The future may not be predicted, but it can certainly be probed. 

Scenario planning is one of the tools that allow us to probe the future, mitigate risks, and reduce uncertainties — or, at least, prepare for them. 

If you think that predicting the future is something better left to governmental agencies or crystal ball handlers, I have news for you:

We’re All Predicting the Future, One Way or Another

Most of our decisions are based on forecasting. When faced with choices, we look to the future and try to probe it in order to catch a hint of the things that may unfold. This is as true for everyday, mundane decisions as it is for the BIG choices you have to make.

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Let me give you a few examples:

• When you cross the street, you wait for the green light (or, at least, you should) because you predict that the cars will stop and allow you safe passage.
• If you have two job offers, you will most likely choose the one that has the best chance of setting you up for the future you want. This typically involves going with the more stable company, the bigger paycheck, or the company that offers the best chance for career development. Whichever criteria you choose, you do it by predicting a future outcome.
• When you get married, you do it because you think you will have the life you want with your partner. This means analyzing current and past behavior and actions to predict what your future together may look like. 

Granted, things don’t always work out the way you predicted them. You can never be sure what the future holds in store — and that’s because of a little something called critical uncertainties.

Critical Uncertainties: What Are They and How Do They Mess Up Our Future Plans?

As the name suggests, critical uncertainties are unstable or unpredictable elements, things that you have no control over but that have a critical impact on your plan. In scenario planning, critical uncertainties are things like:

• Changes in consumer preferences
• Legislation changes
• Natural disasters
• Pandemics
• New disruptive technologies

Some of the things above can be predicted in advance (for instance, you can find some indication of a change in consumer preferences), while others cannot (remember the pandemic? Of course you do, but you most likely didn’t see it coming!)

Following up on our examples, here’s how critical uncertainties can affect the decision laid out above:

• A drunk driver runs the red light and then runs over you on the crosswalk — a rare, but plausible outcome.
• The company you joined goes belly up within six months — you didn’t know this because you didn’t have access to their financials at the time of the interview.
• Your new spouse meets the love of their life two years into your marriage — there was no way to predict they would be in the right strip mall at the right time, was there?

Critical uncertainties can certainly (see what I did there?) mess up the best-laid plans. But this doesn’t mean you should stop planning altogther.

Quite the opposite. 

Planning Your Future — Critical Uncertainties and All

Critical uncertainties exist everywhere, in every aspect of life. This is why it’s important to identify them and plan alternative futures around them. 

Let’s use the examples above again:

• Don’t rely on the green light to cross the street. Look at the drivers of the first cars approaching you to make sure they’re slowing down. Their faces may even tell if they’re drunk or spaced out at the moment.
• Always have a savings account with enough funds to support you for at least 6 months (ideally a year). Start building it as soon as you’ve gotten your first paycheck from that seemingly awesome new job. If the company goes belly-up, you’ll have a nice cushion to land on and time to find a better job.
• Prepare your exit strategy early on, ideally before marriage. It would be great to never have to use it, but if you do, it’s best to not plan it while extremely emotional.

You’ll notice that, in the first example, all you have to do is pay extra attention to avoid serious personal injury or death. The other two examples are a bit more complicated: you won’t come out of those situations unscathed. But you will definitely come out of them better if you have a solid plan laid out before the uncertainty takes place.

Why We Should Never Stop Trying to Catch a Glimpse of the Future

I purposefully chose personal life examples here and not business ones. You may disagree with the solutions I suggested — and that’s a perfectly valid personal choice. 

The point of this exercise was not to offer you personal advice but to show you that we all predict the future on a daily basis. More importantly, we can all get better at it by identifying critical uncertainties and planning for them in advance.

The same goes for business decisions. You can make decisions on a whim and hope for the best. But if you ignore critical uncertainties, you do so at your own risk.

More often than not, at least one of the uncertainties that would pop up during proper scenario planning will happen. Wouldn’t it be helpful to have planned for it in advance?