Prediction
I learned about Scenario Planning from Peter Schwartz, the man mentored by the OG, Pierre Wack. Wack and his elite team of strategists successfully navigated Shell Oil through the 1973 energy crisis and the more severe price shock of 1979. He left Shell Oil in 1982 but not without warning of the oil market's collapse in 1986. Wack hired Schwartz to succeed him. By the time I'd met him, Schwartz had left Shell Oil to co-found Global Business Network. You can listen to Schwartz talk about his impressive career here.
It would be powerful to predict the future, but we all know this is impossible. What Scenario Planning does is the next best thing. Through thorough analyses of social, political, and economic forces, an organization becomes informed enough to anticipate what could happen in uncertain times. Thinking the unthinkable, called Black Swan events, was critical for this exercise.
We train our minds to be flexible and agile by intellectually processing unthinkable scenarios. Uncertainties are a certainty, so our reaction time is much faster when they happen because we’ve already played something similar in our minds. This reaction time affords your organization a competitive advantage. Critical decisions are easier and faster to make.
Preparedness
Scenario Planning makes you more prepared. The contradiction is that it's challenging to make companies see their troubled future regardless of how clear the scenarios are. Successful companies have one or two people acutely attuned to the world around them. Scenario Planning helps grow this aptitude throughout the rest of the organization.
At times of great uncertainty like today, executives tend to double down into the numbers instead of honing their skills to see what's ahead of them as far and wide as possible. It's hard to imagine a pack of wolves led by a leader who doesn't see what's before them - why is this so commonplace in corporate hell?
Your company may not listen, but here's something you can do. The next time you're staying at a hotel, don't forget to look at the map behind your door and familiarize yourself with the nearest stairwell. Do the same thing when you're on an airplane. Bitches, listen to the flight attendant when they show you where the nearest exit is. It really can be behind you!
When the unthinkable happens, having gone through this mental exercise will save your life.