How CEOs use scenario planning to adjust corporate strategy

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.