Scenario planning is a key part of your strategic toolkit
In a little more than 100 years, the world has braved World War 1, the Spanish Flu pandemic, the Great Depression, World War 2, the 1973 and 1979 oil shocks, and the 2008/2009 financial crisis. We’re now faced with the Covid-19 pandemic, and predictions are that global GDP will fall more steeply than at any time since the Great Depression.
History indicates that brands that act effectively in a crisis can become disproportionately stronger after the event. Timely and sensitive use of marketing communication can help brands demonstrate their values, relevance and purpose to people at a time when they are needed most. If ever there was a time to be agile, anticipative, innovative and progressive, it’s now. Going dark is not an option. As we have seen from past crises, recovery from silence and inaction takes exponentially longer and is vastly more expensive.
Beginning in the late 1960s and early 1970s, Shell developed a technique known as “scenario planning”. In essence, scenario planning looks at underlying demand potential and supply/demand balance over a given time to postulate “zones of extraordinary opportunity or misery”.
By listening to planners’ analysis of the global business environment, Shell’s management was prepared for the eventuality, if not the timing, of the 1973 oil crisis. And in 1981, prior to a supply glut and price collapse after the outbreak of the Iran-Iraq war, Shell sold off its excess, while other oil companies stockpiled reserves.
Deciphering scenario outlooks includes hypotheses on two key drivers: population and prosperity. These drivers are key for emerging markets as they enter their most consumption-intense phases of economic development. Covid-19 has an indelible effect on both. It affects the population through disability and death. Further, it goes without saying, that Covid-19 affects prosperity through its enormously depressive economic impact.
The Futures Practice at Kantar recently developed a set of Covid-19 scenarios as plausible ways that things may evolve over the next six to 12 months. Severe yet sharp scenarios include a one-time outbreak with a fragmented governmental and institutional response. It leads to a period of brief chaos in which customers experience a panic attack. Then life goes on. The second scenario includes a one-time outbreak with a comprehensive governmental and institutional response. It leads to a period of surviving the storm, in which consumers largely experience the event as a close call.
Deeper and longer scenarios include the third scenario, which outlines seasonal and multiple outbreaks. The government and institutional responses again are fragmented, which leads to a longer period of putting out fires, during which consumers experience a recurring nightmare.
The final scenario envisions seasonal and multiple outbreaks mitigated by comprehensive governmental and institutional responses. This leads to a new normal in which consumers experience a brave new reality.
No one knows for sure what will happen. Regardless of the scenario (identified or not), we are seeing more and more consensus as to a global sobering, a slowing downtrend in which consumers shift from accumulating goods to living more meaningful experiences.
Covid-19 has forced a global pause, a reassessment of culture, and a reset on values that touch on many aspects of 21st-century life, including conspicuous consumption, capitalism, celebrity culture, societal values, climate change and our impact on the natural world, and our undeniable connectedness in terms of global community, co-operation, and creating shared value.
At the same time the pandemic has forced isolation on consumers who are inherently social and have an innate need for connection. It has ushered in a period of hardship and sacrifice for consumers who were largely engaged in an era of individualism and status, and has created a period of scarcity and insecurity for people who were largely engaged in consumerism, conspicuous consumption and instant gratification.
The world, as we knew it, has changed. We know that there will be systemic changes just as there were after 9/11 and the global financial crisis. We know that Covid-19 has prompted changes in consumer behaviour that are likely to continue for some time. And Gen Zs and Alphas, the consumers of the future, will be undeniably changed by this event. Nonetheless, we can now plan for possible future scenarios and adjust as necessary as we go along — and at least forearm ourselves to the extent we can.
If we are lucky, as Covid-19 shakes our world views, making us question what really matters, this event could be a watershed moment for humanity, and we may look back on the virus as a catalyst for the resurgence of human values of belonging, shared humanity, and a sense of duty to the collective.
Using scenario planning, brands can pivot to focus on creating collective meaning, building shared values, and connecting through them to achieve sustainable growth and emerge disproportionately stronger after the event. If scenario planning isn’t in your strategic toolkit, perhaps it should be.
- Lynn Wilson is an integrated senior planner at Wunderman Thompson. A version of this article was first published in the BrandZ Top 30 Most Valuable Brands 2020 Report by Kantar SA.
The big take-out:
We may look back on Covid-19 as a catalyst for the resurgence of human values of belonging, shared humanity, and a sense of duty to the collective.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.