Scenario Planning Process

PESTLE, VUCA, SWOT, Inflection point curve and even the 5 forces of framework by Professor Porter are actually strategic business tools which could help you assess your business and/or the business environment as whole. However, in doing the strategic planning process, a strategic practitioner should not only culminate the assessment and analyses here, rather continue to the next step which is the Scenario Planning Process. Doing so will help you anticipate and mitigate risks in the future as well as help you plan at different points and levels to make decisions.

This exercise is simple but helpful. You simply have to create multiple different environment or realities of the future of your business.

  1. Identify the driving forces. You can refer to your PESTLE, VUCA, SWOT and other business tool you probably have used.
  2. Identify critical uncertainties. Depending on the kind of industry, determine the things that you might not know about. Then among the uncertainties list, keep those which you think would really affect your business
  3. Develop Plausible Scenarios. Get the guestimation and creative thinking rolling! Ask how WH scenarios might look like in x number of years? After which, create a scenario planning matrix imagining as if you are there – being transported to the future. With my case studies at school, I normally use the Worst-Business as Usual – Best matrix since its cleaner and easier to fill in, but you can use the X-Y axis too. Note that it may take a lot of brain works if you try to project scenarios in 10++ years.
  4. Discuss Implications and Paths. Try to address challenges so you can make the organisation successful. How will you act on it?
In order to do this well, you have to veritably know the industry you belong to.

You might think that this is rubbish and a waste of time since we are all just making guesses – we don’t know where we are going to be or what is it going to be. Yes, correct, but it’s the science, art and math of putting together long range planning to help mitigate all kinds of risks and be prepared to tackle it. At some point, whether now or in the future, you have to make decisions and doing this process will keep you ahead of the game.

It stirs you closer to reality.

Strategic planning is not all about getting there and hitting the billion dollar target, or tweaking the mission/vision statement. It is about being ready with unexpected realities that might possibly stifle or paralysed the business.

Ian’s Note: Most of the contents here are based on my learnings from Leeds Business School, UK to which I am currently enrolled as an MBA Student. This is merely a synopsis of my understanding. I hope you could learn something out of it too. Love lots and stay safe.

Ever heard of Pestle and Vuca?

Environmental scanning has always been a part of to-dos whenever an organisation does its year Corporate Strategic Planning. This environmental scan determines and identifies the external factors that drive a business or that may drive the business in the future. 

One of the common (if not overused) business analysis tools, perhaps is the two-by-two matrix used to build SWOT, with horizontal pairings of Strengths and Weaknesses; Opportunities and Threats, and how you could then convert your Weaknesses to Strengths; your Threats to Opportunities.

Another tool is the use of Inflection Point Curve where an organisation determines some changes in the environment that may impact the business 10x or more. As believed, if an organisation gets this right, business will reach new heights. If an organisation ignores or neglects the signals, then business might fall to critical decline.

We have probably heard both tools mentioned above during our University days or even from our workplace. I , for one, is writing and illustrating right now based on learning vestiges (at least) from my marketing classes almost a decade ago.

But… what if I tell you that there are actually other more helpful analysis tools I just learned 10 years after? Yes, just now and we are going to learn it together.

PESTLE, a mnemonic, which stands for Political, Economic, Social, Technological, Legal and Environmental Analysis. This framework gives a drone view of the whole macro-environment from many different angles. Other companies call this PESTEL or STEPLE. Whichever way, this tool is a much more comprehensive form of SWOT and it is critical that companies understand the complete depth every letters represent.

VUCA, on the other hand, is actually a military acronym for Volatility, Uncertainty, Complexity and Ambiguity. This framework has been actively and frequently used by civilian business executives and leaders professing that certain elements which make soldiers combat-ready can be applied in the business prairie too. The business idea is simply to be ready for new trends that require rapid transition as our world continues to become more complex, more uncertain and much less predictable – VUCA WORLD.

Both Pestle and Vuca business analysis tools can be utilised in Scenario Planning as part of the strategic planning process. We can tackle this on my next blog post. If you have not explored Pestle or Vuca yet, I really recommend that you give it a good read and research. As of right now, I am currently doing my case studies using these frameworks. It is so much fun!

Ian’s Note: Most of the contents here are based on my learnings from Leeds Business School, UK to which I am currently enrolled as an MBA Student. This is merely a synopsis of my understanding. I hope you could learn something out of it too. Love lots and stay safe.