Over the past several decades, leaders have turned to scenario planning to identify future risks to their businesses. By analyzing things like revenues or margins across locations globally, this method allows leadership teams to design flexible long-term plans against a defined set of alternative external events and outcomes. The outputs can often include short-term financial forecasting and business planning in a “base case / best case / worst case” fashion.
When Scenario Planning Fails
Leaders of companies with operations in Russia share how they’ve navigated new and unexpected challenges during the war in Ukraine.
April 21, 2023
Yaroslav Danylchenko/Stocksy
Summary.
How can organizations perform scenario planning when they are hit by shocks outside of leaders’ field of vision? Interviews with Nordic executives, who experienced both the Covid-19 pandemic and were in close proximity to Russia as the country invaded Ukraine, can provide clues. Instead of abandoning the typical “base case / best case / worst case” planning, they adapted their planning to encompass four main strategies other companies can try: stretching the types of scenarios under consideration, using vulnerabilities as a prism, building strong action guidelines an internal communication, and building crisis management into the organizational structure.