Most of us would love to be confident of making the right decisions that will lead to beneficial outcomes. We look at how effective scenario modelling helps you achieve your business goals.

Choose your own (business) adventure

Did you ever read those choose-your-own-adventure books as a kid? The ones where you were given options at the end of each chapter? You could effectively write the story yourself, choosing what the main character did next.

I never got on with those books. I was too indecisive; I wanted to check out all the options to see what happened before I picked one. So that I could be sure I was making the right decision.

It’d solve a lot of problems if you could do that in business too. Evaluate all the alternatives and understand the consequences before you made a possibly expensive mistake.

Scenario modelling helps you do exactly that.

Scenario modelling helps boost resilience and reduce risk

No matter how much we think we’re prepared for the future, we’re not really. Most recently, the Covid-19 pandemic taught us that. Businesses had to change extremely quickly, and some struggled to cope.

Scenario modelling enables analysts to test process changes and assumptions, plan better, manage risks and avoid surprises (even good ones). It’s particularly useful to financial or growth planners, but supports most areas of a business. Leadership teams use the data-led results to inform strategy and tactics, thereby ensuring they achieve the organisation’s objectives.

Example of scenario-modelling results

Example of scenario-modelling results

Source: BusinessOptix

Three steps to better scenario modelling

1. Define your key assumptions

Outline the hypotheses to factor into your scenarios, for example revenue, costs, or inability to operate. You should have clearly identified these in the process mapping stage, when creating the to-be processes.

The aim is to test different supply or demand scenarios, incorporate changing raw material costs, or adjust timescales. Explore whatever matters to your business or process. It’s about enabling the business to identify and seize opportunities, as well as avoiding negative effects.

2. Create a manageable number of realistic scenarios

Make sure you examine all alternatives, not only the positive or ideal results. There are three views you should take at a minimum: the best case, worst case and most likely options.

Combine scenarios to understand the potential impact of events, and test several assumptions at once. Scenario modelling is a dynamic process, so don’t stop when you’ve run one. Adjust the assumptions and go again.


3. Automate your approach

You could use spreadsheets, but they can be hard to maintain accurately. A dedicated business transformation platform, like BusinessOptix, is better.

BusinessOptix offers scenario-modelling capabilities and process simulation tools. It helps you map out many possible futures, based on assumptions that you change or replicate with one click. It also has automation capabilities, enabling you to explore potential outcomes even more easily.

Improve your scenario modelling capabilities with a free consultation

You might already be doing scenario modelling but feel it could be working better. Or maybe you’re not sure where to start. Either way, we can help.

And, as a BusinessOptix premier partner, we apply its diverse capabilities within a wider solution. Simply leave your email address here and we’ll be in touch.

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Article by Catherine Ellwood