Agility Not Just for Athletes: Maintain Business with Scenario Analysis
Scenario analysis is the process of examining every possible outcome of a given situation to determine the best course of action. It also determines each way a business needs to adjust in order to thrive in every scenario.
According to Decision Strategies International, a management consulting company based in Pennsylvania, the purpose of scenario analysis is not to predict the future or choose the right outcome. The purpose of scenario analysis is to have a scope of all possibilities in a market and be prepared to make successful moves within each outcome. With this in mind, no business or company has to question whether or not this tactic is useful or important. Scenario analysis tests business strategies for future success.
Business agility is a company’s ability to change with tides, both internally and externally, without losing effectiveness or momentum, according to the online publication HRZone. Scenario analysis is a way to measure a company’s agility, and whether or not it can withstand changes to the status quo. Business agility is especially important in industries, such as those technological, where a system, software, or piece of machinery may be replaced by something deemed even more efficient the very next day.
Scenario analysis and business agility are also important in that they ensure that the business sustains, and the people working within the company have the skill set and stamina to keep up with shifts and new developments.
Business agility built into a company’s core rather than in response to a crisis, is one of the best ways to ensure a company’s longevity. The 2009 Economist Intelligence Unit reported that almost 90 percent of executives believed agility was critical for success, with 27 percent fearing lack of agility in their own companies. Research conducted by the Massachusetts Institute of Technology (MIT) suggests that agile businesses grow revenue 37 percent faster and generate profits 30 percent higher than non-agile companies.
Developing methods of adaptability and flexibility serve to sustain companies in the long run. After all, industries change no matter what section of the professional sphere an individual may inhabit. Additionally, sometimes it is not the industry itself that changes but societal culture that shifts, forcing an industry adapt. For example, fast disappearing are the days of the coal mine. As society grows more environmentally conscientious and technologically advanced, attitudes have shifted energy production from fossil fuels to solar production. For energy companies to thrive in the market and continue supplying jobs, they must shift attitudes internally.
In 2015, PricewaterhouseCoopers (PwC), a London-based multinational professional services network, determined that the three drivers of agility are: the operating environment, strategic responses, and organizational change. In the overview prefacing their infographic, PwC states, “In our fast-moving world, the winners will be companies that can sense change and respond accordingly.”