Should SMEs use Scenarios? Yes, if...

Scenarios are narratives of alternative environments in which today's decisions might be executed[1]. Scenarios illustrate future strategic contexts through technical and symbolic narratives that can be more or less detailed.

The development and use of Scenarios can be particularly useful in contexts of high uncertainty, where change may come from areas seemingly distant from the company's core business, making it more difficult to distinguish the essential from the accessory.

The space for this article is scarce, but it is not difficult, in today's world, and even telegraphically, to defend the idea of the prevalence of a set of structural uncertainties that affect all markets and economic sectors: pandemic, war in Europe, energy crisis (energy chaos?), political fractures in the European Union, devaluation of the Euro, inflation (possibly uncontrolled?) and rising interest rates. And if we want to look just a little further into the future, we can add to these sources of uncertainty, the rapidly aging population, climate change, desertification, water shortages, increasing inequalities, or growing threats to cybersecurity.

But do SMEs have the resources (time, money, talent) to invest in developing or using Scenarios?

- Yes, if they choose simple (but not simplistic) processes. Often associated with the use by large companies, economic groups and governments, the Scenarios Methodology can be particularly useful and applicable to SMEs - especially in its more pragmatic form of development and application that I call "Fast Scenarios" - promoting confidence in decision making and strategic sensitivity of its leaders and employees, in a business context marked by exceptionally high levels of uncertainty. In fact, depending on the specific context and the resources available, experience has shown me that it is possible to work with Fast Scenarios, including the selection of crucial uncertainties and predetermined elements and the definition of each Scenario's distinctive key ideas, moving from there to action, through implications, options and the construction of strategic roadmaps (and learning a lot in the process).

- Yes, if they work together (without giving up competing, of course). SMEs (in the same sector and/or the same value chain and/or the same region) share major contextual challenges that they do not control, but which have the potential to dramatically affect their future. It will be in everyone's interest that at least part of the scenario work (e.g. scanning for forces of change or building narratives of possible futures) can be done in a shared way, with obvious benefits: saving resources, networking, collective learning. Then, each company can do its specific work in connection with Strategy and decision making (for example, defining investment portfolios, growth and internationalization strategies, new business focus, etc.), considering its resources, culture, supply and competitive advantages.

In fact, SMEs are, at least in the most dynamic economies, key players in innovation and experimentation with new solutions and business models. As a rule, they have shorter decision-making processes and greater flexibility, often developing and applying disruptive technologies, creating products and services and offering forward-looking employment opportunities. And Scenarios, if applied in a simple, practical and shared way, can contribute decisively to the risk management and decision making of SMEs, particularly in these times of great uncertainty.

[1] Ogilvy, Jay, and Peter Schwartz. "Plotting Your Scenarios." GBN. 2004.

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This article is republished in partnership with PME Magazine