Planning for the future? Of course you are. We all are. But a solid plan needs to be based on a vision of how the future might change. How solid is your vision?
Most organizations rely on projections or forecasts to try and get a handle on the way things will develop in the future. Concocting plans based on a forecast may be fine in the short term, but if you’re crafting a strategy meant to assure your competitiveness five or ten years from now, forecasts and projections may actually be dangerous.
Why? Because projections paint a picture of the future as if it will be a variant of the way things already are today. You take the current numbers, tweak them a bit, and – hey presto! – you’ve got a picture of the future terrain. Or you think you have, and that’s the problem. By projecting growth rates, prices, exchange rates, etc., your focus is on the details, whereas it is probably bigger and broader trends – so-called ”driving forces” – that will actually affect you more profoundly.
Think about it. Is your long-term future success more likely to be affected by exchange rate movements, or by political developments, societal changes, technological innovations, or shifting consumer behaviour? For most companies, these are the changes that will have a real impact, yet in the typical 3-year forecast, such big-picture developments are often ignored.
So is there a way to discern the future lay of the land, given these changes? A fascinating approach is called scenario planning. This structured process helps you identify the most critical uncertainties your organization will face – the ones that could be make-or-break factors for you in the long run. By imagining how they might play out, you generate a range of different ”scenarios”, alternative ways your business environment could plausibly develop.
Unfortunately, even though its logic helps you visualise different futures, scenario planning can’t tell you what will actually happen. It is not a tool for predicting the future but rather for exploring it: what could happen in your future business environment? A thorough scenario generation session can open your eyes to new ideas about your future competitive environment. You can then see that different future landscapes will present different opportunities and threats, and you can ask yourself about your readiness to compete in these landscapes:
• How would you best differentiate yourself in each scenario?
• What challenges would you face in these landscapes? Can you already prepare your company now?
• What financial, marketing, operational, or human resources policies would serve you best in each scenario? How much would they cost to implement?
Thinking about the future in terms of alternative landscapes means you can make better strategic decisions today and more of them. But scenario planning is also a leadership tool. If you want to make ambitious plans, you need to convince your colleagues (and your Board) to support your vision of the future. This means you need to demonstrate that you’ve anticipated the changes that could emerge in your landscape. Scenario planning lets you do just that. More information: www.11changes.com
Woody Wade is the author of Scenario Planning, A field guide to the future. He is also a futures coach and speaker (email@example.com)