Scenario Planning
By: Matthew W. Hurtienne, Ph.D, Assistant Dean – Batterman School of Business
“The problem with the future is that it is different. If you are unable to think differently, the future will always arrive as a surprise.“ Gary Hamel
You probably have heard of strategic planning, but have you ever heard of scenario planning? Strategic planning looks at planning on a linear scale and in a stable environment. But, when has the future ever followed what we have planned? Take the current pandemic, for example. Scenario planning recognizes that the future is not linear and allows you to prepare for the unknown. Consider Shell Oil for a quick example; they were able to predict the oil crisis of the 70’s. By planning for the event, they had a response plan and were able to survive the crisis.
Clear your minds and attempt to grasp the impact of being able to see futuristic events and how these events might impact the success of your organization. Now imagine what it would mean to your organization if you had a detailed plan on how to respond to the event. Scenarios should be specific and unique to each organization. Every organization is unique and different, and as such future events will have different impacts and will need different responses. This type of planning allows us to make high stress and strategic decisions at a time when human emotions are more rational and reasonable. Scenarios help organizations to develop appropriate policies, initiatives, and operational responses before the crisis even occur.
Now let’s take a look at something not so drastic as a worldwide pandemic. Consider the impact of your organizational sales increasing or even decreasing, what impact would that have on your organization? Do you have an operational response plan on how you will pivot to the new normal, manage your payroll, or even restructure your leadership team? Without scenario planning, you will not have identified the events that will trigger the response, but you also will not have a strategically planned response.
Scenario planning is not just for corporate America. It is also for small businesses, non-profits, education, and even religious organizations. Think about education. A possible scenario for education is what impact would occur if the education institution experiences a 10% decrease or increase in enrollment? The 10% increase in population may seem more positive, but both could have a catastrophic impact on the organization if not forecasted and planned.
Similar to strategic planning, you need to gather available data and projections. With a team of planners, you want to work to develop critical forces and drivers, and then work together to research these forces and drivers in detail. This information is used to help build the scenarios, with a storyline for each scenario.
How does scenario planning relate to organizational success and employee engagement? We must look at the concept that scenario planning will undoubtedly have a positive impact on performance at the employee, team, and organizational levels. By working together, and following the ideas of systems thinking, the organization will be more innovative, and thus productive, in producing an accurate response plan.
Please take the time to create the scenarios, identify the triggers, and develop an appropriate response to critical operational events.
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