Key insights from Pete Compo’s discussion on the Emergent Approach to Strategy podcast
Picture this familiar boardroom scene: the leadership team gathers as the head of strategy presents three neat columns on screen. “Here’s our best case scenario, our worst case scenario, and our most likely scenario. If we average these projections…”
Stop right there.
If this sounds like your organisation’s approach to scenario planning, you’re falling into what strategy expert Pete Compo calls “the tyranny of the mid-case” — a seductively logical practice that’s actually killing your strategy design. In a recent podcast discussion, Compo revealed why this seemingly reasonable approach of creating low, medium, and high scenarios, then gravitating towards the comfortable middle ground, represents one of the most dangerous traps in modern strategy.
For executives in agriculture, food, and chemicals — industries where commodity volatility, regulatory shifts, and supply chain disruptions can make or break quarterly results — getting scenario planning right isn’t just academic. It’s survival.
The Mid-Case Trap: Why Averaging Kills Strategy
The allure of the middle ground runs deep in corporate culture. When faced with uncertainty, our natural instinct is to find the safe harbour of “most likely” outcomes. We create a 2% interest rate scenario, a 6% scenario, split the difference at 4%, and call it strategic thinking.
This approach feels rational. It appears balanced. And it’s fundamentally flawed.
“I call it the tyranny of the mid-case,” explains Compo. The problem isn’t just oversimplification — it actively encourages the worst possible strategic mindset: most likely thinking.
Consider the interest rate example. When you create scenarios of 2%, 4%, and 6% interest rates, what story sits behind that neat 4% middle case? If rates hit 2%, we’re likely seeing economic distress and deflationary pressures. If they reach 6%, we’re probably facing inflation concerns or currency pressures. But 4%? It’s a mathematical construct that doesn’t challenge thinking about how your strategy might perform under extreme conditions.
More dangerously, that comfortable 4% figure becomes the gravitational centre of your planning. Teams unconsciously begin to average their scenarios, thinking, “Well, we modelled a 10% growth case and a 90% decline case, so let’s plan for the 50% case.” This isn’t strategic thinking; it’s statistical sleight of hand that obscures the real dynamics your organisation needs to understand.
What you really need to examine are the extremes — and the rich, detailed stories that explain how those extremes might unfold.
What Scenarios Actually Are (And Aren't)
Most organisations treat scenarios as sophisticated forecasting tools. They’re not. This fundamental misunderstanding explains why so much scenario planning fails to improve strategic decisions.
“A scenario is an external condition or event that you have very little ability to change, but that can impact your results,” Compo explains. Notice what’s missing: any pretence that you’re predicting what will happen.
Even the Federal Reserve, with all its economic modelling and policy tools, cannot simply choose interest rates. As Compo points out, “Even the biggest companies in the world can’t change interest rates. Even the Fed and the government can try to control them a little bit, but they don’t choose them.”
The power of scenarios lies not in their predictive accuracy but in their ability to stretch your strategic thinking beyond the comfortable assumption of continuity. They force you to grapple with the question: “If this external condition changes dramatically, how does that affect our strategic choices?”
Your business might face high interest rates and weak competition simultaneously. You could be dealing with favourable commodity prices while navigating stringent new regulations. Wars, political disruption, technological breakthroughs, and demographic shifts don’t coordinate their timing for your convenience.
The goal isn’t to map every possible future — that way lies paralysis. Instead, effective scenario development identifies the external conditions that would most significantly influence your strategic choices, then explores how those conditions might evolve independently of each other.
The Fatal Flaw: One Strategy Per Scenario
Once organisations move beyond the mid-case trap, they often stumble into an even more dangerous pitfall: creating different strategies for different scenarios.
“Your strategy is at the mercy of all external conditions and events,” Compo emphasises. “You don’t get to pick which external conditions and events are going to occur for your particular strategy.”
But here’s the critical constraint: “You can only follow one strategy at a time. You can’t be walking down two paths at one time.” Your organisation has finite resources, limited attention, and singular decision-making processes.
The value of scenarios lies not in generating multiple strategies but in stress-testing your chosen strategy against multiple possible futures. The question isn’t “What strategy should we pursue if interest rates rise?” but rather “How would our chosen strategy perform if interest rates rise, and are we comfortable with that outcome?”
You can develop indicators that signal which scenario might be unfolding and prepare contingency responses. But this is fundamentally different from trying to implement multiple strategies simultaneously.
The Integration Challenge: Strategy as a Puzzle
Perhaps the most sophisticated error is treating scenario planning as a sequential process — first develop scenarios, then create strategies to address them.
“Strategy can’t be done sequentially, in a cascade or in a Chevron sequence. It’s a puzzle,” Compo explains. When developing scenarios, you must simultaneously consider how they connect to your strategic alternatives. Otherwise, you’ll end up with elaborate future projections that have no bearing on the choices your organisation actually faces.
As you develop scenarios, continuously ask whether they would influence your choice of action. Consider a food manufacturer evaluating scenarios around consumer health consciousness. If your strategic alternatives remain unchanged regardless of whether health trends accelerate or plateau — perhaps because your product portfolio is already heavily weighted towards health-focused options — then this scenario dimension isn’t strategically relevant.
This integration requirement explains why effective scenario planning is so difficult. The people developing scenarios need deep understanding of your strategic alternatives, your operational constraints, and your organisational capabilities.
Conscious Risk vs. Robustness: The Tea-Making Test
One persistent misconception is that scenario planning demands building robustness across all possible futures. This assumption leads to strategic mediocrity — approaches that work adequately in many conditions but excel in none.
