A major casualty of the suddenness and depth of the current economic downturn is the confidence executives have in their ability to predict the future. And, if you cannot predict the future, how can you plan for it? Does the demise of prescience mean the death of strategic planning?
We don’t think so. A future that is increasingly cloudy and turbulent, however, may mean you need to adjust your planning process. One response we have seen is a mini-resurgence of scenario planning. Initially made famous by Shell Oil, scenario planning involves developing descriptions of a number of different futures and then developing plans or strategies that increase the likelihood that your organization can deal with any of the futures you have described.
Scenario planning has been criticized by some as being a resource-intensive exercise that does little to increase accuracy in predicting the future. But, we believe this misses the real purpose and value of scenario planning. Scenario planning is not so much about predicting the future, as it is about imagining future possibilities.
So, what is the value of spending time as an executive team discussing and imagining alternative futures if no one knows which will become reality? Here are some benefits we have seen when doing scenario planning with executive teams:
??? Development of a common language and framework for discussing alternative futures
• The uncovering of growth opportunities not discovered when discussing a single future
• Development of a more adaptive, creative organizational mindset that considers a wider range of future possibilities
• The ability to spot and manage new risks earlier since they have already been discussed and envisioned
• Development of agreed-to “sign post” to alert the team as the probability for one scenario over another evolves
End Note. Scenario planning does not have to involve a heavy resourced commitment to be beneficial. I recently spent time facilitating a ½-day scenario planning session with an executive team as part of their two-day planning session. This was the fourth time this particular team had met to revise and refine there core strategic plan. Truthfully, their update sessions had become somewhat pro forma with minimum changes to the strategy. However, the company works in the health care sector and all of the executives could see the clouds of change on the horizon, even though they had no idea how things would play out once the politics have run their course. By spending a half day envisioning alternatives, the executives concluded they needed to refocus the strategy in a number of areas to increase the company’s ability to adjust quickly regardless of what future evolved. They also identified and agreed to monitor a series of indicators they believed would signal early on which way the winds are beginning to blow. The evolution forms of the two-day planning session indicated that the executives felt the scenario planning had been of greatest value even though they had spent only a quarter of their planning time engaged in the exercise. Just because you can’t predict the future, does not mean you should not spend time envisioning and planning for it.