Scenario technique for questioning risky dependencies

Following on from my Christmas greeting and the wishes expressed in it to make this year a better year, I am unfortunately already having to row back in the first quarter. For we see that the world is unfortunately not getting any better: While the Corona crisis has not yet been overcome, the global world order is already being put to the next test since the Russian military invaded Ukraine: The ongoing Russian war of aggression is accompanied by social tragedies, political paralysis, and economic disruption of yet unknown proportions. Relationships that were thought to be secure are breaking down, and supposedly stable alliances are being put to the test. The shortage of grain, for example, is showing its effects even as far away as Africa, where many people are now starving. This phenomenon shows the effects of the interconnectedness of all activities in the world.

We cannot prevent decisions made by others. But we can better prepare ourselves for extreme scenarios by recognizing dependencies and selectively reducing them if they carry the risk of undesirable effects.

What applies to the global political scene also applies to companies. We often take established relationships for granted without questioning the risks involved. Why is that? Functioning relationships are comfortable. We focus our attention and resources on the circumstances that don’t work. In addition, dependencies develop along with the relationships in a creeping process. In the process, we ignore the fact that the existing circumstances could radically change and the relationships could be endangered.

It is precisely these blind spots that the scenario technique sensitizes us to. It challenges us to question presuppositions and to see them as fragile and changeable. And it encourages us to remain capable of action even in the event of a radical change that seems unlikely to occur.

The solution to the problem of entrenched dependencies is to maintain multiple active connections rather than single sourcing. It is advisable to pursue alternative technologies instead of putting all one’s eggs in one basket, and to keep reserves in reserve.

Above all, however, a mindful and agile approach is crucial. Such an approach also requires regularly asking oneself the sometimes uncomfortable but important “What if…” question: What would we do if our market volume halved tomorrow? What would we do if a resource critical to our success, be it know-how, assets or relationships, were abruptly unavailable tomorrow? What precautions should we take now to ensure we are ready to act in such situations? What will we change? What will these precautions cost us? Russia’s momentous attack on Ukraine suggests that scenario engineering should take on the status of an ideal insurance policy for companies.