A Future-Ready Business Strategy

How Scenario Planning helps navigate disruption, policy shifts, and changing markets

Volatility is the new normal. In today’s VUCA world, businesses face a dense network of interlinked risks—spanning energy shocks, regulatory changes, digital disruption, and shifting consumer dynamics. These risks don’t exist in isolation. Instead, they reflect the constant interaction of political decisions, economic forces, social shifts, and technological breakthroughs. Understanding this interplay is at the heart of political economy, where governance, markets, and power collide to shape business realities.

As discussed in a recent episode of the Forces and Signals podcast, oil remains the lifeblood of the global economy—powering logistics, manufacturing, aviation, and national security—while geopolitical instability in resource-rich regions can trigger price spikes that ripple through supply chains, reduce consumer spending, and drive inflation. From the Middle East to Africa and the Eurasian continent, these shifts reflect not just market forces but political power struggles and economic policies that shape global resource distribution.

At the same time, artificial intelligence is reshaping industries—not just automating tasks, but redefining competitive landscapes with new opportunities and emerging risks, including ethical dilemmas, data governance challenges, energy consumption, and algorithmic bias.

Regulation has likewise evolved from a compliance concern to a strategic variable in many markets, where ESG mandates, digital taxes, and data localisation laws can rapidly reprice markets or alter access. Sudden shifts in political priorities—especially in major economies like the US, the EU, or China—can change trade rules, tilt investment climates, and redraw global value chains.

Consumer behaviour, too, has become more volatile and harder to predict. Cultural movements, inflationary shocks, generational values, and viral trends—amplified by social media—drive demand in real time. From TikTok-driven product surges to Gen Z’s ESG preferences, businesses must now read social sentiment as closely as they track economic indicators.

The Need for Strategic Foresight

In this environment of compounding disruptions, business leaders and investors can sometimes feel pulled in all directions at once. If only there were a structured, strategic tool designed not only to survive until the next quarter but to adapt and thrive with foresight amid uncertainty.

Scenario planning is such a tool that offers that critical edge. Applying it with systems thinking principles helps organisations to dynamically visualise how multiple political, economic, technological, and social factors interact, amplify, or counterbalance each other, moving beyond more traditional linear forecasts.

This holistic approach aims to explore multiple plausible futures and their plausible impacts on business. It can help business decision-makers map out uncertainties, stress-test their assumptions, and build real resilience to become truly future-ready in our age of disruptions.

From Cold War Origins to Modern Corporate Strategy

Scenario planning’s roots lie in the core challenge of anticipating complex, interdependent global shifts.

Originating in Cold War military strategy, agencies such as the U.S. Department of Defense and the RAND Corporation developed scenarios to explore nuclear conflict outcomes and Soviet tactics, embracing multiple plausible futures rather than singular predictions.

Governments have also applied scenario planning to understand volatile geopolitical developments and policy shifts, such as dealing with power, governance, and economic uncertainty.

The corporate breakthrough for this approach came in the late 1960s and early 1970s, when Shell, the Anglo-Dutch oil major, recognised that traditional forecasting failed to capture global energy market uncertainties shaped by political and economic forces. By developing multiple energy scenarios, the company anticipated the 1973 oil crisis ahead of competitors, gaining a strategic advantage and setting scenario planning as a best practice for managing political economy risks in business.

How Scenario Planning Works in Practice

Scenario planning doesn’t predict the future; rather, its participants postulate or explore multiple plausible futures. A scenario is a plausible representation of how the future might unfold based on a combination of current trends, uncertainties, and potential social, political, economic, or technological shifts, typically over a time horizon of five to ten years.

You don’t have to be an avid science fiction reader to be good at strategic foresight—if you follow the process, anyone can learn to anticipate and prepare for a range of plausible futures.

This exercise prepares businesses for multiple plausible futures, capturing the complex interplay of political, economic, technological, and social drivers. It is a key step that sits before strategy and implementation.

This kind of strategic foresight helps move beyond linear forecasting and grapple with different layers of uncertainty. As former U.S. Secretary of Defense Donald Rumsfeld famously noted, decisions are shaped by “known knowns” (things we’re aware of and understand), “known unknowns” (factors we know will be important but whose outcomes are uncertain), and “unknown unknowns” (emerging surprises we haven’t anticipated). Scenario planning is especially useful for the middle category—those known unknowns—by mapping out plausible futures shaped by today’s uncertainties. But it also cultivates the mindset and agility needed to better detect and respond to unknown unknowns as they emerge.

