Last week, we discussed how you can apply the reputed scenarios planning of the Royal Dutch Shell. We analysed the way Shell uses scenarios planning to get prepared for the future to weather the storm and to even exploit opportunities that come with expected positive or adverse events.
By the time we were writing last week’s column article, Malawi had not yet registered any Covid-19 case. As of now, we have at least 8 confirmed cases. And so, the much-hated Covid-19 is here now. Can we put to the test the scenarios that we outlined last week?
Of course, we do know that Covid-19 will become much worse before it can be controlled and so the real scenario that we are to experience is not yet here. This means that we still have the opportunity to apply Shell’s planning. And we can keep refining the personal plans or the plans we make for our business and organisations.
I want to share an example from Shell. This is based on a popular MBA case study video clip. In the clip, the former CEO of Shell New Zealand narrates how Shell New Zealand had prepared for several future scenarios and in the end that helped them to aggressively beat their competition in the market.
What was happening in New Zealand was that the petroleum market was heavily regulated by the government. The government was dictating many aspects of the industry including setting the retail prices for petroleum products and so on. Shell New Zealand keenly followed all the political manifestos of all the major political parties in New Zealand and based on that, they did their thorough scenario planning.
Their analysis showed that in the near future, there was a great likelihood that the petroleum industry in New Zealand would be de-regulated. Shell New Zealand detailed their plans on what they would do immediately government made those changes to accelerate their business growth. Thinking ahead of their game and their competitors, Shell New Zealand even had all their plans approved by all their superiors including their international head office as well as their board of directors.
This meant that when a new government took over and made the massive market regulatory changes, Shell New Zealand was already ready to roll out their respective plans which had already been approved, complete with ready capital funding. On the other hand, this was the time their major competitors were beginning to plan before they could even seek a series of approvals and raise the required capital to finance the changes.
As a result, Shell New Zealand cruised well ahead of all their competition. Simply because Shell New Zealand had thought well ahead of the game and had detailed all the plans for all the major future market scenarios.
Shell does the same with major changes in oil prices. Shell knows exactly what changes they would make at different oil prices. They know which oil wells they would suspend oil production at what price. They are able to shift work of engineers from working on current projects that get suspended to start working on future projects getting ready for the oil price to rebound – this way, they do not lose productivity and critically, they are able to keep their key human resources without wasting money on paying idle staff.
Shell’s approach to scenarios planning is very relevant today to many companies and organisations. After the Covid-19 Pandemic, many companies and organisations in the travel and tourism industry will completely close without return to operations or business. Many people will lose jobs not just in the travel and tourism industry but across many industries. What scenarios do you envisage? How can you prepare now like Shell does, to hedge your organisation and yourself against the worst effects of Covid-19 pandemic?
Good luck as you prepare for the several possible scenarios ahead to weather the storm and remain one of the few companies and individuals that will survive his pandemic. Very clever ones will come out even stronger than before because behind every problem, there lie new hidden opportunities. Good luck as you rise and shine using Shell’s approach to scenarios planning