How scenario planning informs strategy

How scenario planning informs strategy

Many organisations still don’t employ scenario planning to explore alternative futures, articulate risks and inform strategy. The following simple and topical example was recently created for a business school programme on risk management, but it has wider application and deserves to be shared with the SAMI community.

The policy challenge shared by many national governments concerns the binary choice between maintaining restrictions on individual freedom and re-energising a stalled economy. Too much public health focus and the economy suffers, but too much economic stimulus and public health is at risk. Getting the balance right in terms of degree and timing is a problem for politicians.

As with all scenario planning diagrams the trick is to identify and apply the most useful dimensions to plot as ‘x’ and ‘y’ axes for the matrix to have value. In this case we chose for the ‘x’ axis the speed with which the virus (irrespective of mutation or strain) will spread: simply a continuum from slow to fast. Conversely the ‘y’ axis uses the degree of public restriction set as law by the government from high to low. The lowest being complete relaxation of any controls on public life.

This produces a model as shown from which it is clear that the more desirable political outcomes are to be found in either top right or bottom left. Conversely the least desirable outcomes fall in the top left and bottom right.

The challenge for policy makers is to identify the levers to engineer a favourable outcome, but that requires a consensus view on whether the virus is spreading fast or not. In the UK some believe it is fast based on daily infections recorded, while others believe it is slow based on recorded deaths. Only time will tell which is the correct interpretation. Nevertheless, the model is a good start point and demonstrates how articulating four alternative futures can inform strategy.

The model demonstrates the need to keep the balance between the two dimensions, neither relaxing control too quickly, nor maintaining it too long. It emphasises the need for “data not dates” and the dangers of making commitments too early.

There may also be opportunities for mitigating the two unfavourable scenarios.  Public frustration can be managed to a degree by clear communication, with an emphasis on “an abundance of caution”.  In practice it seems that the public are, on average, more cautious than the Government and its back-benchers.

The risks of a higher death rate are reduced by the roll-out of the vaccine, so accelerating its deployment as fast as possible is clearly a sound strategy.

Written by Garry Honey, SAMI Associate and founder of Chiron Risk 

The views expressed are those of the author(s) and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

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Image by Bruno /Germany from Pixabay

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