Scenario planning can use lots of post-its (Photo credit: Sidereal)

If you’re happy making incremental changes to your strategies or business models, you won’t need to read this. But if you sense there are potentially big changes afoot, this blog article might be an important read.

Conventional ways of putting together strategies and plans are fine most of the time. In essence this approach is:

• Appraising what work streams are growing and declining in volume and profitability
• Assessing what key areas of expertise you can or should offer
• Matching the two together and finding key individuals to be accountable for delivery
• Providing management support and challenge to ensure it happens

This approach will get you incremental changes to what you’re focusing on.

But what if that’s not enough? What if a few firms have got a particular market sown up – you might seek a more radical strategy to shake things up a bit so your firm can make inroads.

Or, what if a new rival (new ABS?) with a different business model is starting to threaten your standing in the market? You might need to change the mental models your partners are using as to how best to deliver your services.

In such a situation I recommend you adopt scenario planning. This technique was first used in the military and then further shaped for business purposes by Shell. They impressed the business world by how well they confronted the oil crises in 1973, 1979 and the economic crash in Asia.

One simple way of using scenario planning is to create two or three scenarios of the future. Each of them should have some basis for coming into being. For example, there may be events initiated by others, eg:

• Your two biggest rivals merge
• Your biggest clients decide to do the legal work themselves

Or you may decide to be radical and disrupt the conventional business model by, for example, outsourcing most of your lawyers to generate lower operating costs.

You then work through these circumstances thinking about the ramifications to the key stakeholders (clients, staff, new recruits, support staff etc) and actions your firm could take to take advantage of these potential developments.

Many of the high volume, low cost legal businesses have already challenged the traditional ways of delivering legal services. They saw the potential for using paralegals and using technology differently.

Benefits of Scenario Planning

Businesses tend to have mental models as to how their market and firm operates. Firms need to challenge these models and be more innovative in this fast changing market.

We can easily miss small developments at the edge of our experience – especially a new type of competitor. Such competitors can start off small but by the time they are winning work from you, it may be too late to react.

Scenario planning is like rehearsing the future. Someone has described it as ‘creating a memory of the future’. The firms that use it will have an advantage when ‘stuff happens’.

Let’s face it – chance favours the prepared mind!