How to Use Scenario Planning to Develop an Adaptive Mindset

The last couple of years have been challenging to say the least! As business owners we have had to manage in an everchanging world and constantly adapt and learn how to move forward in unpredictable times. Having worked as a disruption specialist over a number of years, I wanted to put together some valuable insights gleaned from my work in this area, and so I created this series of 4 blogs.

The series covers off 4 areas:

• How to accept what’s not in your control and embrace ambiguity
• Develop your resilience and mental toughness for success
• Develop your creative thinking to open your mind to new ideas
• Use scenario planning to imagine what the future could look like

So, in this fourth and final blog, I explain how you can use the discipline of scenario planning to analyse and challenge your assumptions, imagine the possibilities and build a more robust business.

Reframe Your Brain

You probably believe that scenario planning isn’t for you, right?

There are so many strategies and techniques that try to promise some sense of certainty. However, the world is changing rapidly, and what might seem certain today may not be tomorrow. But that doesn’t mean it’s not worth practicing scenario planning principles.

It requires you to reframe the desired outcome. Instead of looking for certainty, allow yourself to develop an adaptive mindset, unlock your creativity, and become comfortable with ambiguity. You’ll find these traits can provide greater rewards to you as a business owner.

Failure Is An Option

In business, it’s vital to be comfortable with not being certain.

A great way to gain confidence in accepting that not everything you do will succeed and that failure is an option, is by starting small. Making changes doesn’t mean you have to swing for the fences. You can start small and experiment. Learn what’s working and what’s not. Then start over with the lessons you’ve learned. Take the time to involve your community, prospects, and existing clients early in the process to help with testing, giving feedback and validating your ideas.

Domino’s Pizza used the practice of scenario planning to generate ideas and reinvent itself back in 2010. They understood why customers chose competitors as well as what these companies weren’t doing to satisfy their needs. So they tried different ideas. Some worked, such as letting people know what stage in the cooking process the pizza was at. Some didn’t, like delivering food by drone. More importantly, they understood how to use scenario planning principles and lead the charge to disrupt the market. The company became the largest pizza chain, and other franchises played catchup to them.

“In a world of hyper-competition and nonstop disruption, playing it safe is the riskiest course of all.”

• Patrick Doyle, former CEO of Domino’s Pizza

The World Continues To Change

You might be wondering how you can increase your capacity to adapt to a world of accelerated change. After all, look at where we are presently. Just a handful of topics getting discussed include inequality, technological disruption, social injustice, and climate change.

Not to mention the devastating impact of COVID on businesses. There are rolling outbreaks, which can impact worker shortages, supply chain issues and changes in both customer behaviour and spending habits. Then of course you have the great resignation (will this happen or not?) and negotiating hybrid workplace models. The European Union wants to separate from free markets and embrace industrial policy and strategic autonomy and then as attention turns to climate change, carbon taxes will play a more prominent role as more organisations attempt to reach their net-zero obligations, not to mention ESG ratings. And let’s not forget that the world’s biggest tech companies are now twice as big as they were five years ago – some even acting like they are above the law. All as China ready’s itself for a post-American age. Oh and did someone say Metaverse, Facebook has already invested $10 billion dollars into Meta.

It’s a total head spin right? Which is why having an adaptative mindset is so important right now – the world is going through momentous change.

What Is Scenario Planning?

If you’re unfamiliar with the concept of scenario planning, it’s the practice of making assumptions about the future of your business in a variety of circumstances. It allows you to analyse the impact of your decisions as well as the influence of external factors.

Scenario planning frameworks allow you to have one foot in today and another in tomorrow. You can better see the bigger picture and keep up with this ever-changing world.

“Rome wasn’t built in a day, but they were laying bricks every hour. You don’t have to build everything you want today, just lay a brick.”

• James Clear

Becoming a strategic thinker with an adaptive mindset requires exercise.

You don’t need to lift any dumbbells. You just have to flex your strategic thinking muscles by taking a moment away from the day-to-day operations and having a closer look at the bigger picture.

It’s more than just reviewing your strategic goals. You need to have your finger on the pulse of what is happening in the world, your industry, and your markets.

Look for emerging trends and keep your eyes open.

Question any assumptions about how the market operates. For example, what is one aspect that seems to happen like clockwork? Is this something your company would be impacted by if it was disrupted? Are you in a position to be the disrupter?

Take Action!

“The best time to plant a tree was 20 years ago. The second best time is now.”

Deeply adaptative minds are indeed created through scenario planning. It starts by recognising that much in the world is too complex to be predictable and only parts of this system can be seen or influenced.

It can be difficult to accept these complexities. But scenario planning helps by shifting your sense of time. A brief glimpse into the future makes you realise that you need to start by imagining various realities that you can interrogate, plan, and respond to when the time is right.

You don’t need to overthink the process. You can start with:

• Challenge – start by identifying an obstacle

• Question – overanalyse and outline various scenarios

• Simplify – create a solution down to its simplest form

• Act – launch your answer and see what happens

Now Try This!

Choose a date in the longer-term future. Let’s say ten years ahead and imagine the world. Consider the external environment and don’t forget to think globally and locally.

Consider:

Most likely – in this scenario trends unfold according to our best estimates

Optimistic – this is the dream scenario where everything is good

Pessimistic – In this scenario everything goes against us – for many this would be the pandemic scenario!

When you have jotted down a few thoughts on the above, consider how your organisation fits in the environment that you have imagined.

Defining a future no one can see requires radical imagination, which is why scenario planning is a beneficial exercise. You’ll unlock your creativity. You’ll become comfortable with ambiguity. You’ll gain the courage to analyse your own assumptions and understand how they might actually be wrong. Most importantly, it will help you develop an adaptive mindset that can help you prepare for a world filled with uncertainty. You don’t need unlimited resources or disciplined methods. You just need to shift your behaviour, think from short term to long term, and use your creativity to imagine all the possibilities.