Strategy and scenario planning are back and that's good news

I recently met clients in person, at their offices, after a long period of mostly virtual meetings. These in-person meetings are more conducive to deeper reflections. Our large business clients had many, sometimes urgent questions about where to invest, new business models and technology growth. Some aspects of the future were becoming more apparent. For example, we learned that organizations need to invest in digital capabilities to support more customer touchpoints, from sales to service.

Most agreed the next decade would likely be a turbulent one, with technology (and, in many cases, science) playing a leading role in how the economy unfolds. But more uncertainties loomed.

How long would the pandemic last? Will the way we conduct business change forever? Will the role of governments permanently increase with global tensions and sustainability imperatives?

When considering these questions, I found myself referring to the  pandemic-related scenarios work Accenture recently completed with Salesforce, with the valuable participation of Peter Schwartz, who many would call called “Mr. Scenarios.” Our teams zeroed in on three scenarios we could use for the next few years as a tool to help prepare organizations for success in a (hopefully) post-pandemic world.

Strategy makes a comeback

We realized scenario planning had significantly declined until the pandemic hit, perhaps because business turbulence had decreased dramatically in the past twenty years or so. Strategic planning techniques (and frankly the craft of strategy, in general) weren’t taught as much by academia; business lost access to a very valuable tool.

But suddenly, the number of basic, sometimes existential uncertainties about the business environment, supply chains, the economic climate, regulation, taxes and inflation dramatically increased. How could leaders who’ve followed mostly linear strategies deal with all these uncertainties?

Short answer: scenarios and strategy.

Scenario planning is essential

Leadership teams need to prepare for radically different scenarios that may affect our world and their businesses. We identified a range of pandemic-driven scenarios. Perhaps we are looking at a world where we learn from the pandemic and societies and economies become even more dynamic and successful. Or perhaps pandemic-caused effects drive increased tensions and uncertainty.

We know these scenarios probably won’t unfold exactly as we suggest. But it’s important to consider each situation they describe carefully. When doing so, organizations challenge assumptions and make sure they’re prepared by considering several possible scenarios.

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Fortunately, there are also several “no regret” actions to help organizations across any scenario. An obvious one is getting control of the critical data silos and building a solid, shared data platform to help identify and respond to changes.

As a consultant who works at the intersection of business and technology—and helps my organization prepare for the next 5-7 years of change—I often focus on the following four priorities that address information technology.

1. Accelerate new technology architecture to support the business
   Businesses need to leverage the inherent flexibility and innovation enablement of cloud architectures. During the pandemic, many companies fell behind “digital natives” in leveraging AI by using cloud tools. For example, some hospitality companies, concerned about short-term revenue challenges, stopped investing in new capabilities. At the same time, more nimble competitors doubled down on improving their platforms and experimenting with new offerings. This is particularly important given the changes in customers’ needs and expectations as they deal with the changes in their circumstances and mindsets during this unprecedented period (read more about this in our Fjord Trends 2022).

2. Don’t forget geography
   Increase the use of geographically-specific attributes and regulatory and security considerations in deploying business processes and the underlying technologies. The pandemic has likely generated increased divergence in local priorities, supply chains and regulations.
   
   Our pre-pandemic focus on more monolithic architectures will be a significant detriment. This will be particularly true if we end up in the scenario we call “fault lines.” In this scenario, countries will insist on keeping all their customer’s data and maybe critical processes inside their geographical boundaries and will also impose new, often divergent regulations to drive national resilience and enforce their own policies.

3. Include sustainability in IT architectures
   When developing IT, organizations now need to consider a broader environmental, social and governance (ESG) management and measurements in their architectures. This is responsible because the pendulum has shifted dramatically during the pandemic. Customers and governments demand much more accountability around ESG issues, not just concerning measurement, but also for implementation.
   
   For example, carbon considerations now affect how ships are deployed while we deal with supply chain bottlenecks; some companies have used the required reconfiguration of their operations to reduce ship idle time by double digits. The more organizations wait to implement ESG into their IT thinking, the more challenging and more expensive it will be to meet goals and government requirements.

4. Consider science
   The pandemic and our vaccine response have shown the importance of science in our lives. Science will become more and more critical—not just in biology and medicine but also in food, energy and other domains. A more flexible, data-driven ( vs. process-obsessed) IT architecture will allow us to adapt to changes in the business environment as we move to electric propulsion or personalized medicine.
   
   For example, we need to assume that consumers will become much more conscious of the health impacts of our services in addition to their carbon footprint – is the office space we provide sufficiently ventilated? Are the hours we require employees to work excessive? Can pharma companies be more open about disclosing adverse side effects?
   
   This may mean building IT solutions that enable faster adaptation to scientific-driven change. For example, the personalization of products and services, whether real estate we rent to support diverse types of work, or food we provide based on individual health needs and preferences.

The pandemic paved the way

Luckily, many companies have already started moving in the right direction to respond to immediate, pandemic-driven changes. Those first steps laid valuable groundwork and will help address these “no-regret moves.” For example, accelerating the orchestration of their data, reaching out to innovators at the leading edge of using analytics and science to understand consumer preferences and product requirements and develop new, niche solutions.

More companies are working on more extensive efforts to create flexible, cloud-based computing and data architectures that allow for more rapid innovation during the next decade. Many are accelerating their efforts to organize data differently, train their employees to use it and adapt its application to geographic constraints. And a few others are starting to instrument their IT solutions to help them meet their sustainability goals (more on that here).

We finally see renewed partnerships between the Strategy and IT professionals in a new, promising symbiosis. Leading-edge technology leaders are populating their organizations with business experts. Business professionals are finally availing themselves of great new tools to develop solutions without help from IT experts. When you add up all these responses, we end up with organizations that move faster, are more flexible and drive much higher productivity. These are critical as we face a very uncertain set of post-pandemic scenarios.

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Watch the interview with Dan Elron : Strategies for enterprise technology in the Pandemic Era