Agile planning for an unpredictable future

• 75% of organisations are not prepared for the pace of change in and around their industry.
• 40% of CEOs do not think their companies will be economically viable in a decade if they continue on their current trajectory.
• Boards need to be increasingly agile, adopting flexible approaches for planning for an uncertain future.

In 2005 when junior Democratic senator Barack Obama advocated for pandemic preparedness, he was branded by many as an alarmist. Instead, following advice from the Centers for Disease Control and Prevention, analysing past pandemics and factoring in the impact of global air travel in disease spread, alongside Republication senator Richard Lugar, he laid out a planning framework.

Two of the unique elements of this call to action were that there was no immediate threat to the United States, and that it was planning beyond political terms. For businesses, this is, or should be, a core part of strategic planning – scanning the horizon, identifying risks, and planning for the long-term. Despite the raft of short-term challenges demanding their attention – inflation, labour shortages, cyber-risk, AI, Covid, supply chain disruptions, geopolitical instability – the 2022 Director Sentiment Survey found that directors are continuing to monitor long-term trends and expanding their planning horizons.

One of our Top 5 Issues for directors in 2023 was board agility – the need for boards to be increasingly agile, innovative and quick in their decision-making to respond to the ever-changing operating environment. A key planning tool to help boards plan for new or unforeseen challenges is strategic foresight. With rapid change and increasing uncertainty, strategic foresight is an essential part of strategic planning to help boards anticipate and better prepare for change. Strategic foresight can help boards shift from crisis responses to planned responses, preparing for and embracing the changing environment to provide the effective governance that is needed to ensure their organisations are around for the long-term.

Asking “what if?” questions and leveraging what you don’t know to develop multiple future scenarios helps organisations to operate with greater agility and provides flexibility as the outlook changes. The newly-adopted climate-related disclosures regime has sharpened directors’ attention on scenario analysis, and as Covid has taught us, traditional approaches to strategic planning are not suited to black swan events – unpredictable events with potentially severe consequences. And as seen in the last decade, black swan events are becoming more frequent. While climate-related scenario analysis is critically important (and mandatory for some) for exploring a range of plausible futures, scenario analysis helps boards to develop organisation-wide strategies that are forward-looking, adaptable and resilient. And just like climate-related scenario planning, they are about identifying future challenges and opportunities.

Strategic foresight isn’t new, but its relevance and necessity has grown, especially in our ability to respond to Covid and climate change. While the future is inherently unpredictable, strategic foresight provides a tool to help directors think about and prepare for an uncertain future in an age where looking back, no longer provides a roadmap for looking forward.

The World Economic Forum plays a leading role in supporting boards to adapt and respond to climate change, and preparing for an uncertain future. They have identified foresight as a key strategic capability to help identify and explore challenges and opportunities emerging from multiple signals and drivers of change shaping the future. One of their latest articles outlines some of its core principles, approaches and uses with a focus on horizon scanning and scenario analysis.