Planning different scenarios gives various businesses the opportunity to exercise for the future and take a peek at the battlefield before the battle actually begins, only to be better prepared. However, it is worth knowing that developing a scenario does not imply predicting the future. Its value consists of the possibility to help companies understand the forces that can affect their future. Practically, all these forces tend to try out their assumptions.
I have noticed that a lot of top notch managers encourage these solutions, whether their businesses are new or not. Pierre Wack may not ring too many bells for a lot of people. But all those who have something to do with the oil industry might be familiar with his management skills over Shell during the ’60s. One day, he has asked the other directors to visualize tomorrow. He encouraged a sophisticated and responsible thinking over the current situation by giving everyone else the chance to understand the changes.
Pierre Wack has basically tried to find out if there are other factors that might make the difference in the oil distribution, aside from the technical availability. He has inventoried the interested parties in the attempt to understand the government implication in the countries with the highest oil production. Will they actually increase the production on a yearly basis? By exploring the changes in governmental politics, the Shell director has managed to understand that it was almost impossible for these governments to still be influenced by the activities of the company. The ball was in their side, so their smartest solution was to reduce the production, but not without increasing costs and maintaining the internal reserves.
The Arabian-Israeli war from the ’70s has clearly limited the oil production, so the costs sky rocketed. Fortunately for Shell, the activity scenario developed by the company has prepared it for such a situation. Believe it or not, Shell has saved billions of dollars, so it jumped from the seventh position on the second one in the chart of the most profitable companies in the oil industry.
In conclusion, I assume that you do not have to be an expert to understand that planning scenarios provides the possibility to administer unsafe elements and risks in a very effective manner. Moreover, such scenarios help companies understand the business dynamics, identify new future opportunities, evaluate strategical options and make long term decisions.
Plan a potential business scenario in the smallest details
It is crucial to remember that a scenario is not a prediction. Instead, it is used to understand the forces that configure the future. It is completely useless to try understanding how the future will look like. Instead, you need to understand the direction it goes to, as well as the reasons. With this thought in mind, plan and structure the scenario process in very small details. For instance, decide upfront on the people who must be involved in this plan.
Other than that, try to debate more types of potential futures. It sounds hard to believe, but I think that such a job is actually fairly simple. You just have to go back on the line in the vision of a potential future and make slight changes. It is very important to develop such scenarios in the smallest details. Therefore, you will most likely end up with a series of different possibilities.
Finally, do not forget to analyse the new scenarios and ask yourself a few basic questions.
- What are the main reasons wherefore your scenarios might become reality?
- What would you do if all those things would actually happen?
Use these thoughts to model your decisions and priorities.