Scenario Planning for ‘No Deal’: how the principles of scenario planning apply in a crisis

As the UK and EU inch towards the end of the year without a deal, there’s renewed interest in scenario planning.

Last weekend, Robert Peston of ITV wrote about the Government’s ‘reasonable worst case scenario planning’, in the form of a presentation he’d been passed outlining the potential for food and medical shortages, violent protests and financial collapse of some local councils.

In response to the leak, a spokesperson replied:

As a responsible government we continue to make extensive preparations for a wide range of scenarios, including the reasonable worst case.

This is not a forecast or prediction of what will happen but rather a stretching scenario.

It reflects a responsible government ensuring we are ready for all eventualities.

We focus a lot with teams on exactly this: trying to help them explore consequences and make sensible preparations given limited resources and time – rather than trying to make impossible predictions. But how can you explore consequences and scenarios that are two or three steps ahead of where we are right now?

What’s the purpose of scenario planning?

First and foremost, it’s worth being clear there are different modes of scenario planning. One of the pioneers of the discipline is the multinational energy firm Shell, which has invested in long term strategic scenario planning since the 1960s:

Ultimately, for Shell and others, strategic scenario planning is about stepping back from current business and challenging the assumptions about trends and behaviour that leaders naturally work with. It’s quite a systematic, analytical process of extrapolating future patterns and consequences based on what we can see changing across various axes: politics, technology, society, science, economy, culture and more.

“You are trying to manipulate people into being open-minded.” —Ted Newland, manager of Long-Term Studies 1965–1971; scenario team leader 1980–1981 – HBR “Living in the Futures”

For me, scenario planning boils down to:

  • Broadening thinking: taking the time to check and challenge assumptions you have
  • Stepping back to see trends: what is rising in importance, and what is declining
  • Exploring consequences: asking what happens next, or how one action or trend might influence another
  • Developing shortcuts: using the process of exploring scenarios and consequences to identify the gaps in understanding or preparedness, so you can address them proactively

Scenario planning in a crisis

So in the Shell model, scenario planning is an extended exploration of future trends. But sometimes – as with the Brexit cliff-edge – you don’t have the luxury of time to work through your analysis. So how can scenario planning help prepare for and manage a crisis?

1. Different perspectives

Broadening thinking under pressure is best done with a wide range of perspectives and experience represented. But if you give everyone a seat at the table and simply brainstorm issues, the discussion can quickly get out of hand.

Scenario planning for crisis is a role in itself, someone able to step back from the coalface response or people management of the situation, but being fed information and updates from those colleagues. It’s hard for a crisis leader to develop scenarios: they need to be able to direct decision-making, and will often have a strong personality or authority position that can limit the feedback they hear and take on board.

Your scenario planners need the headspace to see the bigger picture, be open to challenge while actively gathering new information, and have the respect of the wider team when they present back analysis of scenarios and consequences to guide the decisions of crisis leaders.

2. Worst and most likely

Under time pressure, focus on the scenarios which present the strongest challenge to your team: the worst case in terms of potential harm (to people, assets, reputation etc) and the case you estimate is most likely.

Whereas in long-term scenario planning, the key is to avoid falling into the trap of attempting to predict the far future, in a crisis you have a clearer picture of what those potential situations and consequences might be. Focus on those two cases and you’ll have a line of thinking which doesn’t underestimate how bad things may get (like those Government no-deal Brexit scenarios), and one which helps you align your resources and planning to what’s most likely to be needed. My colleague Alasdair has shared a template for mapping risks and thinking about mitigations.

3. Plausible rather than probable

That said, when scenario planning for a crisis, try to challenge your assumptions about probability. We sometimes hear teams in cyber exercises saying things ‘can’t happen’ when we all know of processes that are routinely ignored, that multiple parallel systems can fail, or attackers can find vulnerabilities we’re not yet aware of.

There’s a great passage in the Harvard Business Review’s write up of Shell’s scenario planning methodology which describes how ‘memorable but disposable stories’ help teams plausibly imagine future scenarios different from current reality:

Corporations, like human beings, act on the basis of an agreed-upon reality—which is, in essence, a story. Stories of the past and the present can be based on facts, but a story of the future is just a story. The problem is that the stories we most commonly tell about the future simply extrapolate from the present.

Perhaps the greatest power of scenarios, as distinct from forecasts, is that they consciously break this habit. They introduce discontinuities so that conversations about strategy—which lie at the heart of any organization’s capacity to adapt—can encompass something different from the present.

Storytelling is key to making this process work. A story is not a position, so no one has to be for or against it or line up behind the CEO’s opinion. If it’s sufficiently vivid and memorable, it allows executives to discuss difficult issues without having to revisit arguments connected with them: A few words can evoke a world. Charismatic presenters; evocative graphics; memorable phrases, images, and archetypes; illustrative graphs of future outlooks; and the preparation of the audience through interviews, workshops, and other forms of participation all contribute to the storytelling power of Shell’s scenarios.

That picture-painting is where the worlds of scenario planning and crisis simulation come neatly together, and where we often come in. For a training exercise to feel real, it’s important that the environment the participants work within has the ring of authenticity from stakeholders’ emails to the tone of social media comments.

Since they tend to be much shorter and more intense than real-world crisis responses, it’s important that simulations aim to stretch thinking rather than try to recreate the grind of long hours in crisis meetings or avalanche of phone calls, tweets and emails that a real crisis bring. So think about the range of stakeholders, the variety of social media channels and media formats to manage, and the nuances between antagonistic customers, regulators, politicians and staff.

So to wrap up, here’s a little montage of clips from No Deal Brexit scenario work we’ve been supporting different clients with over the last 18 months. Whatever happens the other side of 31 December, hopefully the discipline of thinking through stakeholders and consequences with an open mind has proved useful.

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