How scenarios can help your business deal with uncertainty
I’m working with a few business owners at the moment to help them grow their businesses.
In the planning stage, there’s often a “gap” in the middle.
They tell me that the medium-term is hard to plan for, because that’s where the unknowns are. A good long-term vision is flowing, attractive and compelling. And all business owners can tell you about their most immediate priorities. But the medium-term is full of “What happens if…?”
I usually recommend a straight-forward form of “scenario planning” for the medium-term. Invented by Shell as a way of dealing with the volatility of the oil-price in the 70′s, scenario planning gives you some alternative baselines, so you can plan for those “what happens if…” questions. For example:
- What happens if the oil price goes through the roof – do you bring on new fields or prioritise existing ones?
- What happens if the oil price takes a dive – do you look for new markets or restrict supply?
- What happens if the oil price stays the same?
Find your own business’ equivalent of the oil price and sketch out a few likely scenarios. Then ask the “what happens if…” questions and add the choices you might need to take to your plan.
Then you know what needs to be done right away, you’ve got a compelling vision of where you want to get to and, whichever way things go in the medium-term, you’ve got some plans in place to deal with it.
Fail to plan; plan to fail