Tackling Your Short-Term Uncertainties
Although big, game-changing driving forces may present an array of opportunities and threats, a number of smaller scenarios hit closer to home — the what ifs. These scenarios are short-term uncertainties that tend to keep you up at night. A great way to test the waters of scenario planning is to build out a few scenarios based on one of your known short-term uncertainties or risks.
This exercise can be accomplished in one or two meetings and is much less resource-intensive than the extensive scenario planning explained in “Confronting Your Longer-Term Futures.”
In the following sections, I walk you through this exercise by providing example questions to help you identify your immediate risks and giving you the steps you need to build a scenario plan for those risks.
Identifying immediate risks
To build a set of short-term scenarios, you first have to identify one variable or area of uncertainty. Certainly, you can repeat this exercise numerous times, but for simplicity's sake, I recommend tackling one risk at a time. Ask yourself the following questions to help you identify which variable you want to use:
- What if sales are flat this year or sales decline by 20 or 30 percent?
- What if sales increase rapidly, such as 25 percent or more?
- What if accounts receivable collections slow by 30 days?
- What if banks increase interest rates by several percentage points?
- What if our biggest customer goes out of business or we lose our biggest client?