions to prepare the organization in the event an assumption fails. Remember that wild card scenarios are highly unlikely to happen. But, what makes a wild card scenario useful is when the future it describes would produce disproportionately dire consequences. The classical case of an unlikely scenario with dire consequences is H1N1 pandemic virus mutates into a ‘Superbug’ and killing millions of people. The combination of its extreme unlikelihood and horrific consequences make its risk worth worrying about and planning for. It is not a dry academic exercise but an effective way to plan for the future. Most people don’t realize there is an opportunity side of the equation, and that these exercises usually help unfold a lot of new opportunities too. So it is not only for planning for the big disasters.
According to Meyer and Miller:
- The world moves into the future as a result of decisions (or the lack of decisions), not as result of plans
- All decisions involve the evaluation of alternative images of the future, and the selection of the most highly valued offeasible alternatives
- Evaluation and decisions are influenced by the degree of uncertainty associated with expected consequences
- The products of planning should be designed to increase the chance of making better decisions the result of planning is some form of communication with decision makers
Idris Mootee is the CEO of idea couture, a strategic innovation and experience design firm. He is the author of four books, tens of published articles, and a frequent speaker at business conferences and executive retreats.
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