Scenario Planning

Strategy Offering Turbo-Charged with Advanced Scenario Planning

Nicole-Anne BoyerAt a recent strategy update retreat with one of our clients, we introduced scenario planning as a front-end to their strategy process. The improvement was dramatic! One of the partners even queried us if we had been actively using scenario planning at the time we’d done their original strategy session. (We assured him that we hadn’t, that it was a new offering, and we had NOT been holding out on him!) He thought it added tremendous value and insight, and maintained that it should be part of their strategy process from here on out.

Much credit for the tremendous improvement between the two sessions goes to our associate, Nicole-Anne Boyer, founder of Adaptive Edge LLC. Since 2009, Ann, Charles and I have had the pleasure of collaborating with Nicole. From the start of our association, our strategic planning offering has been turbo-charged with the addition of robust scenario planning, strategic foresight and futures thinking. While I had thought I knew something of scenario planning before, I have been learning at a furious pace to come up-to-speed on the state of the art in scenario planning.

Scenario planning has been around for a very long time, but took significant strides forward, notably in the planning department at Royal Dutch Shell, and at the Global Business Network. It is now used widely in planning processes in business.

“According to Bain & Company’s annual survey of management tools, fewer than 40% of companies used scenario planning in 1999. But by 2006 its usage had risen to 70%.”
– The Economist, September 1st, 2008

I have been learning that there are as many forms and methods of scenario planning as there are practitioners, but there has been a clear evolution in the purpose and motive for scenario planning.

  • Inform Planning: Use the output of a scenario planning exercise to inform a conventional “out-think the future” strategy session.
  • Adapt to Future: Scenario planning becomes part of 1) a way of thought for leadership, and 2) an early warning system to help a company to adapt to future changes. One of the funders of modern scenario planning framed it so:

“The test of a good scenario is not whether it portrays the future accurately but whether it enables an organization to learn and adapt.”
– Peter Schwartz, The Art of the Long View

  • Shape the Future: The scenario planning process might be taken beyond the walls of the organization and involve the wider system we are trying to influence. The scenario planning process is then a catalyst in a broader, generative effort to shape our desired future. Put another way:

“The best way to predict the future is to invent it.”
– Alan Kay, Scientist and Apple Fellow

In our work at Ralston Consulting Inc., we have always focused on helping our clients develop the orientation and capacity for generative change to create their desired future. Our collaboration with Nicole has given our mission a tremendous boost!

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Scenario Planning Helps Profit From Uncertainty

In Profiting from Uncertainty: Strategies for Succeeding No Matter What the Future Brings, authors Paul J. H. Schoemaker and Robert E. Gunther make a point about the discrepancy between the forces shaping a sector’s future, and where management tends to focus. Their claim is that about half the forces shaping the future value of a business – developments in the industry, and in the larger global environment –  are not monitored by management, and thus, “left to fate”.

Instead, management is compiling backward-looking internal and industry trend data to forecast future conditions. This is backed up by informal surveys by Gary Hamel & C. K. Prahalad, suggesting that senior management devote less than 3 % of their time and energy to building a collective vision of the future. (Competing for the Future, Harvard Business Press, April 1, 1996, p 4)

We need a working understanding of our external environment and the many possible futures that may emerge, as making plans based on a single notion of the future can increase risk even as, paradoxically, it reduces our sense of conflict about an unknown future. The world is simply too uncertain and complex for such single-point predictions; and they give a false, sometimes dangerous, confidence that we are in control more than we really are. At the other extreme, we cannot become paralyzed by what we perceive as too much uncertainty, as we become obsessed with avoiding risk. We must plot a course between prediction and paralysis, thinking about the future in terms of multiple possibilities in order to better create our desired future.

Action Plan: Make a practice of ‘learning from the future’. To kick off your 2011 strategic planning cycle, take your leadership team through a facilitated scenario-planning process. In the course of co-exploring 3-4 possible futures, defining a ‘desired future’ and gleaning strategic insights, your team will develop a much deeper capacity to mine profit in areas of high uncertainty – an area your competitor is likely spending 3% of their focus on!

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Date: Wednesday, September 3rd, 2014 - 06:59:47am



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