Where Do We Go From Here?

Scenario planning is a medium (10 years) and long (50+ year) term forecasting tool. By thinking about the “what ifs?” of possible risks to a manageable level while adding adaptability to unforeseeable risks in the future.

Scenario planning is especially useful in uncertain times (indeed there is a famous book on scenario planning titled “ Profiting from Uncertainty ”) because it does not just focus on planning for one future, but rather on  planning on multiple futures based on divergent thinking and complexity reduction in a common pictorial language for a business and a family, for an individual and a group, and between generations. By thinking about the “what ifs?” of possible risks to a manageable level while adding adaptability to unforeseeable risks in the future.

The result is clarification of what may happen and what possible courses of actions might be in the face of both internal and external uncertainty. This can be illustrated in a quadrant-type diagram.

To get to this diagram, there needs to be - Tracking, Analysis, Imaging, Deciding, Acting (TAIDA) . Tracking and Analysis are ongoing effort but  Imaging, Deciding and Actions are projects (this is based on the book “ Scenario Planning: The Link Between Future and Strategy ”)

• Tracking: Our instinct is to “look where the light is shining” and so lose sight of the “weak signals” that are most often the precursors of change. To track weak signals, a deliberate effort is made gather all elements of news and thought possible, not just those issues and risks being highlighted today. It also requires that you look at Global and Market trends as well as micro trends (that are within your control.)
• Analysis: Taking the data of present actions and digging into the creative and intuitive models and visions by repeatedly asking:

1. What is happening and what seems to be happening?
2. What are the necessary conditions for this to be reality?
3. How tenable is this model?
4. What are the points of strength and weakness?

• Imaging: Use visual and verbal imaging to create both an intellectual understanding, but also an emotional meaning to multiple Futures. Imaging is in part based on analysis, but also on the family’s intuition, will, and relationship with the business and themselves as part of the imaging process. The key to success is action and the key to action is the image of success envisioned when the action is taken. Often a good image is better than a good report.
• Deciding:  Deciding is how you select what strategies will take you from your vision to actual actions to achieve your objectives. Strategies need to blend both the concrete objective with subjective desires.
• Acting: For every strategy you decide upon, you need to have a tactic for how to achieve your objectives. Whether it is a workflow, a contingency plan or even a single piece of paper with an outline on it, having already worked through in your minds eye what to do when the improbable happens is the difference between just reacting and expending time and resources needlessly and being able to cope with the uncertainties of the future.

Scenario Planning has been used successfully to plan how major corporations handle economic, political and societal changes. In estate planning for private businesses, we track these macro trends, but also track the micro, or internal, trends on things like governance, resources, learning, innovation and other leading indicators of long term sustainability of both the business and the family.

So, as we all look hopefully to a better and brighter 2021, it is time to make your plans, including your estate plans but relying on forecasting is not enough in this time of uncertainty, you also need to include scenario planning as well and begin tracking your internal and external trends.

By Matthew Erskine, Contributor