Welcome to What’s Your Edge – a series of VisionEdge Marketing podcasts dedicated to helping you use data, analytics, process, and measurement to create an edge for you and your customers.

If you’re familiar with baseball you know that there are various options the pitcher employs to confuse and defeat a hitter. Since I hail from a baseball town, I had the opportunity to learn about the twelve most common pitches at a young age. Sitting in the bleachers we’d keep an eye out for Fastballs such as Four-seam, Two-seam, Cutter, Splitter, and Forkball. And breaking balls such as Curveball, Slider, Slurve, and Screwball.

Each of these pitches has a slightly different velocity, trajectory, movement, hand position, wrist position and/or arm angle. Good pitchers “change-up” frequently to keep batters off their game. Hitters realize they need to be ready for any of these pitches or scenarios and become adept at reading and calling the pitch. In addition, good hitters prepare and practice for each possible pitch.

The fluid and dynamic nature of the market, customers, and competitors means business leaders and Marketing professionals need to be at the ready for any possible number of scenarios or pitches. This is the domain of scenario analysis and planning. Organizations use scenario analysis and planning to prepare for and manage market shifts, competitor moves, and changes in customer behavior.

Improve Your Ability: Simulate, Practice, and Plan

The Webster Dictionary defines a scenario as “an imagined sequence used to account for a possible course of action or events.” Scenario analysis is your ability to simulate and analyze potential scenarios for any given situation or event. That’s why batters head to the batting cage where they can simulate, practice and plan for the various pitches. Business leaders and Marketing professionals need to head to the whiteboard. Hitters come with bats. Business leaders and Marketing professionals come with data.

Just like a hitter, while might not be possible to anticipate and prepare for every scenario, in business, you will want to identify the ones that are most likely to occur and have a plan of action in place should the scenario come into play. This way, you can use scenarios to support real-time marketing.

The use of scenarios in the planning process is not new. It has been employed by companies since the 1970s. Why use them in your planning? Because scenarios help you understand the magnitude of a trend and the uncertainty of your environment. They provide a vehicle for developing a set of strategies that optimize your chances of success under all possible outcomes. When you incorporate scenarios into your planning you can explore the joint impact of various uncertainties, which stand side by side as equals. They allow you to change several variables simultaneously. They enable you to identify patterns and clusters among numerous possible outcomes.

Scenarios are applicable once you understand the problem you are trying to solve or the outcome you are trying to produce. You build the scenarios AFTER you identify the trends, forces, and uncertainties and BEFORE you develop your strategies.

Ready to Create Your Scenarios? Follow These 6 General Principles

To effectively use scenarios and incorporate them into your planning, you need to create a range of scenarios that cover the full range of possibilities. There is both an art and a science to creating scenarios.

Follow these general principles when creating your scenarios and selecting the ones you need to anticipate.

  1. Look for events that are certain or nearly certain to happen. Like pitches, while you cannot control what pitch the pitcher will choose, there are primarily a select number of common pitches. The same holds for the competitive arena of business. A competitor bringing a new product to market, a new competitor entering a market, market consolidations that might affect your customer based, new technologies that might woo your customers to switch, a shift in the political or economic environment, a change in legislation, a supplier who cannot deliver, a partner whose defects are examples of common scenarios.
  2. Create scenarios that cover a broad range of outcomes. Define your scope and time frame for your scenarios. Ask what information would be of greatest value to the organization at what time-period down the road. It might help to look at the past and think about what you wish you had known then, that you know now. Clarify the key issues. Then identify the industry, political, economic, societal, technological, and legal trends that might affect these issues.
  3. Now you are ready to identify the key uncertainties, that is the what events, whose outcomes are uncertain, will significantly affect the issues you are concerned with and the relationships among these uncertainties. Keep the trends in mind. We recommend that you identify at least 3-5 critical uncertainties.
  4. You want to identify themes that are strategically relevant and then organize the possible outcomes and trends around them. If necessary, conduct research to flesh out the details and increase your understanding of the remaining scenarios. Develop at least four scenarios that address these uncertainties. Why four, so people don’t lean to the middle one.
  5. Organize all the possible scenarios from a high versus low probability and your degree of preparedness. Evaluate each scenario in terms of its likelihood within the time frame. A note of caution. Avoid selecting one or two scenarios immediately and discarding extreme scenarios as a waste because you don’t believe they can happen. Ignoring outer scenarios leaves you exposed to risk and implementing only moderate improvements. Sometimes the most interesting and insightful scenarios are the ones that at first seem the most unlikely. One useful method is to create a weighting scale to evaluate the probability and risk of each scenario. Use the scenarios with the highest probability weighting as your primary cases.
  6. Pick the scenario(s) you believe requires you to be better prepared and create a plan based on each scenario. Pitchers tend to throw more sliders and curves and make fewer change-ups when they have the platoon advantage (pitcher and hitter of the same hand). In any case, pitchers throw most fastballs (59% of pitches thrown) no matter what side of the plate the batter is standing on. Choose and plan for the most likely scenarios based on your analysis. Include clear contingencies if another scenario—or one that hasn’t been imagined—begins to emerge instead. Ensure that each scenario tells a story of how various elements might interact under which specific conditions. The scenarios you choose should help you develop a strategy portfolio, challenge your assumptions, stimulate internal discussion, and help you detect early warning signals.

Prepare for the Unexpected With Scenario Analysis

Creating scenarios helps you consider a range of possible outcomes and drivers of change. Like any good hitter, you want to be able to anticipate the next pitch. Scenarios analysis is a powerful tool for understanding potential situations and developing appropriate strategies. Agility requires that you have a strategy portfolio. Scenarios provide a means to have different strategies at the ready based on a set of possible realistic events. Scenarios protect against and enable you to challenge the status quo. Scenario planning helps you anticipate, predict and adjust. Bring your data and head to the whiteboard to craft scenarios that will help you prepare for the unexpected. In this way, when you get up to bat, you’ll be far more ready for whatever pitch comes across the plate.