What is Scenario Planning and How to Use It
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It aims to define your critical uncertainties and develop plausible scenarios in order to discuss the impacts and the responses to give for each one of them. If you are aware of what could happen, you are more likely to deal with what will happen.
It involves identifying a specific set of uncertainties, different “realities” of what might happen in the future of your business.
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Uncertainty is always there. The degree of uncertainty can rise and fall.
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During periods of heightened uncertainty, leaders reflexively reduce investment, stop hiring, slash marketing, refrain from entering new markets, or stop making decisions.
Although understandable, acting in a pro-cyclical manner can be counterproductive. It can leave companies poorly positioned to benefit from the next stage of the cycle.
Organizations should be inclined toward action. As a baseline, companies must strive to be fit for growth. This can be done by aligning costs with priorities and strategy, investing in varied capabilities, and using traditional and digital levers to execute.
They must regularly engage in scenario planning with an array of options. They must build the capacity to be agile. They must learn to become more resilient to withstand strong external forces and quickly recover from setbacks.
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Managers who can expand their imaginations to see a wider range of possible futures will be much better positioned to take advantage of the unexpected opportunities that appear.
“Most executives cannot articulate the objective, scope, and advantage of their business in a simple statement. If..."
An executive needs those she leads to translate strategic insights into choices that drive results. For people to commit to carrying out an executive’s strategic thinking, they have to both understand and believe in it. But repeated explanations don’t necessarily increase people’s understanding and ownership of strategy. Making them discuss the pros and cons of it make it so the problem is better understood and flaws are identified and fixed increasing ownership for success.
When someone is promoted into a function that requires strategic leadership it’s easy to spend time fixing what was wrong in their previous function but that often isn’t what the strategic leadership position requires. So, identify the strategic requirements of your job and focus on them.
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