We live in the most exciting times humanity has perhaps known. Technology has the potential to enhance the lives of everyone on the planet and mitigate many of the significant challenges we face, such as peak population and climate change. However, seizing the moment and the opportunity it presents requires significant leadership in an age in which relentless change causes many overworked managers to be consumed by ‘mega-busyness’.
Disruption can take many forms. For example, in energy and utilities we know only too well the impact caused by the politics of the day in the form of Brexit in Great Britain and Europe, pressure for price control, market liberalisation, social ownership or privatisation. There are also the impacts of environmental concerns, such as climate change, and other technological opportunities like artificial intelligence (including home automation) and the growing share of energy generation associated with renewables. Add into the mix transport trends and policies and, already, we get a glimpse of the potential complexity.
The need for the intelligent management of change
In contemplating the business impact of such issues, our minds might naturally focus on the ‘obvious suspects’ such as utilities, the automotive industry and rail and flight operators. But as we explore the associated supply chains we realise that getting a handle on the challenge is a matter for all businesses; if, perhaps, some more than others.
According to Peter Schwartz (The Art of the Long View).
“Every year, every decade, we are surprised by social, or technological upheavals that appear suddenly, surprisingly”.
He raises the question: how can businesses and institutions plan for the future when they do not know what tomorrow will bring?
And as Charles Darwin suggested: “it is not the strongest of the species that survive,
nor the most intelligent, but the ones most resilient and responsive to change.”
Rather than locking themselves into a rigid, unbending approach, progressive organisations benefit from building adaptive strategies which allow flexibility. Such flexibility is particularly critical when making high-cost, potentially high-return, decisions such as M&A, investments in new products and markets, and so on. Sometimes “today” is not the best time to make the definitive move, and waiting until the right moment can be as rewarding – or more so – than taking immediate action. Our approach provides a framework that allows management teams to identify such situations, enabling them to maximise opportunities while managing risk.
The power of scenario planning
Scenario planning is a systematic approach for evaluating the complexity of change and potential disruption. It presents a pathway for minimising volatility of shareholder value. Done well, it facilitates top-team alignment on the best strategy to manage uncertainty; by focusing on the key strategic issues that uncertainty provokes. For example, it can:
- Inform the nature of those corporate acquisitions and divestments that may be most appropriate and attractive
- Identify which corporate structures may be most appropriate for building resilience into the business
- Enable decisions to be taken on the types of technology in which to invest and which to abandon
- Systematically inform the evolution of company culture and behaviours
What can scenario planning deliver?
Each assignment is unique. However, the process normally delivers a combination of the following:
- Agreed change drivers impacting your business
- 2-3 scenarios around which you can plan and develop your response – recognising that there is uncertainty about which scenario may actually occur
- A facilitated agreement in the top team on a responsive strategy to manage this uncertainty, which doesn’t mean having to “pick the winner”
- Personal commitments to action by workshop participants, which align to the key business challenges, change drivers and organisational vision
- A draft resilience plan comprising the most important challenges for further development and testing
- Outline resources and a timeline to underpin the strategy
Scenario workshops often surface issues relating to team cohesion, ways-of-working, leadership focus and organisational values and culture. These in turn support the design, development and delivery of business-enhancing strategic interventions and remedial actions.
This short, intense package of work has the potential to arm your enterprise with both organisational and strategic tools with which you can most successfully respond to an uncertain future in the best interests of your stakeholders.