More than ever, leaders need to stay focused on strategy

The COVID-19 crisis has wrong-footed many business leaders. But there are ways to get your strategy back on track.

The most recognisable tool of strategic foresight is scenario planning.

How can we formulate strategy in the face of uncertainty? That’s the fundamental question leaders must ask as they prepare for the future. And in the midst of a global pandemic, answering it has never felt more urgent.

Even before the COVID-19 crisis, rapid technological change, growing economic interdependence and mounting political instability had conspired to make the future increasingly murky. In response, a lot of organisations have had no choice but to focus on surviving immediate threats. But many business discussions still demand far-sightedness. As they try to manage their way through the crisis, leaders need a way to link current moves to future outcomes.

“Strategic foresight” — the history, theory and practice of which I have spent years researching — offers a way forward. Its aim is not to predict the future but rather to make it possible to imagine multiple futures in creative ways that heighten our ability to sense, shape and adapt to what happens in the years ahead.

The most recognisable tool of strategic foresight is scenario planning. It involves several stages: identifying forces that will shape future market and operating conditions; exploring how those drivers may interact; imagining a variety of plausible futures; revising mental models of the present on the basis of those futures; and then using those new models to devise strategies that prepare organisations for whatever the future actually brings.

Today the use of scenarios is widespread. But all too often, organisations conduct just a single exercise. If companies want to make effective strategy in the face of uncertainty, they need to set up a process of constant exploration. What’s necessary, in short, is the institutionalisation of imagination.

The prospect of organising a scenario exercise can intimidate the uninitiated. There are distinct benefits to enlisting individuals or even large firms that specialise in scenarios to provide helpful direction. However, managers should follow these key guidelines:

Invite the right people to participate: One of the chief purposes of a scenario exercise is to challenge mental models of how the world works. To create the conditions for success, you’ll need to bring together participants who have significantly different organisational roles, points of view and personal experiences. You’ll also need people who represent the three powers necessary for any effective conversation about strategy: the power to perceive, the power to think and the power to act.

Identify your assumptions, drivers and uncertainties: It’s important to articulate the assumptions in your current strategy and what future you expect will result from its implementation. Think of this scenario as your projected scenario — but recognise that it’s just one of many possible futures, and focus on determining which assumptions it would be helpful to revisit. Rafael Ramirez, who leads the Oxford Scenarios Program, advises that in doing this you disaggregate “transactional actors,” which you can influence or control, from “environmental forces,” which you cannot. How might those forces combine to create different possible futures?

Imagine plausible but markedly different futures: This can be the most difficult part of the exercise, particularly for those used to more analytical modes of thinking.

Push yourself to imagine what the future will look like in five, 10 or even 20 years — without simply extrapolating from trends in the present. This takes a high degree of creativity and also requires the judgment to distinguish a scenario that pushes the envelope of plausibility from one that tears it. Good facilitators can prime the imagination and maintain the guardrails of reality.

Inhabit those futures: Scenario planning is most effective when it’s an immersive experience. Creating “artefacts from the future,” such as fictional newspaper articles or even video clips, often helps challenge existing mental models.

It’s also a good idea to disconnect participants from the present, so if you use workshops for scenario planning, hold them off-site and discourage the use of phones.

Isolate strategies that will be useful across multiple possible futures: Form teams to inhabit each of your far-future worlds, and give them this challenge: What should we be doing now that would enable us to operate better in that particular future? Create an atmosphere in which even junior participants can put forward ideas without hesitation.

Once the groups develop strategies for their worlds, bring them together to compare notes. Look for commonalities, single them out, and identify plans and investments that will make sense across a range of futures.

Implement those strategies: Using scenario planning to devise strategies isn’t resource-intensive, but implementing them requires commitment. To couple foresight with action, leaders should set up a formal system in which managers have to explain explicitly how their plans will advance the firm’s new strategies.

Realistically, foresight will not drive every initiative, but scenario exercises can still be valuable in several ways. First, they can provide participants with a common language to talk about the future.

Second, they can build support for an idea within an organisation so that when the need for implementation becomes clear, it can move faster. Finally, they can enable participants to act at the unit level, even if the organisation as a whole fails to link the present and future as tightly as it should.

Ingrain the process: In the long run you’ll reap the greatest value from scenario exercises by establishing an “iterative cycle” — that is, a process that continually orients your organisation toward the future while keeping an eye on the present, and vice versa.

Moving in a loop between the present and multiple imagined futures helps you to adjust and update your strategies continually.

This last point is critical. As the current pandemic has made clear, needs and assumptions can change quickly and unpredictably. Preparing for the future demands constant reappraisal. Strategic foresight — the capacity to sense, shape and adapt to what happens — requires iterative exploration.

Only by institutionalising the imaginative process can organisations establish a continual give-and-take between the present and the future. Used dynamically in this way, scenario planning and other tools of strategic foresight allow us to map ever-shifting territory.

Of course, strategic foresight also enables us to identify opportunities and amplifies our ability to seize them. Moments of uncertainty hold great entrepreneurial potential. It takes strength to stand up against the tyranny of the present and invest in imagination.

Strategic foresight makes both possible — and offers leaders a chance for legacy. After all, they will be judged not only by what they do today but by how well they chart a course toward tomorrow.

J. Peter Scoblic is a co-founder and principal of Event Horizon Strategies, a foresight consultancy, and a senior fellow in the International Security Program at New America.

Harvard Business Review