How can you today in Lebanon build a strategic plan for your company if you don’t have certainty about the future? what should Lebanese retailers, Mall owners, industrials, distributors and services providers do in the wake of the systemic shifts in the economy post-crisis?
That’s like laying the foundations of your house on a ground that might move or shift in any direction as you move towards the future.
The reality is that today every Lebanese organization is finding extreme difficulties in formulating what should be their next decision and what will the future holds.
Shall we continue to wait & see? Will our business shrink? Should we start looking into alternatives & substitutes? Which ones? What could be the legal & financial restrictions impacts? Etc.
We all normally agree that decision making should be based more on data and analysis than simple intuition and gut feelings. But there are two problems here: First, data and information will be difficult to gather as things change by the hour. Second, in the current country turmoils, previous data will tell us more about the past but gives us absolutely no indication about the future.
Make it Plausible with Scenario Planning.
Scenario Planning is not about predicting the future in a crystal ball but making assumptions on what the future is going to be and how your business environment will change overtime in light of that future. Scenario Planning 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.
Among the many tools a manager can use for strategic planning, scenario planning stands out for its ability to capture a whole range of possibilities in rich detail. By identifying basic trends and uncertainties, management can construct a series of scenarios that will help to compensate for the usual errors in decision making — Low or overconfidence and tunnel vision.
The issue could be a narrow one: whether to make a particular investment, for example, Should a supermarket put millions into more out-of-town megastores and their attendant car parks, or should it invest in secure websites and a fleet of vans to make door-to-door deliveries?
Farmers use scenarios to predict whether the harvest will be good or bad, depending on the weather. It helps them forecast their sales but also their future investments. The scenarios that Royal Dutch/Shell used to anticipate the drop in oil prices in 1986. The scenarios a major computer manufacturer used to navigate its transition from products to services. The scenarios Xerox used to anticipate the convergence of the copier and printer or American Express used to deal with the replacement of traveler's checks by credit cards. Each organization needs its own scenarios to face its own challenges.
Other well known examples include when blue chip companies explored the end of the Berlin Wall, OPEC oil price rises, bombs and terrorist attacks. Asking the great What if? helps Identifying risk and opportunities that could arise from such events puts companies in a better situation to adapt & thrive.
So how to use scenario planning?
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As you can see from the above illustration, scenario development process holds 4 critical steps. After identifying the driving forces and critical uncertainties for the months or years to come, the objectives is to develop 4 distinct scenarios that are most likely to happen. The best way to perform all of these steps is to organize workshops during which all the participants brainstorm together, it will help you find creative solutions.
The process to create scenarios is to:
- Identify your driving forces: To start, we discuss what are going to be the big shifts in society, economics, technology and politics in the future and see how it will affect your company.
- Identify your critical uncertainties: Once we have identified your driving forces and made it a list, pick up only two (those that have the most impact on your business). For example, two of the most important uncertainties for agribusiness companies are food prices and weather forecast.
- Develop a range of plausible scenarios: The goal is now to form a kind of matrix with your two critical uncertainties. Depending on what direction each of the uncertainties will take, we are able to draw four possible scenarios for the future.
- Discuss the implications: During this final step, we discuss the various implications and impacts of each scenario and start to reconsider your strategy: set your mission and your goals while taking into account every scenario.
It sounds simple, however, building this set of assumptions is probably the best thing you can ever do to help guide your organization in the long term.
If you're interested in learning more about how to do scenario planning, how to get alignment on your strategic plan, or learn how to lead your team through the process with our help, do contact us today!
Joe Ayoub- brandcell consulting