Strategic Scenario Planning Best Practices that Work

Strategic Scenario Planning
Creating multiple strategic scenarios during strategy retreat facilitation is a great way to envision, prepare for, and thrive in both possible and probable futures. The strategic scenario planning process can give you alternative windows into the future of your marketplace and provide a viable roadmap for making strategic decisions that can sidestep risks and leverage unexpected opportunities for growth.

The Key
The key to effective strategic scenario planning is twofold: customization and purpose. The scenarios need to reflect your specific business context and include your specific challenges. You also need to consider the point of the exercise.

• What is the purpose?
• Are you looking to prepare for unwelcome and unexpected events like a pandemic?
• Or are you predicting the viability and desirability of a product still in development?

Strategic Scenario Planning Best Practices in Seven Steps
The process can be broken down in two major phases: choosing which stories to tell and actually telling the story. At first, your thinking will be broad and encompass a variety of ideas. Later, your strategic thinking should converge on prioritizing, drawing implications from the scenarios chosen, and summarizing the results into meaningful strategies for action.

1. Main Strategic Issue
   Decide first on the focal issue. What problem are you trying to solve?  What question are you trying to asnwer?

   This can be either specific or open-ended. For example, is the issue a matter of which product deserves a major investment of resources or whether you need to completely shift from a product to a services operation?

2. Key Strategic Influences and External Factors
   Next, brainstorm as many factors as you can that could affect your main issue. Such factors could include competitors, regulations, suppliers, customer demands, supply chains, and other items that would be listed in a typical business plan.

   Then consider what additional forces could have a bearing on your scenario. Everything from an economic downturn to a pandemic should be considered.

3. Find a Strategic Balance
   Once you have created a list of all possible internal and external influences, it’s time to use your experience and judgment to winnow down the list. The scenario team can vote on which of the factors deserve more attention and which of the uncertainties are most likely to play a critical role in your strategic success.
4. Select the Most Strategic Stories
   You can’t possibly examine and explore all the scenarios you first identified — nor should you. Best practices advise that you choose from two to five stories to develop further. Too few and your choices are too limited; too many and the stories are likely to get confused and you could lose focus.

   Remember, the point of this kind of planning is to gain insight into the strategies that can help the organization protect against or take advantage of changes in your marketplace.

5. Tell the Most Strategic Stories
   Think of describing each scenario as a story with a central plot line. If you were a journalist reporting the story, what would your headline be? You may find this step is better handled in breakout sessions with stories assigned to individuals or small teams.

   Ideally each story would outline the current situation, key challenges, implications, and potential actions.

6. Play Out the Most Strategic Stories
   Here’s where you sift out the strategic nuggets — the implications of each scenario and the appropriate strategic options. Are some strategies common to your different stories? Do they seem to have more validity than others?

   These are the ones you should act upon. The more unpredictable should be shelved until they become more certain to play a role.

7. Keep an Ear to the Ground
   Watch for strategic trends and early indicators that lead to one strategic scenario over another. This is where you shift from the imaginary to the real-world. Scenarios are the possible stories; strategies are the actual stories that determine how you interact with and influence each story’s outcome.

The Bottom Line
Strategic scenario planning gives you a tool to survive or take advantage of various contingencies. Use it as the foundation to build strategies that support your future survival and to outperform your peers.

To learn more about creating strategic clarity, download Do You Have a High Performance Organizational Culture to Drive Your Strategy?