10. Scenario Analysis and Managing Strategic Ambiguity: How to Remember Future Events, Before They Actually Occur!

Scenario analysis deals with strategic uncertainty. It introduces a new way of thinking about problems. We use scenario analysis when we don’t know what will happen next, and when we are facing such strategic ambiguity that we don’t even know what game we are playing. Digital transformations are like that. We don’t know what the rules are. If we’re executives, we don’t know what’s possible, what our customers will want, or what our regulators will permit. We don’t know what our opponents’ strategies will be, or what strategies we should adopt in response. If we’re consumers, we don’t know what to buy, or how to choose, or what the sharing economy of Uber and Airbnb will do for us, or to our neighborhoods. We need a way to figure out what the new rules will be, and what the new strategic choices will be. We need to know what game we are playing. Then, we can develop our strategies, for our businesses and for our lives. Scenario analysis doesn’t start by gathering data. The process starts by identifying questions that will be important and then seeks to determine the data that you will wish you could have to answer those questions.