Miami Vistage Fall Summit 

Topic: Scenario Planning in Erratic Times

The higher the uncertainty about the future, the more business leaders need to think strategically. It’s simple: if everything is known, all that is required is disciplined execution day after day. If key elements about the future are not that clear, then executives need to pause and think a bit about what their next best move should be.

Looking towards the next few years, we see a long tail COVID epidemic that brings with it labor volatility, inflation, and a logistical quagmire. We are also faced with unprecedented acceleration in automation and digital transformation – the quest for near-zero-marginal cost – with the lowest cost player emerging as the winner that takes all. Barely do we have our heads wrapped around digital transformation to now be confronted with Web3 which is a decentralized online ecosystem based on blockchain. Platforms and apps built on Web3 won’t be owned by a central gatekeeper like Google, Amazon or Meta, but rather by users, who will earn their ownership stake by helping to develop and maintain the services.

To plan for company growth in this future, Gideon discusses how to overcome the barriers to thinking expansively and then work through the process of scenario planning to define multiple plausible futures. Scenario planning is best done with the executive team of a company and the various uncertainties that may impact the company are defined. The most critical uncertainties become the axis for developing four scenarios. From these scenarios, opportunities and risks are identified.

The mathematics of this planning method is straight forward: If an opportunity is profitable and doable in all four scenarios, the odds of it failing are very low. If, on the other hand, an option will only work in one scenario, it is a high-risk bet, and probably avoided.

Scenario Planning helps executives to rationally choose their strategic focus areas. We all know that trying to do a hundred things leads to mediocre results. But once management has confidence – and courage – to focus their efforts and resources on a few strategic plays, company performance tends to exceed expectations. Scenario planning is the tool to define what the focus areas are that have the highest probability of success.

Value to Member: The scenario planning framework helps members organize the context within which they have to manage, and provides a sound basis to choose critical levers for growing the company. Members also gain greater understanding of the macro forces and developments that directly impact their business in future.