In this brief paper we will outline four steps needed to turn business scenarios into a value-added component of your strategy execution plan.
We’ve developed and validated our scenarios. Now, how do we create business value from them? The question posed in the title of the paper is a natural one for any executive. The exercise of creating scenarios, i.e., alternate and plausible futures, is exciting stuff. By themselves scenarios create value in organizations because their existence facilitates discussions about something other than the ‘official future’ which most forecasting-based strategic plans define. In that way developing scenarios helps to open minds to better see what might come.
But using scenarios will also help you to decide and act proactively. So, while there is value in the scenario development exercise, the real payoff comes for organizations which systematically link their scenarios to management decisions and actions through real options. In this brief paper we will outline four steps needed to turn scenarios into a value-added component of your strategy execution plan. These steps are:
- (1) stress test your current business and wind tunnel your plans and goals,
- (2) generate real options to deal with scenarios,
- (3) create real options and
- (4) monitor how the future unfolds while you exercise your options.
The article, which you can read below, also describes how you can integrate scenarios in your investment analysis.
Interested in how De Ruijter Strategy can help creating business value from scenarios? Please contact us!
