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Scenarios Planning

By Drive, Inc. on Tuesday 17 April 2018.

The 14th of March in 2008 was a very bad day for Jim Cramer. Jim Cramer had a spectacular career in finance and is now the host of Mad Money, a popular TV program. Just three days prior, Jim had instructed his listeners to hold on to stock in Bear Stearns; however, on this day the shares dropped by 92%. Jim is a smart guy, so how did this happen? Despite his intelligence, Jim attempted to predict the future, which is impossible. While this prediction proved disastrous for Jim, the problem with predicting the future is much more widespread. Many businesses attempt to do this very thing in their strategic planning processes by trying to set up a strategy while assuming there is only one potential future and ignoring the probability of many alternate futures. The only thing we know for sure is that the future will be different from the present in some capacity. In light of the impossibility to predict the actual future, we must, nevertheless, plan for multiple future scenarios. How can a business improve their ability to better predict the future? We propose using Scenarios Planning as this method.

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