IT Leadership and Scenario Planning
Do you want to drive your organization’s immediate affirmative action amid the COVID-19 pandemic? Or are you worried about the long-term future of your company? Considering likely outcomes as you make strategic plans helps functional leaders make sound decisions for an uncertain future. You can also consider planning for potential outcomes of your choices. Scenario planning provides an overview of possible and different futures.
Executives are alive to the rapidly-evolving business models as they try to figure out how enterprises will remain afloat in the long run. As disruption has affected operational decisions, functional IT leaders need to adapt to new strategies. They’ll have to equip their teams to handle the arising risks and opportunities better.
Explore Different Possibilities
While scenario planning won’t predict the future, functional leaders can get a glimpse of different plausible outcomes. As strategic advisors working with CFOs, these leaders need a better view of their strategic assumptions. For one, they need to understand that scenarios don’t take the place of contingency plans or predictions.
Instead, scenario planning provides glimpses of how the business environment will change over time, helping you identify different uncertainties and possible realities. With such preparation, an organization can reduce future costs and mitigate potential risks. This approach involves defining critical changes, then creating possible scenarios to find their impact and proper responses to each one of them.
Identifying driving forces behind the significant shifts in the society and your market is always a good starting point. Select the forces that are likely to have the most significant impact on your business, then develop different possible scenarios around them. With this in mind, think about the implications of different situations and build robust strategies to last through the disruption.
Identify your Objectives
Scenario planning works best when a company’s objectives are clear from the onset. Determine what you hope to achieve during and after the disruption in question. Transformation initiatives and critical growth areas can be areas to place your focus. Regardless of how the future turns out, make up your mind on the strategic decisions you intend to pursue.
It is also prudent to think critically about short-term decisions as they have a strong bearing on whether your organization stands the test of time. Make adjustments on these decisions as the need arises. Once you are clear on the path you’re taking, empower your team to mitigate risks depending on unfolding scenarios.
Consider the implications different outcomes will have on functions’ risk exposure and strategies, then plan with this in mind. Create corporate scenarios, then narrow down to specific tasks to increases your chances of success. Applying enterprisewide plans without thinking about a particular department can fail.
Discuss Different Scenario Implications
Starting from the enterprise level, diagnose what different outcomes will mean for your regular business operations. Reconsider your mission and goals as you think about how each scenario impacts your enterprise. A supply-demand needs analysis helps you understand how the business’ demand for your services will vary depending on different scenarios. Try to plan possible responses to all case scenarios keeping in mind how you’ll effectively use your resources during the disruption.
Specific scenarios will bring along different risks and opportunities. Find out how both the risks and opportunities will affect your roles in the corporate strategy. Adjust your goals, initiatives, and strategies to remain relevant in the wake of different scenarios. Create specific action plans and decide which systems or processes will change to fit the business needs and make the most opportunities while managing risks. Match your action plans to the scenarios’ implications and your core strategy.
Make Scenario Planning Practical
Creating scenario-specific moves ensures that functional leaders get to develop resilient strategies. This approach lets you make needful changes on individual steps while sticking to your organization’s overall plan. Practical scenario planning requires you to:
- Assign each staff member specific action items.
- Define particular actions that the organization will adopt or discard in line with different scenarios.
- Encourage diverse participation from both frontline staff and managers. The former can help you look at the impact on workload and various operations while the latter will guide your resourcing plans. Different viewpoints ensure that you don’t miss out on anything.
It is easier to focus more on crafting risk response strategies and miss out on revamping opportunities. Your team will find more motivation working to capture opportunities rather than acting to adverse effects. Create action plans that place you in a prime position to make the most opportunities to tap into latent talent pools and form new business partnerships.
Besides serving as a hedge against crisis management, scenario planning is an excellent tool for innovation. Think about winning innovations that can make a difference in the wake of different scenarios.
Pitfalls to Avoid
- Building your strategy around one particular scenario. Rather than focusing on one scene, scenario planning lets you analyze all possible outcomes and create a strategy that fits all the consequences.
- Focusing only on your existing market and competitors. Functional leaders should anticipate what the long-term future holds for their IT enterprise. Consider how your market and competition will evolve throughout the disruption and prepare your team to handle the changes creatively.
- Allowing the numerous possibilities to paralyze your plans. Try to keep your scenario planning simple. Focus on the most likely uncertainties and create scenarios based on them.
- Disregarding your company’s vision. Scenario planning is not the only tool in your strategic planning efforts. While this approach is ideal for building a robust future, functional leaders should work with the company’s goals and overall vision in mind.
Why is Scenario Planning Valuable?
This strategic planning approach helps you find clarity in an uncertain environment, like today. Going through this process enables you to create a clearly defined path. Functional leaders also find an ideal platform for taking immediate action on strategic priorities. Unlike forecasting, scenario planning lets you run different scenarios and explore possible solutions for rapidly-evolving scenarios.
Once you have a pragmatic strategy in place, spare time to monitor how different scenarios evolve and effectively change your strategy. Create multifaceted action plans for each scenario and remain flexible to ensure that your strategy is robust. Integrate business forecasting with cash-flow forecasting to get the best out of your scenario planning model.