Strategic planning in times of uncertainty

The power of logic, calm and creativity

With the pandemic, changing geopolitical tensions and extreme weather events, the world may feel like a place of uncertainty and chaos. Some organisations will be better prepared for the unknown than others. That’s because these businesses get on with the job of thinking strategically and preparing to win. Put simply, they create a strategy. 

To do this with so many unknowns might seem overwhelming at first. None of us can predict the future, so where do you start? Let’s break it down. 

1. Scenario planning is key

Without a crystal ball, we can’t possibly imagine with precision what the future will look like. So we don’t try to imagine one future. Rather, we begin by constructing a logical baseline of data points that are important for your business. Start with what you know, examine trends, and extrapolate data that provides a good understanding of the likely demographics, languages, industries that we expect will shape the lives of our customers, communities, and competition. In scenario planning, you should look at what is relevant for your business. 

There are many uncertainties still, and so examine the most critical uncertainties. Of the things that might land on one extreme or another, what would be most likely to impact your business? 

On a two by two matrix, use two ‘critical uncertainties’ as your axis. For example, geopolitical conflict rises significantly on the top, and geopolitical tensions ease at the bottom. From left to right, strong economy to poor economic conditions. You then have 4 combinations to explore: 

  1. Strong economic conditions, high level of geopolitical conflict
  2. Poor economic conditions, high level of  geopolitical conflict
  3. Strong economic conditions, low level of geopolitical conflict
  4. Poor economic conditions, low level of geopolitical conflict

matrix

With your matrix you can then plot relevant scenarios. Here’s some tips for developing effective scenarios: 

  • Make them relevant to your business
  • Use the data from your research on key trends (e.g., the population size in 10 years)
  • Consider adjacent sectors (e.g., Construction and Aged Care)
  • Consider externalities that could affect your suppliers, customers, partners and distributors 
  • Give each scenario a snappy title – this will make it easier to discuss

Creating probable scenarios enables you to explore opportunities and threats. While there is an unlimited number of possible scenarios, this thinking exercise will give you a strong foundation to identify your strategic choices.  

Feeling confident you’ve thought about the probable outcomes of the uncertainties most likely to impact your business, it’s time to explore strategic choices. 

To foster creativity and innovation, bring together a team with diverse perspectives and great listening skills. It’s helpful if there are varied tenures, to bring industry knowledge and to test the status quo – the way we’ve always done things. For strategic conversations, it’s important to bring in an external facilitator. This enables the whole team to participate in the thinking. A good facilitator will ensure that everyone contributes, and new ideas aren’t just cast into a void, but are picked up and examined. 

If you have a great team, but you are still working on team dynamics, deep listening, constructive challenge, it’s also useful to bring a coach into this process. “Culture eats strategy for breakfast” as Peter Drucker says. To give you the best shot at a great strategy, work on the culture of the leadership team, and organisational culture after the strategy is complete. Align your culture with your strategy and you will position your business to thrive.

2. The future is here, if you know where to look.

It’s not uncommon that we get pulled into our day-to-day routines with news curated by global media corporations and well tuned social media algorithms that narrow your lens.

We recommend taking a step back and examining the trends, innovations and emerging operating models in your sector and adjacent sectors. 

We often present boards, executives and other business leaders with the simple question: “what business are you in?” That question can be surprisingly hard to answer.  

Once you define your core business, inclusive of your purpose and values, you open up the possibilities for collaboration or competition with comparable businesses. As we step back and really examine why we exist, who we are, and what we do, we can look at the macro environment with a fresh lens for learning. 

World Intellectual Property Organisation (WIPO)’s Global Innovation Index 2021 report presents the latest global innovation ranking of 132 economies, using 81 indicators to make up the Global Innovation Index (GII). In 2021, it ranked the most innovative economies to include Switzerland, Sweden, the US, the UK and South Korea.

That said, it can be surprising which countries are most innovative in your sector – when was the last time you ran an analytical eye over the global competition? 

With the benefit of this global analysis, broaden your focus to consider the changing trends for consumers. 

As global patterns of migration change as a result of climate change, geopolitical tensions and economic drivers, cultural factors also influence consumer expectations. A useful way to conceptualise these ideas is to utilise the PEST, PELT or PESTLE framework (political, economic, social, technological, legal/regulatory, and environmental). This helps you to analyse the macro environment, and most crucially the interplay between these forces. 

The pandemic has seen a shift from rapid globalisation to global distancing, characterised by a rise in economic nationalism – a move away from ‘just-in-time’ global supply chains with pressure to move towards domestic production. As you plan scenarios, it is wise to consider innovation, and the broader environment in which you do business, and importantly, not with a black or white lens, but with a clear view of the grey and areas of complexity.

3. Also look at the trends closer to home

In corporate Australia, people are continuing to work from home, while large towers in the CBD have high vacancy rates. Housing prices continue to rise out of reach for many people, while our overall population is shrinking. There have been fewer births, an increase in overall mortality, and a significant decrease in net migration. These factors will have profound economic implications in the years ahead. 

Contextualise these trends in relation to what your competitors and the broader sector are doing. 

By exploring the innovations and movements of complementors (organisations that aren’t competition but could be partners in some capacity) you can learn from what they are paying attention to, and importantly, what trends have slipped by them, that you might consider in your own scenario planning.

4. To navigate the complexity, listen closely and with curiosity

If you haven’t come across “Think Again” by Adam Grant, please give it a read. It describes very clearly how important it is to think in terms of complexity and grey in order to think differently. It highlights the importance of humility and curiosity as fundamental tools for learning – or unleaning.

Yes, the future is uncertain, however rather than being frozen by a fear of the unknown, we can use logic, research, data and curiosity to engage with possibilities – with probable futures. We can learn from developing scenarios and from global and local trends. 

With a step back to look at who we are, why we exist, and the big picture of the world around us, we will find so many possibilities. In this context, if you leverage the power of diversity, deep listening and curiosity as you explore different possible futures for your organisation, you will uncover the best ways forward to ensure your business thrives amidst uncertainty.

Solving complex business problems is what we do best at Three Chairs Consulting. If you would like an independent perspective to help your business through this process we are here to help.

Please get in touch at
team@threechairsconsulting.com.au 

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