HOW TO MAKE YOURSELF FUTUREPROOF
Build Scenarios and never be surprised in your life
Have you ever heard of a PDB? I am sure most people have not. PDB is the president’s daily brief handed over to the president of the United States of America as it contains the potent information regarding the immediate future. This information is obtained and distilled by the most capable experts in America to predict what could happen in the next 24 hours for the thoughtful consideration of the President of the USA to craft the foreign Policy. Now one must say that future is uncertain and not known by any human being but having some thoughtful and analyzed information is certainly better than its alternative which is not knowing anything at all.
Everyone wants to know what could happen in the next moment. People do all sorts of unbelievable things to have a glimpse of the future. Armies run reconnaissance missions against their foes to find out about their enemies, football coaches run scouting trips to determine what strategy the next opponent is going to use and presidential candidates do all sorts of dirty maneuvers to gain leverage on their opposite candidates.
These efforts are all measures that are derived from a strategic skill named SCENARIO ANALYSIS. First used in the 1960s, Scenario Analysis is a technique to stretch your thinking, analyze the possible events and prepare yourself for these scenarios. In the business world, uncertainty means risk, and risk costs money. Businesses seek to reduce uncertainty to reduce risk and the costs of doing business. The question of what the future holds is often the most important question for everyone, especially for a CEO of a company and for various levels of the company executives. It’s often an important question in our personal lives, too. Anyone who faces competitive or challenging situations in life has a desire to seek what might happen next.
Scenario planning has three basic objectives. The first objective is to generate projects and decisions that are more robust under a variety of different futures. The notion of more robust projects and decisions is truly elegant rather than measuring a proposal against the best possible, it weighs up against all the possible scenarios because there is no best possible scenario, every scenario holds equal importance.
The second objective is to improve the quality of thinking about the future. Helping people develop multi-dimensional thinking instead of taking a linear approach. It forces us to consider possibilities that we might otherwise dismiss.
The third objective is to deepen and enrich the way people interpret the information around them in a way that differs from the common mentality. High-stakes jobs only provide rare opportunities which could either make or break futures. It takes courage to challenge the common wisdom and think the unthinkable.
Process of the Scenario Planning
- First, identify the issue and its roots. You always play with the cards you get but what’s the play here and why? What is it that you want to do? The mission statement and goals of the corporation or individual drive the first step.
- Define your success. Which indicators would establish success? Which environmental factors can influence your progress such as competitors, and stakeholders, and identify the players in the scenario.
- What are the driving forces in the macro-environment that influenced the key factors identified earlier? It includes factors like demographic shifts, industry growth, technology, progress, and activity of competitors
- The next step is to rank the factors and forces by impact against the uncertainty.
- Build Scenarios and check the operability of the environmental factors. An easy way is to plot a 2x2 matrix with uncertainty, high or low, and impact with high and low.
- Add more details, complete the pieces of the puzzle and you have a narrative. But remember, you are telling a story.
- Determine the implication of the scenario on the focal issue.
The last step is where the future is rehearsed. Evaluate your decisions in each scenario within the 2x2 matrix. After the selection of indicators, one can see events unfolding and also the course history is taking.
Shell is one of the companies which have implemented this strategy and continues to do it to this day. The first major test of the Shell scenario planning process came in the early 1970s. The question to be considered as the price of oil, which is their core business, the company developed six scenarios initially, one of which was counterintuitive at the time. It became known as the crisis scenario in which the oil-producing countries ceased producing oil at a rate that was unprofitable to those controlling the supply. This scenario was predicted, and unfolded in 1973, with oil shock and the Arab embargo, everyone else was surprised as a result, the shell was more prepared than any other company to deal with the crisis and has already thought through its implications beforehand. Subsequently, shell consistently bettered other oil companies.
Big organizations such as Armies and MNCs use this technique but it can be used on an individual and personal level as well. Young people entering the workforce benefit tremendously from rehearsing their job interviews in advance, to equip themselves with the skills necessary to answer questions. No matter if the questions in the real interview differ from the ones you prepared in a mock interview but it certainly gives a competitive edge to the interviewer, after he contemplates several different answers to different questions. It gets you thinking in the right direction. It also chalks out the steps necessary for the preparation and other aspects leading up to the interview.
Uncertainties are impossible to read. Nobody knows what lies ahead. The best example is the recent pandemic, but this also stresses the importance of scenario planning even more and how crucial it could be to equip yourself with the tools required for a safe and slightly predictable future.
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