Organizations need to systemically explore the future and be prepared for the “space of possibilities”. It is not only essential to create mechanisms of structured internal business intelligence, but also to scan the transactional and global environments. Decision-makers should structure the way they think about the future by incorporating it into the planning and decision-making processes.
Hence, it is crucial to explore the forces of change that are continuously reshaping the world. However, only identifying these Megatrends might not make a difference. Along with that, it is essential to perform a more in-depth analysis. For instance, it is vital to understand how these forces interact with each other; how digitalization interacts with a world where the free movement of people, goods, services, capital (and even information) can be undermined; and what each Megatrend means to the organization.
Population aging does not mean the same for Jerónimo Martins, Daimler or The Faro Hospital, for example. The essence of the phenomenon is the same, but the kind of consequences it has, for instance, on demand, product design, target markets, partnerships, and value-chains, is entirely different.
Currently, the least that can be expected from an organization is that it is efficient and capable of internal alignment and resource-mobilization.
The most significant opportunities and risks, as well as the differentiating factors, are more and more external to the organization. It is the ability to identify them in time and anticipate transformations that the business cannot control (but should act upon) that makes the difference. For this, it is essential to “see further” than short-term, to generate possibilities for action, to map opportunities and risks and, if necessary, to change the direction of the organization, its projects, and priorities.
In this context, Scenario Planning and Foresight methodologies can make a decisive contribution by systematizing, in an inclusive and informed manner (“evidence-based”), individual and organizational thinking about the future and its intimate relationship with strategic decision-making processes and innovation.
In a strategic approach, we can distinguish two different types of risk. On the one hand, there is the risk of events that recur in time. In these cases, the event “gives us” its probability. Thus, it is not difficult to calculate the probability of something similar happening soon, nor it is necessary to do major strategic planning exercises with experts or stakeholders. If we want to know, for example, the risk of a person dying of a stroke, it is enough to do some medical examinations and cross-check the patient data with others of the same age and a similar profile.
Something quite different should be, for example, the attempt to obtain the likelihood of a fierce currency war between China and the United States of America. Indeed, it is not possible to get this probability so objectively and directly, as there are no statistical evidence and no previous examples.
However, it is still a risk. We are facing real crucial uncertainties that allow us to build different futures, where we will test strategies and see how we can act if the world goes in that direction. It is here that Scenario Planning has proven to be very useful, increasing the organizational capacity to incorporate uncertainty in decision-making in a troubled and fast‑moving world.
By focusing attention on the critical uncertainties each organization faces and on the identification of their root causes, Scenario Planning and Foresight processes enable organizations to be more informed and more aligned with the reality of their strategic context. These methods help companies avoiding the suppression of challenging topics, questioning dogmas and clarifying assumptions right from the start.
In this process, the key stakeholders involved in strategic decisions participate in identifying specific opportunities for their organization. By generating and testing different strategic alternatives, a culture of learning is fostered, promoting a better understanding of the robustness of the business-as-usual activities and of the current decision-making criteria and priorities. Indeed, without the consideration of strategic alternatives and divergence, space for innovation can hardly be created.
More than providing a consensual analysis of the uncertainties, trends, and disruptions that could affect the future of a given organization, Scenarios and Foresight aim at clarifying different points of view regarding the interpretation of available information, the evolution of key variables and how the organization can position itself concerning these developments.
Each of the developed scenarios overcomes the limitations and risks that underlie single visions of the future and raises long-term questions that act as powerful sources of motivation for present action.