Scenario Planning & Stress Testing

What Is Scenario Planning?


As any good Futurist will point out, our futures can never be known with any degree of certainty, given that we live in an age of discontinuity, and particularly so during periods of structural market change. What can be done, however, is to plot out several possible and likely scenarios that may unfold in the future. This allows a business to develop appropriate contingency plans around each of those scenarios. This is known as Scenario Planning.

The aim of Scenario Planning is not to create the illusion of any particular scenario as being definitive, but rather to bound the future in a way that permits learning and that drives flexibility and adjustment as our futures actually do unfold.

Because we believe this is such an important and useful tool for securing the future health and relevance of a business, we undertake Scenario Planning for clients in the context of emerging market trends.

The Process


Using what is known from Insights Research and general Trend Watching, we map out each of several possible and likely scenarios the future might hold for a business. In each case, we examine the events that would unfold, the implications these would have, what actions your business might take, what would then happen were it successful with those actions, what would likewise happen were it not successful with those actions, and what fall–back plans it should have in place in each case.

We then do three additional things. First, we sort these different scenarios into an ordering based on their likelihood, starting from the most likely and ending with the least likely. Second, we identify those actions that overlap multiple scenarios. These are considered common actions that would be undertaken in each of the affected scenarios, sometimes because of, and sometimes in spite of, the unfolding scenario. Third and finally, we attempt to gather all of the appropriate actions, or some versions thereof, into a final set of recommendations based on the scenarios most likely to occur. This produces what is known as a "bottom–up" strategy.

What IS Stress Testing?


Scenario Planning also allows us to test specific predetermined business strategies against future scenarios. These are known as "top-down" strategies, and the testing process as Stress Testing. In Stress Testing, a particular strategy is evaluated against the future scenarios in order to determine whether or not it might prove viable and robust in light of the associated trends and disruptions.

Because in actuality most strategies will be driven top–down – for a variety of valid reasons – this can prove an immensely useful exercise. Thus we undertake Stress Testing for clients of their proposed top–down business strategies.

The PROCESS


Using what was learned from the Scenario Planning exercise, we examine specific strategies, brands, and offerings to understand how well they will perform when challenged by each scenario. This highlights their strengths and their weaknesses. In each case the questions we seek to answer are to what extent are these strategies future–proof and where are adjustments or complete overhauls required in order to make them as future–proof as possible.

THE ROOTS OF RESPONSIVE GROWTH STRATEGIES


Scenario Planning and Stress Testing – as tools of an overall Responsive Growth Strategy – provide excellent starting points for developing and validating effective innovation–driven growth strategies.

The Engagement


The Scenario Planning & Stress Testing Engagement typically follows these steps:

  1. We begin by listening to you so as to understand your current business strategy and how that plays into emerging markets and trends.
  2. We also examine your organization's disposition toward risk and reward… more conservative or more progressive.   This will impact how it responds to certain scenarios.
  3. We then undertake the Scenario Planning work, identifying and capturing as many likely scenarios as we believe will be pertinent to your situation.   In each case, we look for the common actions.   From this, we prepare for you a formal Future Scenario Assessment Report detailing our insights and recommendations around the potential scenarios.
  4. As desired, we subsequently undertake Stress Testing on whatever strategies, brands, and offerings you choose for assessment.   From this, we prepare for you a formal Stress Test Assessment Report detailing our findings and recommendations for optimally future–proofing these entities.
  5. We then travel to your office and present these insights and recommendations to your leadership team.   We can also lead workshops with any of your staff in order to work these insights and recommendations deeply into their thinking and work.
  6. As desired, we can assist you with additional follow–on work, such as Insights Research or Opportunity Scouting.

To learn more about engaging us for Scenario Planning & Stress Testing.



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