NOTE: This blog was written in April 2020.
Many of us are grappling with high-impact decisions that need to be made right now. For the most immediate decisions, a checklist to help organize thinking can be a useful tool.
For issues that must be grappled with over time, good habits of scenario thinking can improve decision-making.
The four building blocks of scenario learning are:
- Develop plausible alternatives that challenge conventional wisdom.
- Create structured time for discussion and dialogue.
- Quantify the potential impact; don’t just describe it in words.
- Link lessons to their impact on specific decisions, whether by augmenting understanding, reframing existing decisions, identifying contingent decisions or adding new decisions to the agenda.
This is not as easy as it sounds, particularly the element of developing plausible alternative scenarios about the future. The goal is to challenge conventional wisdom, but also to relate the scenarios to underlying driving forces that can be monitored over time.
To be better at scenario thinking, we suggest developing habits of these 10 behaviors from Peter Schwartz’s Inevitable Surprises: Thinking Ahead in a Time of Turbulence:
- Build and maintain your sensory and intelligence systems. Look around to observe and interpret the interaction of forces that might affect you.
- Cultivate a sense of timing. When you see an event approaching, make a point of asking: How rapidly is it approaching? When could it occur? How far in the future?
- Identify in advance early warning indicators that would signal that a change is rapidly upon you.
- Try to avoid denial. When a future scenario feels particularly wrong or discomfiting, and your first impulse is to say, “That would hurt us if it happened, but it won’t happen,” that’s a signal to pay closer attention to it.
- Be aware of the competence of your judgment, and the level of judgment that new situations require; and move deliberately and humbly into new situations that stretch your judgment.
- Place a very, very high premium on learning.
- Think like a commodity company, which is accustomed to product prices going up and down regularly. Understand the temptation to think that “this time is different” and that good (or bad) streaks will go on forever.
- Focus attention on the side effects of your actions by, for example, considering environmental and ecological sustainability.
- Place a very high premium on financial infrastructure and support, because risks are greater than we think and a financial cushion can make the difference in how we weather hard times.
- Cultivate connections by building relationships with people who think differently from you.
Please call if we can help you, or a business leader or investor you know, with scenario thinking in these uncertain times.