Strategic Planning & Scenarios (adapted from Strategy Bites Back by Henry Mintzberg et al)

There are numerous definitions for strategy.  One I read recently intrigued me:

“Strategy is an intimate conversation with the situation by committed and knowledgeable people in constant search for improvement.”

We won’t take the time to unpack that definition in this Weekly Insight, but I would challenge you to think about such key words as “intimate” and “committed” and “knowledgeable” and “constant” and “improvement.”  

What I’d like to focus on this week deals with scenario planning and it comes from the book Strategy Bites Back.  Scenario planning begins by identifying a focal issue or decision.  “There are an infinite number of stories that we could tell about the future; our purpose is to tell those that matter, that lead to better decisions.”  For that to happen, strategic planning participants must agree on the issue that needs to be addressed (whether very broad or somewhat narrow).  Make sure the participants have agreed on the issue(s) that will be used as a test of relevance as they go through a scenario-making process.

Before we can develop the various scenarios, we need to identify the primary “driving forces” at work in the present.  These forces typically fit into four categories: social dynamics, economics issues, political issues, and technological issues.  Examine the forces currently at work for their long-term impact.  Some of these forces are outside our control and are predetermined (e.g., demographics).  Identify all the forces that are predetermined.  What’s left will be a number of uncertainties.  Prioritize these uncertainties and focus on the critical ones.  How do we define a critical uncertainty?  It is key to our focal issue(s).

Now we can think or dream about the various scenarios that might unfold in the future.  Of course, we don’t know which ones will actually occur.  Some of the decisions that we make today will make sense across all of our future scenarios.  Others will make sense in only one or two.  For those decisions that will work across all scenarios, we can use them to move forward in the confidence that we are making robust plans for the future. 

However, the decisions that only make sense in some of the scenarios are much more tricky.  Thus, we must devise “early warning systems” that let us know when certain scenarios are beginning to unfold. 

The Value of Scenario Planning  (from The Subtle Art of Strategy by Ian Wilson) 

Scenarios increase an organization’s willingness and ability to deal with uncertainty, to focus on external drivers of the business, and to increase learning and flexibility.  They also contribute to the clarity and farsightedness of vision and to developing strategy as a matter of choice (choices among alternative possibilities in the future).  Scenario planning contributes to the overall effectiveness of strategy management by developing: 

·        A more complete understanding of the dynamics of change

·        Fuller consideration of the range of opportunities and threats in the future

·        Reduced (not eliminated) vulnerability to surprises

·        Expanded range of strategy options

·        A more resilient, flexible strategy

·        Better assessment of risks 

With the above advantages, why do companies have such a hard time making scenario planning work?  The author believes the problem is largely a cultural and psychological one.  Most corporate cultures still focus on single-point forecasting and quantitative analysis.  Scenarios, however, are more qualitative and their focus is on ranges of possibilities rather than on precision forecasting.  Scenarios force everyone to view the future and decision making in terms of alternatives.  Scenarios remind us that we do not, and cannot, know the future and thus force us to display some degree of incompetence.  Who wants to feel incompetent? 

True North Wisdom’s Approach

What does Scripture teach us about planning…about the future?  I trust that you might spend some time searching your Bible for answers to this question.  However, suffice it to say in brief that God encourages us to plan.  Someone once told me to plan, plan, plan but make sure you submit those plans to God for redirection, for erasure, for fulfillment.  Proverbs 3:5-6 states this quite well: 

“Trust in the LORD with all your heart and lean not unto your own understanding.  In all your ways, acknowledge Him, and He shall direct your paths.”   

And so we should use the creative gift of scenario planning as we attempt to determine the best way to accomplish God’s will for us in the marketplace.  Just realize that He holds all the scenarios in His hand and He will choose which future will actually occur—for His glory and for the benefit of His children. 

Keith 

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