'Man plans, God laughs." This wry Yiddish proverb reminds us that life is filled with unexpected twists and turns. (For proof, look no further than the 2016 U.S. Presidential election.) Today's VUCAD world, filled with volatility, uncertainty, complexity, ambiguity and disruption, poses particular challenges to corporate boards. How can directors--mere mortals, with limited capacity to foresee major shifts--fulfill their solemn duty to safeguard the company's future?
One practical answer is scenario planning.
Scenarios are not probabilistic models, but rather engaging narratives that envision what plausibly could happen, even if that outcome currently feels unlikely. Scenario planning is a tool to define a range of possible futures, so you can more fully anticipate potential risks and move faster to secure emerging forms of competitive advantage. Scenario planning is not about predicting the future but, rather, informing the present (see graphic on following page).
While many boards and senior executive teams have leveraged scenario planning at some point, their explorations tend to be narrow. When scenarios focus solely on what might happen within the company's industry, they fail to consider the powerful impact of unanticipated changes in the macro operating environment, such as the socio-economic shock of the 9/11 terror attacks in 2001, the financial crisis of 2007-08, or the more recent precipitous drop in oil prices.
Need for a 'macro' view
Right now there are compelling reasons to gain a more sophisticated "macro" view of how America as a whole may change during the coming decade:
U.S. markets offer multinationals the richest potential for growth over the next 10 years, particularly as many of the world's once-enticing emerging markets have stalled or careened toward crisis.
Despite the promise of its markets, America's future is in some ways less certain today than at any time since historic inflection points such as the Great Depression, the Cold War, or even the American Civil War. Optimistic as well as pessimistic outlooks seem feasible.
By gaining deeper insight into America's future and the drivers that will shape it, boards can do more than prepare contingencies--they can have a direct influence in shaping a preferable future. In other words, scenario planning is an ideal tool for helping companies "do good while doing well."
On July 4, 2026, when America marks its 250th birthday, will the...