Scenario planning

A Soldier's Guide to Managing Uncertain Times

Firstly, let me apologise for not being strong enough to withstand the pull of the Brexit black hole. It was out there and reams have been written and will continue to be written, but not by me I said. Well, that was my position, but I have succumbed.

However, if any respite can be offered, this is no place for the micro, or macro-economic, or further speculation about Scottish independence. No, in what sounds like an Absurdist argument, I’ll try to flesh out the challenges of organisational uncertainty.

What with the disruptive nature of technology, the lingering legacy of the GFC and the widespread rejection of mainstream party politics, It’s been said (by far too many) that we live in uncertain times, and now the UK’s decision to leave the European Union has exacerbated the sense of limbo being felt by corporates and consumers.

So, how best for corporate leaders to manage this ‘fog of war’? Fittingly, I believe military thinking to be an invaluable starting point. To expand, former CIA Director and General, David Petraeus once spoke of his frustrations of live fire arms exercises within the US Army, which were too “carefully scripted” and resultantly lost any spontaneity – you can read more here. I hasten to add that I don’t endorse executive team shoot-outs, but I believe there’s much to be learnt from an unannounced simulation exercise for team members. Clearly, such sessions are carefully choreographed and planned behind-the-scenes, but participants should very much feel ‘down in the deep end’. In extending another of Petraeus’ thoughts, it’s also vital that these exercises are now far more inclusive of more middling and junior ranked employees. To Petraeus’ words, the “decision making needs to be pushed outwards and downwards, towards where new information is originating.” Those more junior members of the team have, for instance, for more affinity with the subversive nature of technology; they know what it can do and have less in the way of reverence for those institutions that stand to lose, or gain from its application.

The military factor should also be explored by way of the war game - a cornerstone of combat strategy for the past 200 years. In contrast to the conventional simulation, the exercise is far more adversarial in nature, with your executive decision makers lining up against a team of competitive adversaries in terms of a given scenario, where every action is met by a reaction. Again, this is about leaders having to take the initiative and manage uncertainty actively.

By our very nature, we as rational animals, look to make decisions based on information; we put off difficult choices by requesting more information, and in an age of big data, there’s no shortage of content to turn to. However, there lies the potential for even greater paralysis and the overriding paradox of the Information Age. The statistics are useful, but let’s not lose sight of the need for strong instinctive leadership. 

The value of corporate heresy

International law firm, Slater & Gordon had a particularly painful reminder of the wide-reaching effects of ‘what if’ scenarios last week, when UK Chancellor, George Osborne announced an increase in the small-claims limit and the removal of the ability to claim for general damages from minor whiplash injuries. The firm’s stock price fell 68 percentage points to a low of 69 cents, which is a veritable plunge, from the highs of $8 a share in April this year – that’s $2.5 billion in share market value wiped away.

I can’t go into the details of the case, as I haven’t got them. The episode does, however, highlight the criticality of scenario planning for businesses to best identify and resolve the threats that could damage operations.

Most discerning organisations – and I include Slater & Gordon here – would undoubtedly have a risk register, which tracks the course of such threats, but the register is only as good as the threats that have been identified, which are usually borne of internal perspectives – that is, current employees. This is not wrong, but I would counsel organisations to have a heretic to hand. That’s right, the individual in the room who goes that bit further in terms of identifying nightmare situations. Such bravado is usually found outside of the business, as external advisors aren’t encumbered by the emotional baggage that hangs round the necks of most salaried employees – loyalty being one. Granted, such advisors don’t have the insights in regards to brand heritage or corporate politics, but these are gaps that can be addressed.

Scenario planning sessions are, if done properly, heresy writ large. Threats are duly recognised and tracked to gauge their impact from a range of perspectives – brand, political, financial, community and personal. In fact, it’s vital that the session gets personal as that’s what stakeholders – primarily, the media, are looking for if anything was to go wrong. In short, they need somebody to denounce. So, let us speak the unspeakable and save ourselves from the blame game.