Compo offers a delightfully simple example: “Do I need a strategy to make a cup of tea? I don’t need a strategy to make a cup of tea because I can live with the fact of the unlikeliness of the kettle exploding on me when I switch it on.”
But change the aspiration: “What if you’re making tea for the Queen?” Suddenly, scenarios that seemed irrelevant become central to your planning.
Consider an ETF manager who believes there’s an 80% probability that interest rates will remain high. She could design a portfolio that takes full advantage of high rates, accepting dramatic underperformance if rates drop unexpectedly.
“It is a perfectly valid strategy to say I’m going to go with what I believe to be a high probability of success, and I’m going to accept the fact that if the 20% chance occurs… I’m going to look terrible and I’m going to get fired,” Compo explains. “That is a completely valid strategy.”
The critical question isn’t whether this approach is right or wrong — it’s whether the choice is conscious. Every hedge, every form of strategic insurance carries a cost. The question is whether those costs are justified given your specific aspirations and risk tolerance.
The Three Real Purposes of Scenarios
If scenarios aren’t about prediction, what exactly are they supposed to accomplish? Compo identifies three strategic functions:
First, scenarios destabilise your organisation’s belief in a known future. Most organisations operate with implicit assumptions about continuity. Scenarios force you to articulate and challenge these assumptions. “You don’t even have to come up with the right scenarios,” Compo notes. “You just have to say, ‘The fact is, we don’t know what the world’s going to look like exactly.'”
Second, scenarios help you prepare possible contingencies. This means building early warning systems and maintaining strategic flexibility, not developing detailed plans for every possible future.
Third, scenarios influence strategy alternative design. When you’re conscious of multiple possible futures, you naturally consider how different strategic approaches might perform across various conditions.
Notice what’s absent: prediction, forecasting, or determining what will happen. “None of these objectives around scenarios are to predict the future,” Compo emphasises.
What Not to Do: Practical Guidelines
After years of studying failed scenario planning efforts, Compo has identified the most common pitfalls:
Never average scenarios. The moment you start averaging, you destroy the very thinking that scenarios are meant to provoke. Each scenario should represent a coherent, plausible future with its own internal logic.
Don’t ignore upside potential. Many scenario planning exercises focus exclusively on what could go wrong. “Sometimes a strategy is great because you’re taking advantage of some possibility of things being 10 times better than you thought.”
Never use scenarios as forecasts. The moment someone asks, “Which scenario is most likely?” you’ve slipped back into forecasting mode. Scenarios are plausible futures that help you think about strategic choices, not probability-weighted predictions.
Don’t create arbitrary long-term views. Your aspiration determines the horizon for your scenarios. If you’re making infrastructure investments with 20-year lifespans, your scenarios need to consider longer-term dynamics. If you’re planning for next quarter, focus there.
Don’t think one strategy, one scenario. The goal isn’t to match strategies to scenarios but to understand how your chosen strategy performs across different plausible futures.
Never forget the integration imperative. Scenarios developed in isolation from strategic alternatives are intellectual exercises, not strategic tools.
Moving Beyond the Mid-Case
The comfortable world of averaged scenarios and most-likely thinking represents more than flawed methodology — it reflects organisational reluctance to confront genuine uncertainty. Breaking free requires both intellectual honesty about what we cannot know and strategic courage about the choices we must make anyway.
The organisations that will thrive aren’t those with the best predictions about the future. They’re the ones that develop superior processes for making strategic choices when the future is genuinely unknowable. They ask better questions: not “What will happen?” but “What are we betting on, and are we comfortable with those bets?”
For executives in agriculture, food, and chemicals — industries where uncertainty is constant — these capabilities aren’t academic luxuries. They’re competitive necessities. The companies that learn to think beyond the mid-case will make better strategic choices, respond more quickly to changing conditions, and ultimately deliver superior results.
At Arkaro, we understand that moving beyond traditional planning approaches requires more than new methodologies — it demands cultural change and leadership development. Our collaborative “do it with you” approach works with leadership teams to develop these capabilities through real strategic challenges.
The tyranny of the mid-case isn’t just a planning problem — it’s a mindset that limits organisational potential. Breaking free opens up possibilities for more thoughtful, more effective, and ultimately more successful strategic leadership.
Want to explore these concepts further?
Watch the full discussion with Pete Compo on the Emergent Approach to Strategy podcast: https://youtu.be/tKBNa0oQShY
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Ready to Move Beyond the Mid-Case Trap?
Escaping the tyranny of the mid-case isn’t just about changing planning techniques—it requires fundamental shifts in how your organisation thinks about uncertainty, makes decisions under ambiguity, and develops strategies that work across multiple possible futures.
Is your organisation still averaging scenarios and planning for “most likely” outcomes?
At Arkaro, we specialise in helping leadership teams develop genuine scenario thinking capabilities using proven adaptive strategy frameworks. Our “do it with you” approach ensures your teams build lasting skills for conscious risk-taking whilst avoiding the comfort of false certainty.
Schedule Your Strategy Reality Check
Connect with Mark Blackwell for a focused 30-minute discussion of your organisation’s scenario planning and strategy development challenges. We’ll examine:
- Whether your current planning processes encourage or discourage real thinking about uncertainty
- How well your strategies perform across different plausible futures rather than single forecasts
- What early warning systems and contingency capabilities your organisation actually needs
- How to build conscious choice-making around risk rather than seeking false comfort in averaged projections
Contact Information:
📧 mark@arkaro.com
🔗 www.arkaro.com
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Ready to move beyond traditional scenario planning? The future belongs to organisations brave enough to think strategically about genuine uncertainty rather than seeking false comfort in averaged projections.
