Predicting the future is out. Surfacing multiple possible futures is in. In a world where uncertainty and volatility have become the norm, traditional forecasting methods are not enough to plan for the future. A better approach is to engage in scenario planning. Think of it as adopting a multiverse mindset for your company.
We’ve had many conversations recently about the complexity of the world and the challenges people face in navigating it. Investors see risk from places they thought were safe. Regulatory teams find politics shifting too fast to adapt. CEOs are encountering internal and external tensions with their stakeholders that are too complicated to navigate.
We live in a time of VUCA: Volatility, Uncertainty, Complexity, and Ambiguity. The term was originally coined by the US Army War College as a way to describe the increasingly complex and uncertain global environment that emerged after the end of the Cold War. Take that geopolitical shift and add radical changes in technology and information to the mix, and you get the supercharged volatility of our current times.
Leading in any era requires planning for the future. While forecasting relies on historical data to make predictions about future events, scenario planning allows a company to create multiple plausible scenarios of the future based on a range of different assumptions. This flexibility can be invaluable in times of volatility, making scenario planning more valuable than forecasting in the world of today.
An expansive approach to scenario planning should consider:
By opening the aperture, companies can identify potential risks and opportunities that they may not have considered otherwise. This approach puts a premium on surfacing new possibilities and seeing the trends that lie beneath the surface. At Penta, we use our technology to identify the low mass, high velocity ideas that will be tomorrow’s trend. By quickly surfacing these ideas, we can turbo-charge a scenario planning process to really pressure test a company’s ability to adapt and respond in the future.
Predicting the future has always been an impossible exercise, but in the current environment, the challenge is less a forecasting failure than a failure of imagination. Fortunately, the same tools that are accelerating change can also be used to navigate that change.