How CEOs use scenario planning to adjust corporate strategy

6 minute read 15 Feb 2021
By Bill Casey

Former EY Americas Vice Chair, Strategy and Transactions

Experienced transaction advisor. Fluent in English, Spanish and Portuguese. Competitive triathlete. Passionate about restoring vintage cars, playing guitar. Fan of Elvis. Husband. Father of two girls.

6 minute read 15 Feb 2021

After moving past the initial pandemic shocks, CEOs are focusing on how their strategy and operations need to change for 2021 and beyond.

Fortune 250 CEOs are analyzing which shifts in customer behavior may be temporary and which may be permanent. They are also looking to remove risk from the supply chain and build in flexibility to meet those changing needs.

The key is optionality. Right now, for example, retailers need to make tough purchasing decisions. Do they take the risk on seasonal items in order to capture a spike in demand? Or do they focus on hard goods that are easier to liquidate if demand doesn’t recover? These types of decisions are being made all over: how much office space will be needed in the future? Will demand continue in businesses like home improvement that have seen a spike? When and how much will business travel come back?

On top of these variables, the pandemic has accelerated the digital economy, potentially requiring new investments and new skill sets to meet future customer demands.

At EY-Parthenon, we are doing a detailed analysis, sector by sector, to determine what the impacts were to production because of COVID, literally looking at thousands of variables.

M&A is a key strategic component. This includes looking at deals that will provide scale, a strategic advantage and new ways to work.

As they plan for more scenarios, CEOs should also consider communicating the need for flexibility, both internally and externally. CEOs should also prepare their boards, in terms of how they're making those changes to the operating model.

Created in collaboration with CNBC Brand Studio. 

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Summary

CEOs should consider what customer behaviors are likely to remain following the pandemic and take steps to address those customer demands. The pandemic has shown the need to build flexibility into strategy to accommodate different scenarios. Investments to increase digital capabilities may be one of the biggest focus areas for companies to compete in a post-pandemic world.

About this article

By Bill Casey

Former EY Americas Vice Chair, Strategy and Transactions

Experienced transaction advisor. Fluent in English, Spanish and Portuguese. Competitive triathlete. Passionate about restoring vintage cars, playing guitar. Fan of Elvis. Husband. Father of two girls.