Imagine that you are trying to get to an important appointment across town and you are stuck in traffic, unsure if you will be able to make it. If there is a high probability that you will arrive on time, you spend the rest of your drive anticipating your arrival and the meeting that will follow. If it is unlikely that you will arrive on time, you mentally prepare for the late appearance or think through a Plan B for the meeting. Either way, you spend the remainder of your drive planning and preparing for the likely outcome. In contrast, the greatest level of discomfort for most people is at the height of uncertainty when the chances are about even as to whether or not you will make it on time.
Managing Uncertainty
As humans, we are generally wired to avoid the feeling of uncertainty, and instead crave a sense of closure or understanding. In fact, most people are likely to seek a definitive result over uncertainty, even if the landing place is one that is not favorable to us. This phenomenon is known as the Ellsberg Paradox, whereby most individuals are drawn toward known probabilities, even if there is a potential better outcome with an unknown alternative.
Because uncertainty makes us uncomfortable, our natural state is to overestimate or underestimate the level of it. When we overrate the level of uncertainty, we assume that the world is too unpredictable to make plans, leading us to throw up our hands and take a wait-and-see stance. The risk with this approach is that we remain in a reactive mindset and are playing catch-up at a time when such a delay has increasing consequence.
When we underestimate uncertainty, we tend to see the future as knowable and plan for what we determine to be the most likely outcome. In this context, without a credible alternative, we default to expect the future to look much like the past. With this approach our assumptions align with the status quo, leading us to miss both risks and opportunities that are emerging around us.
Embracing uncertainty
While we do not know what the future holds, we actually know much more about the future than we often think that we do. While we may not know the specific outcome of an election or a competitive merger, we have a great deal of insight into the trends that are impacting healthcare. We do not need to be able to predict the future in order to plan for it.
If we can find a way to embrace uncertainty as an inevitable part of being alive and engaged in the world, we can use this insight as a superpower that gives us an advantage in business and in managing our own lives.
Scenario planning
Scenario planning is a low-cost, high-impact way to lead forward through uncertainty. It frees us from expecting to know ‘the answer’ and gives us an edge over our own limitations and biases. Rather than making one fixed prediction, scenario planning allows us to prepare for a range of possible outcomes, enhancing our readiness to respond effectively. Some of the ways that scenario planning supports our work include:
Experts' Predictions Are Often Inaccurate
Experts, even those with deep knowledge and experience, often make inaccurate predictions about the future. Scenario planning allows you to consider multiple potential outcomes rather than expecting one to be accurate or known.Human Biases
Human biases can lead us to make assumptions about where the future is headed. Scenario planning helps mitigate these biases by allowing us to explore a range of scenarios, including those that are both favorable and unfavorable.Identifying No Brainers
Scenario planning can uncover steps, or ‘no brainer’ activities, that could be taken across various scenarios. There are often more of these than expected, freeing an organization from waiting unnecessarily to act.Exploring Wild Cards
These scenarios may be unlikely to occur but would be so significant in impact as to warrant proactive attention. Examples could include pandemic, a climate event, major legislation, etc.Encourages an adaptive and empowered mindset
Engaging in scenario planning helps executives to see the future as under development rather than fixed. This frees up thinking to be more flexible when change inevitably arises. It also helps participants to see themselves as actors in constructing the future.Aligning on a future vision
When leaders align on a common vision of the future healthcare environment, of the organization, or of other variables, it creates common purpose. This vision provides clarity of action that both supports future planning and also impacts how to approach near-term issues.
Studying a trend, risk, and even opportunity from a thought piece or presentation deck is valuable but can also leave leaders overwhelmed and issues under-explored. In contrast, a data-driven approach to scenario planning leads executives to feel empowered by finally getting to some of the topics that have been weighing on them. Scenario planning can be part of an ongoing discipline (quarterly, bi-monthly), including in strategic retreats, a means to engage a board, as part of the strategic planning process, as a driver in adopting innovation, organizational change, and more.
Imagine ourselves as back in that car, unsure if we are going to make it to our destination. Scenario planning allows us to explore multiple outcomes, helping the driver to feel calmer and prepared either way. Unknowns are just something we navigate, and there could even be new opportunities along the way.
The healthcare landscape will be changing more rapidly in the coming years and many executives feel a sense a dissonance between the transformation ahead and the topics that take up most of their time day-to-day. Scenario planning helps leaders to keep an eye on the future while freeing time to remain focused on critical topics in the present. And the collaborative experience of exploring critical issues together often ignites a creative spark that can be uplifting and energizing.
‘Uplifting and energizing’ are not words I often hear executives use to describe their meetings. And yet, a disciplined approach to scenario planning can be a low cost, low tech, and high impact way to get there regularly.
I would love to hear how your team uses scenario planning, and of course, I’m always happy to swap tales!