Scenario Driven Strategy
Times of high uncertainty make developing strategies much harder, but it’s in these times that strategy is most important - a Scenario Driven Strategy (SDS) can help.
SDS leverages the value of scenarios to design a strategy that utilizes the concept of optionality to respond to rapid changes in the macro and competitive environment.
Just like the value of financial options is partially driven by levels of volatility in the market, so is the the value of strategic options driven by the level of uncertainty in the economy and the industry.
But not all situations require scenarios, only those with high uncertainty and high impact need to really be address using this approach.
Each scenario needs a clear definition and sufficient analysis to inform its potential outcomes, and to support the creation of relevant strategies.
Situation Overview
Retailers operating locations across the U.S. have seen traffic vanished and revenues reduced dramatically.
While online sales (~30% of sales) could be viewed as an alternative channel to lessen the blow, as consumer confidence has crashed, so have e-commerce sales
How many store locations can come back online over the next 12 weeks is a highly uncertain situation, the outcome of which will have a very large impact on the viability of the business
The most current information and data impacting the situation needs to be collected and analyzed in order to develop each scenario
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And for each scenario, a strategy is designed around key components relevant to the situation under review
Close monitoring of the events impacting each critical situation is key in order to trigger the right strategy at the right time, and to adjust as needed
With an economic, consumer and retail landscape changing almost daily, and with the timing, speed and effectiveness of the re-opening, developing strategies is harder than ever. Leveraging scenarios and the options that come with them, is a practical and effective way to develop strategy.