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Scenario Planning: Crystal Balling or Smart Business?

Allen Black

Is trying to make projections for the future – which is not the next year, but three to five years out – too risky?  Might this be perceived as “crystal balling” and not worth the time and effort, or might it be something that makes perfect business sense?

Worked Last Year

The default for most business planning is to dust off last year’s plans and repackage them in the hope that they are still contextually valid.

This leaves planners scrambling when a major event unfolds that hadn’t been considered.

A change in government priorities or an unexpected alteration in client expectations – and the interaction between these two - could potentially have fundamental and far reaching consequences.  This is why, in my opinion, it is worthwhile to include scenario planning as part of the strategic planning process, particularly where an organization has no easy answers about its future and is faced with uncertainty.

The Smart Way

Swami-175x383I recently had the experience of leading a branch of a federal government department through such a process.

The concept of using scenario planning, as part of strategic planning, to uncover possible futures that might unfold was foreign to them; no one had been through such a process before.

The outcome that convinced them to carry the process through to its conclusion?   They would be in a position whereby they could adjust their business plans without too much trouble, regardless of which scenario emerged.

So, we spent 2 ½ days discussing challenges to the organization - the trends and uncertainties that shape their business environment - and developed three plausible scenarios for the future.

This allowed perspectives on core competencies and key success factors to develop, and from there ideas were derived on how the organization should be structured, staffed, and equipped to support the required business processes.  Ultimately, the strategy for moving the organization forward emerged.

A Happy Ending

Delegates to the strategic planning session left confident that the process made sense to them.

And, because they had developed a better understanding of the likely future, they could make their organization work no matter what happened.

If you had a similar experience you would like to share, or comments about how this could have been handled differently, I would like to hear from you.

Comments

I have been through several similar exercises and found them very useful. But one aspect troubles me: when I have been involved in such excercises, the organization has done them with internal expertise only (and sometimes a facilitator).

Often I have longed to have someone from the outside contribute. Someone who is au courant with the larger public or industry trends that are affecting the organization. Someone who is familiar with what is happening worldwide—how the best organizations are changing to meet these new trends.

For example, a health authority looks at their future. They know the demographic trends, the technology trends, and the best practices in safety and infection control that are now driving many hospitals and health entities. But what about the larger picture, the way hospitals in some parts of Europe have totally changed the way care is offered? It is likely no one within the organization really understands this new way of thinking.

Can we generate scenarios from within, without being aware of great waves of change that may be coming from outside? Do we need to ensure that we that there is someone who thinks differently than all of us do, within our organization, and that that someone is present to signal to us that the light at the end of the tunnel may be an oncoming train we didn’t expect?

By Ellen Godfrey on 2010/11/30

Ellen, I couldn’t agree more. The team has to be diverse so that a wide range of possibilities, options, and outcomes can be considered.
This means having not just those directly involved in implementing strategies developed as an outcome of the scenario process but outside expertise in areas such as demographics, technology, politics, etc, join the team.
However, this is easier said than done. Is the client willing or able to find this representation.
In my case, it was more by good luck than good planning that we had input covering these areas, something I will pay more attention to next time.

Allen

By Allen Black on 2010/12/01

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About this Article

Posted by Allen Black
Posted on November 30, 2010
2 Comments

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Categories: management, planning & policy, risk management, strategy