The suns & clouds chart

The Suns & Clouds chart balances the important opportunities and risks behind a strategy. It is a visual output of strategic due diligence rather than a threat-only register.

When to use it

Use the chart for acquisitions, alliances and investments, or adapt it to project appraisal, strategy review, career choices and other decisions where upside and downside must be compared.

Origins

I created the Suns & Clouds chart during consulting work in the early nineteen-nineties as a way to communicate strategic due diligence on one page. Variants later appeared in other consulting reports because the visual vocabulary makes relative likelihood and impact immediately discussable.

What it is

The chart assembles four areas of uncertainty:

Demand:

Could future market demand fall short of or exceed the forecast?

Competition:

Could rivalry, entry, substitution or market structure develop differently?

Competitive position:

Could the company’s relative strength weaken or improve?

Business plan:

Could strategic choices and implementation underperform or outperform?

The risk jigsaw of strategic due diligence

For each area, identify the main negative and positive departures from the plan. Estimate how likely each is and how materially it would affect value. Together they form a ‘risk jigsaw’ that tests whether the plan is backable.