There are several ways to approach scenario planning—sometimes, combining methods provides greater nuance and depth. But here is a typical example of the steps involved in putting it to work in a structured way:

1. Define the Core Question.
   This first step is fundamental, where the core question to be answered is addressed by the key stakeholders involved in the process. To take the challenge of oil-based disruption as an example, that question could be “How could oil price volatility and regulatory shifts impact our business over the next five years?”

2. Identify Key Drivers.
   In this step, the key trends and driving forces of the core question are considered. Factors include geopolitical risk, technology adoption, climate policy, consumer trends, and governance changes. At this stage, there are several similar analytical tools, such as the STEEP model and the PESTLE model, that are helpful.

3. Pinpoint Critical Uncertainties.
   At this point, you will want to consider which drivers are impactful yet unpredictable for your operations. For example, the pace of green energy adoption or shifts in international trade policy.

4. Build a 2x2 Scenario Matrix.
   In this step, you will want to define the key scenarios visually using a Scenario Matrix.

   Cross two critical uncertainties on an xy diagram to generate four distinct futures.

   Here is an example of what such a matrix could look like:

   

5. Develop Narrative Stories.
   You are now at a point where you can detail each scenario’s market, political, and consumer impacts.

   For example, the above matrix plots scenarios based on oil price on the y-axis and the pace of the green energy transition on the x-axis.

   In the top-left scenario, oil prices are volatile, and the energy transition is slow. Here, businesses face carbon-linked supply chain stress, with input costs and logistics still vulnerable to oil price shocks and fossil fuel dependencies that a faster energy shift might have helped to mitigate. A faster energy transition would also appeal to climate-conscious customers.

   Meanwhile, in the bottom-right scenario, the energy transition is fast, but oil prices are stable. Cheap oil means there is a business case for fossil fuel systems to persist, and businesses may struggle to find agreement to fully let go of legacy models. The result could be a dual-track strategy: adopting clean technologies while remaining tethered to high-carbon assets. This may make short-term financial sense and please a lot of stakeholders, but still, the business is exposed to potential future disruption if oil prices spike again, or if policy, investor pressure, or regulation accelerates divestment at an inappropriate time for the business.

   The other two scenarios paint a picture of business as usual and a volatile shift towards green energy.

6. Assess Business Implications.
   At this point, you will want to assess what business impact the different scenarios will have on costs, supply chains, revenues, and risks.

7. Formulate Strategic Options.
   You are now at the point where you can design flexible strategies to succeed across scenarios. These could include activities such as diversifying suppliers or investing in particular types of energy efficiency.

8. Monitor and Update.
   Finally, it is important to note that this is an ongoing exercise. So it is important to track indicators such as oil prices, policy changes, and technological breakthroughs, revisiting and updating these scenarios as needed. Over time, performing daily acts of foresight will become second nature as you become even more attuned to what is potentially important and impactful for your business.

Why Scenario Planning Matters for Decision-Makers

Scenario planning helps business leaders and investors:

• Reduce strategic blind spots

• Uncover hidden risks and emerging opportunities

• Stress-test key assumptions

• Enhance cross-functional collaboration

• Build a strategy that’s resilient under uncertainty

Today, Scenario Planning is used in designing energy transition pathways, managing climate risk in supply chains, forecasting AI-driven regulatory shifts, and navigating geopolitical complexity in markets from semiconductors to critical minerals.

Governments also rely on it—embedding scenario logic in national industrial strategy, infrastructure planning, and security forecasting.

It works across functions: product design, innovation, marketing, and leadership development. When done well, it unlocks a future-ready mindset across the business.

Final Thoughts: From Prediction to Preparation

No one can predict the future. But we can prepare for it.

Scenario planning helps decision-makers shift their mindset from chasing certainty to building resilience. It breaks linear thinking and unlocks space for creativity, strategic debate, and unconventional insight.

Strategic foresight → enables strategy → which drives effective action.

A business strategy without foresight is like a ship setting sail without a compass.
Scenario planning without a business strategy is like having a compass but no map. Together, they help organisations chart a navigable course—grounded in insight, open to adaptation, and ready for disruption. Scenario planning helps drive a future-ready business strategy.