Scenario Planning 101
The goal of portfolio management is to effect changes that minimize risk and maximize value. But change is hard, and corporate change is harder still. People need motivation. The best way to build that motivation is to lay the consequences of the present course bare and make the status quo completely unpalatable. Like Thelma and Louise, you have to ask, “Where are we headed?” In a portfolio review, that means asking, “What will our current investments in R&D, marketing, and sales get us? How likely are we to meet our strategic goals?”
Scenario planning is the best tool in your toolbox for answering these questions. In scenario planning, you play out the value of the present course of action in the context of a number of alternative futures created by hypothetical changes in the environment and in your strategy and tactics. You can do the same thing for a number of different approaches, mapping different courses and their likely destinations. In the process, hopefully, you’ll also convince the your management to choose a plan and act on it.