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How scenarios help you lead

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Preparing for the unexpected is what allows you to keep a steady hand when guiding your company.

Scenarios are a powerful tool to that end. How to use them right:

• Use scenarios to communicate a single, bold goal, even as you prepare for a number of possibilities. Great leaders do not paint several alternative views of the future. You cannot stand up in front of an organization and say, “Things will be good, bad or terrible, but I am not sure which.”

Example: Winston Churchill said about British aims in World War II, “Victory at all costs, victory in spite of all terror, victory however long and hard the road may be.”

By insisting on only one final outcome, Churchill set forth a goal, while acknowledging the range of uncertainties (“however long and hard the road may be”).

• Use scenarios to avoid looking stupid. A wide range of scenarios—even if not publicly discussed—can help prevent you from making overoptimistic statements.

Example: One financial regulator announced, early in the financial crisis, that its banking system was capitalized to a level that made it bulletproof—only to announce, later, that it required recapitalization.

— Adapted from “The use and abuse of scenarios,” Charles Roxburgh, McKinsey Quarterly.

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