Planning for a possible future

COULD the collapse of Ansett, HIH or One.Tel have been predicted in advance? Was it possible for organisations to foresee the terrorist attacks in the US and prepare for the effects it has had on the global economy?

The discipline of scenario planning, first developed in World War II and later adopted by corporations in the 1960s and 1970s, allows organisations to explore possible futures and prepare for them in advance. Scenario planning does not claim to predict the future, but it does short circuit the sometimes endless and paralysing executive discussions about whether something could happen or not.

Scenario planning says “lets be constructive, let’s explore all the major things that could really rattle our company in this current climate and then work out how we would respond to it.”

One of the most famous examples of scenario planning benefiting a company was the recognition by Dutch oil giant Shell of the massive opportunities for exploration within the former USSR. One scenario developed by the company was that, if Mikhail Gorbachev, a recognised reformer within the Communist Party, was to move into power, Shell could have a chance of gaining access to oil resources in the region.

More important than getting the predictions “right” is looking for the signposts along the way. The Scenario Planning and Research Unit (SPARU) at Curtin’s Graduate School of Business develops scenarios in such a way that managers can monitor developments and world events and recognise which of the futures are starting to come true.

It enables managers to learn more about the future as well as reacting quickly and effectively to it.

In working with various clients before the September 11 attacks, SPARU found it hard to convince some managers to look at the possibilities for the future. Many wanted to dismiss the futures as fanciful. But what we did see after September 11 is that anything is possible.

SPARU staff involved in a workshop in Sydney the morning after the attacks found the events had removed the “it will never happen” thinking. Instead, participants realised anything could happen.

The advantages of creating scenarios allow strategic plans to be developed that are protective and advantageous. Scenarios can provide a degree of certainty about the future and anticipate and understand the risks.

It also can lead to companies discovering new strategic options and taking advantage of future events.

This column is the first in a two-part series. The second column will appear in January 2002 examining how a recent Australian corporate collapse could have been avoided by using scenario planning.

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