By Johannes Gabriel & Liana Lim Hinch
What will the post-COVID recovery look like? How will the government and the private sector deal with rapidly mounting debts? What will it take to restore consumer confidence (and demand)? Is another Great Depression inevitable?
For these and many other questions related to the future, there are no definitive answers because we cannot know the future. Yet, businesses have to make decisions today that will increase their chance of survival and success in the future, despite unprecedented uncertainties and turbulence ahead. During a crisis, it is easier to react rather than to anticipate, to blame the external environment rather than to understand the changes happening around us, and to rely on our mental maps rather than on foresight and vision. Whereas in the past, businesses thought about the future in terms of opportunities, today, many think about the future in terms of risks and fears. It does not have to be like this. There is a way to systematically get back into the driver's seat.
Strategic foresight is a systematic way to approach the future as a space of multiple possibilities that are impossible to predict with certainty. Think of strategic foresight as a toolbox of methodologies and techniques to navigate this space of uncertainty. One of the most versatile instruments in the toolbox is scenario planning. Scenario planning has been used by many corporations and organizations around the world (Fortune 500 companies, the Government of Singapore, Germany's Ministry of Foreign Affairs, among others) to anticipate, make sense of, and plan for a range of possible futures in a disciplined and systematic manner, giving them the ability to recognize and react before sudden changes are happening—and maybe even before their competitors.
Scenarios are plausible thought experiments about alternative future trajectories, including those that might not seem very probable from today's perspective (see illustration). Unlike forecasts, scenarios do not aim to predict the future. Rather, they are designed to challenge our assumptions and mental maps, enhance our ability to perceive and interpret change, and develop a tolerance for working with uncertainty, ambiguity, and complexity. Most importantly, scenario planning helps to break the habit of assuming that the future will look much like the present or the past
Scenario planning is a structured group process that brings together people from all parts of the organization to approach an important strategic question (e.g., "How could digitalization change our business in the coming years?"). There are many variations of scenario planning, but the general set-up is always very similar: 10-15 key decision-makers are guided by an expert facilitator using foresight methodologies in a workshop format. Together they analyze the broader business environment to identify relevant trends and critical uncertainties—these are factors that are very impactful but hard to predict. These factors form the basis to construct raw scenarios that are internally consistent but based on very different sets of assumptions about the future. These raw scenarios are turned into complete narratives of the future through various creative and analytic techniques to reveal underlying dynamics and significant drivers. Using these scenarios, you can stress-test your existing strategies or create new, more robust strategies that can withstand various future developments. Does this sound like too much effort? Scenario planning made Shell the best-performing oil company during the oil crisis in the 1970s (just Google it).
Dr. Johannes Gabriel is Founder and Managing Director of Foresight Intelligence and Liana Lim Hinch is Foresight Intelligence Indonesia Lead and corporate governance specialist. Foresight Intelligence is an organizational consultancy focusing on empowering organizations to manage strategic issues while coping with complex environments and uncertain futures.