Lance Mortlock has spent his career working in the strategy space. Early on, he was part of a team at Shell looking into its planning processes, which gave him exposure to one of the imminent leaders in scenario planning. Shell took military planning to the next level in terms of utilizing scenario-based planning in the private sector. Mortlock took what he learned from professionals there over the coming decades with new clients all over the world.
What is Scenario-Based Planning?
In simple terms, scenario-based planning is about thinking of different possible futures. It’s not about focusing on what will happen, but rather what could. It’s impossible to accurately forecast the future – the pandemic is a great example of that. Our current circumstances can plan out in different ways, each of which requires a different response and strategy to be successful.
Helping Organizations Plan for Futures Post-Covid
Mortlock says now is a good time for organizations and governments to think about what’s next. Many countries are at the stage of reopening, especially in the developed world. As things more or less return to normal with rising vaccination rates, institutions have a chance to consider what the future holds. With one catastrophe behind us, there is no telling how many more may lie ahead. Preparing in a thoughtful way for these potential outcomes is crucial.
Covid hit supply chains particularly hard, and even as countries reopen many industries continue to be impacted by shortages and delays upstream in manufacturing. Scenario-based planning for the future should include an examination of supply chains and other business-critical operations, and how to make them more disaster-proof.
Rise of Remote and Hybrid Work
There are three scenarios according to Mortlock that impact the working model of the majority of companies in the world:
- The pandemic is evasive and continues to be a threat with the emergence of new variants, causing remote work to become a more permanent solution.
- Vaccination programs are successful and occur at a fast enough rate to combat mutations in the virus, allowing people to return to offices sooner than expected.
- Despite mostly beating the pandemic, society has fundamentally changed and people and companies have realized that remote and hybrid work has benefits and should be supported long term.
Current events suggest that the third scenario is the most likely. Many companies have adopted permanent hybrid models based on data showing little to no drop in productivity from employees over the past year.
Planning for an AI-Driven Future
Traditionally, AI has been used in operational processes, but what we are now seeing is its use in strategic processes. Companies have more data than ever before, and making sense of it is the challenge that AI is built to answer.
Investment bankers use AI to make decisions about highly complex rapid transactions. The United States Government uses machine learning models to predict hurricane landfalls. The list goes on – computer models are everywhere, and they are our best tools for understanding and making decisions about a world full of information.
Simple Steps for Scenario-Based Planning
- Define the scope. What is your company trying to achieve through scenario planning? Think about who you want to involve in this.
- Do the research. This involves exploring the internal and external environment.
- Analyze the trends. Understand what the research is telling you. What are the risks and the uncertainties?
- Build the scenarios. Use the research and trends to determine what possible futures there could be for your company. This includes the signals that you want to watch for which will let you know which scenario you’re in.
- Stress test your strategy against each scenario.
- Monitor what’s going on in the world so that when a scenario plays out, you’re ready for that, and more importantly your strategy is ready to pivot.
These six steps should help any company, from a non-profit to a large-scale corporation, with succession planning.
Three Types of Knowledge for Succession Planning
Mortlock describes three different types of knowledge that play a role in scenario-based planning. Planning for the future has to involve thinking outside our comfort zone.
Things you know you know
We draw on our memories and knowledge of the past to come up with plausible scenarios for the future- scenarios that we can imagine occurring with reasonable certainty. These are easy enough to plan for because they’ve usually happened before. Natural disasters are an example of this.
Things you know you don’t know
Emerging frontiers like machine learning, technological advancements etc. are all areas where we know that things will change dramatically, but we aren’t sure exactly how. Scenario-planning for these events involves some creativity, but the groundwork already exists to push our planning in the right direction.
Things you don’t know you don’t know
Before 2020, nobody could have conceived that a pandemic would force large swaths of the population to spend months at home. There was nothing to prepare us for such an outcome because we hadn’t lived through anything like it before. These are the hardest scenarios to plan for, but are the most crucial to create a viable business strategy.
The Right Amount of Planning
Aim to flesh out 2-4 scenarios in depth. More than that becomes unwieldy and distracting. Even then, businesses cannot build shock absorbers into their strategy for every potential outcome. There is a delicate balance between being prepared for the future and capitalizing on the current climate. The role of leadership and management teams is to determine what that balance looks like for their institution.
Mortlock also emphasizes how important it is to look at both the possible upsides as well as the downsides in scenario-based planning. Risk mitigation is important, but maximizing potential profit is a requirement to growing a business and making it successful in the long-term. His final piece of advice is this: don’t be overwhelmed by future thinking. The process can be scaled down to fit a smaller business. Pick the steps that make the most sense to you and start with those. This will help you disaster-proof your organization