If there is one thing we have all learnt from events of the last two years it is that change happens – often without warning, and sometimes with catastrophic consequences.
We have also seen how many businesses were blindsided by events for which they were to a greater or lesser extent unprepared. True, there is little an individual business can do about events such as those that brought about the credit squeeze and subsequent downturn, but we could perhaps have been more prepared for such eventualities.
Though no one can look into the future with certainty, we can, with the right tools, investigate possible scenarios, assess their likelihood and potential impact, and make contingency plans for their occurrence.
Such scenario planning is becoming increasingly important for businesses of all sizes for three main reasons:
- It helps to reduce risks, which apart from the obvious benefits to your business, might also help to reduce insurance premiums and provide more leverage with lenders, investors, and suppliers
- By identifying and monitoring key indicators of change, your business can be forewarned of impending developments and put appropriate measures in place in good time
- In some instances being ahead of the game might enable you to transform into an opportunity what your competitors see only as a threat
Before the downturn, uncertainty played less of a part in business thinking and many businesses made decisions primarily based on what had happened in the past rather than what might happen in the future. That now seems a bit like driving a car by looking in the rear view mirror!
Today, businesses need to be looking ahead all the time. They must learn to anticipate outcomes that might seem unlikely if not impossible, because one thing we now know for sure – the unthinkable can happen!