Scenario planning is a useful discipline that can help business leaders plan effectively in any dynamic environment. Scenario planning has a lot in common with how chess players approach their game. Research has shown that chess masters don’t approach a game with a master plan that they rigidly execute. Nor do they just react to the moves of their opponents. This is partial extract from an article in Fast Company (3/23/21) by Phil Johnston who is a partner and senior vice president of strategy at Marcus Thomas.
Chess masters are adept at “reading” the board at each stage of the game and hypothesizing their opponent’s likely near-future actions, and then planning accordingly. An essential skill in this is their ability to quickly identify which actions and positions are “material” to their situation and their opponent’s intentions and which are largely irrelevant. They focus on the former and pretty much ignore the rest, what I might call "radar clutter." This helps them concentrate on tracking what’s really important and what they need to block or take advantage of. Here are the key steps and noted by Phil Johnston.
Step One: Read the Board with ruthless prioritization
Step Two: Predict the Futures - identify different future states which would require substantially different actions or reactions on your part.
Step Three: Develop Your Game Plan - The first is foundational strategy. Are there any actions or initiatives that will be essential regardless of which future state emerges? The second is contingent. This is the “If A happens do this, if B happens, do that” part of your strategy.
Step Four: Monitor the Board - Like a chess master, you must continue to read the board and note how your material business factors evolve.
Step Five: Modify Your Game - Scenario planning is not a one-and-done exercise. As the future begins to emerge, your plans will need to evolve.
These five steps have clear relevance in the world of business and business strategy.
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