Fixed Mindset

Unforeseen Danger: The perils of a fixed mindset in scenario planning

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In our previous article on scenario planning, we discussed the benefits of consulting a diverse range of people to accommodate as many different perspectives as possible in the first phase of the process.

Once that consultation is complete, the next stage is to create the scenarios themselves. The first step in this phase is to map out the problems for consideration in detail and ensure that decision makers take seriously the risks they could pose to the organization.

Defining the Problem

Initially, a problem must be both identified and defined. At this stage, the most important question to ask is whether the problem is strategic, technical, or operational in nature? Sometimes the problem is highly specific (e.g. should we lay-off staff?), but on other occasions can be more open-ended (e.g. what are the potential emergencies that could disrupt our current strategy?)

The current pandemic and the 2008 financial crash both fit squarely into the second category. Both of those events would have been categorized as inevitable at some point over the next few decades, but were dismissed as unlikely in the near future and not urgent until just days before the dam broke. As a consequence, very few appropriate plans were in place to deal with the two great crises the 21st century has seen thus far. In the case of Covid-19, there was very little fat in corporate or public systems to deal with a prolonged economic hibernation.

Avoiding a Fixed Mindset

Once all the scenarios and their possible impacts have been mapped, the leaders of an organization must make a decision on if and how they prepare for each one. 

This is a delicate stage in the scenario planning process, as the call to prepare (or not) rests with the ultimate decision maker and is guided by that individual’s attitude to risk. Again, diversity is key here, as the more stories they have heard from a range of sources, the less likely they are to be swayed by the opinions of a small group of ‘expert’ advisers in their inner circle.

The 2008 crash is a stark warning as to what can happen if leaders fail to prepare for alternative futures. In the months preceding the crash, not only were financial ‘experts’ not paying attention, they were actively dismissing the potential risks out of hand. Alan Greenspan, the Chairman of the Federal Reserve, was still espousing his free-market, light-touch regulation as an infallible philosophy. Greenspan maintained his charade of certainty until literally days before the crash when he finally admitted that there was a flaw in his thinking. He did so in a frankly astonishing statement:

“I did not foresee a significant decline because we had never had a significant decline in prices before.”

It’s difficult to find a more perfect – and frightening – example of a mindset that refuses to see a future different from the past; the very bias that scenario planning is designed to resist.

Accepting Vulnerability

If, as sports organizations, we are to create realistic and useful scenarios that help to safeguard our futures, we must be open to having our fundamental beliefs challenged. As humans we have a natural aversion to questioning our judgments and feeling the discomfort that accompanies the consideration of negative events. However, confronting those things is absolutely essential if the scenario planning process is to be effective.

As teams and leagues gradually emerge from lockdown, they will return to competition in a drastically altered financial and competitive environment. Those organizations that accept their own vulnerability, learn lessons from the past, and prepare for the uncertainty of the future will surely generate a competitive advantage for themselves when the next crisis hits.

Interested in learning more about scenario planning? Click here to download our latest research paper, Scenario Planning in the Age of Covid-19.

Image: Edwin Hooper/Unsplash