They say that hindsight is 20/20. This is never more accurate than when managing a business. Unexpected market fluctuations, emergent events, and ongoing changes within industries can upend even the best-thought-out plans. As a recent example, leaders need look no further back than the 2020 business year. The unanticipated and astonishing impact of the first truly global pandemic of the modern age left the enterprise world reeling. All around the planet organizations are still recovering from unexpected, rapid changes from the initial blow of COVID-19, with lost profits, difficult new regulatory requirements, and even bankruptcy and closure as the unfortunate result.
With so much at stake, how can companies better prepare for the future, identifying and planning for a range of uncertainties that may or may not ever actually occur? The answer may be found in scenario planning. Flexible planning allows management to create what-if scenarios and evaluate tradeoff decisions, so that when emergent events or other factors force change, the business already has planned and thought-out contingencies in place. But scenario planning is more than just a business continuity plan or subset of FinOps; it is a fully integrated approach for addressing and adapting to the uncertainty of modern business.
The basic premise is this: If an organization can define critical uncertainties and create working contingencies for a range of scenarios, then they will be more capable of surviving—or even thriving—when faced with those scenarios in reality.