Scenario Planning for the Pandemic's Aftermath SoC1166 June 2020
May 2020's SoC1154 — Life after the Time of Coronavirus points to the use of scenarios to understand what changes the coronavirus-disease-19 (covid-19) pandemic might bring. But general scenarios fail to address individual strategic and decision-making needs—the individual needs that make every industry and every company within every industry unique. General scenarios offer a coarse outlook that can aid in developing an understanding of the range and magnitude of potential challenges moving forward. But only customized scenario-planning efforts can help decision makers move from gaining awareness of a changing world to preparing for such a world in ways that will enable them to weather the changes and thrive in a new commercial and societal landscape.
Strategic Business Insights' (SBI's) scenario-planning service has a framework that illustrates the steps and requirements of building narratives about potential futures (scenarios) that guide decision makers' thinking and strategy development. In the context of SBI's framework, general scenarios represent overviews that look at axes of uncertainty and related scenarios and therefore tackle only a sliver of decision-making needs. Axes of uncertainty represent the major considerations that pandemic-related scenarios have to take into account. In the context of the covid-19 pandemic, many researchers look at, for instance, the axes of global versus local, economic recovery versus ongoing recession, and health-care challenges versus health-care advances.
SoC1154 discusses the look that futurist Sohail Inayatullah and consultant Peter Black took at how the future might play out. On the basis of the analysis of hundreds of published documents, they developed four distinct future scenarios: a disaster scenario, a respite scenario, a progress scenario, and a gloom scenario. Similarly, a German think tank recently looked at the covid-19 pandemic's effects on the economic and societal landscapes and developed four distinct scenarios: an isolation scenario, a collapse scenario, a tribal-structures scenario, and an adjustment scenario. In the isolation scenario, individuals and countries keep a distance from one another; traveling has become difficult, and participating in public events requires health checks. In the collapse scenario, the coronavirus has caused the world to enter a permanent crisis, and national interests trump global considerations. In the tribal-structures scenario, local economies thrive, and people focus on small circles of friends and family. Finally, in the adjustment scenario, global society is learning from the crisis and emerges strengthened.
These scenarios outline plausible futures that decision makers might have to deal with; however, they represent extreme outcomes, and the actual future will likely be somewhere in between or a mixture of them all to various degrees and within certain ranges. For instance, a world of tribal structures would work for only certain products and services. Seeing how car manufacturing and shipbuilding could become truly local affairs is difficult. And such shortcomings point to the limitations of general scenarios: They can neither reflect the needs of particular companies nor provide guidance for such companies' decision makers. In reality, decision makers require scenarios that take their specific business, industry, and markets into consideration. A one-size-fits-all approach does not allow effective strategy development. General scenarios merely provide an idea of what challenges might lie ahead for many companies and are shortcuts to understanding what issues may require addressing.
In contrast, the framework of SBI's scenario-planning service not only produces scenarios with deeper and more textured narratives but also supports strategic decision-making that focuses on the needs and markets of the decision makers' companies. Companies must first decide what their strategic need is and what the resulting and related decision focus will be. For example, in reacting to the covid-19 pandemic, does a company want to establish more robust operations (including the logistics of supply chains) to weather future crises more effectively, or does it want to take advantage of the current disruption to acquire competitors in an effort to create more comprehensive product portfolios? Clearly, these two strategic needs will lead to scenarios that look at very different factors. But a scenario is a look at the marketplace, not a strategic response. The entire right side of SBI's framework then guides decision makers through a process that results in a custom strategy. After developing and gaining an understanding of scenarios, companies will have to put themselves into these worlds, consider implications and response alternatives, and create robust and flexible strategies that address their situations in the context of potential future worlds that the covid-19 pandemic might create.
General scenarios remain valuable starting points to trigger strategic thinking and to provide the awareness that strategic responses are necessary to deal with changes in the economic and societal landscapes. But customized scenarios and strategy development are indispensable in preparing companies for the future that will emerge, given all the uncertainties that lie on the pathway to this future.