Scenario Planning: A prudent activity for any organization

-Introduction-

An organizational strategist has many tools and activities to help achieve organizational success. An organization’s strategy is absolutely pivotal to staying afloat in the market space. With all of the complexities involved in a market, the changing factors and variables, and evolving customer needs and wants, it is difficult for an organization to continue to navigate without charting a new course frequently. Scenario planning is an activity that helps an organization chart a course and sail forward. Scenarios are a way to think out the “What if…” possibilities that could happen. They help with organizational thinking, brainstorming, planning, and decision making.

Recently, I read a McKinsey Quarterly article entitled “The use and abuse of scenario planning.” This article had a lot to say and many good points. I’ve included some excerpts below.

-Selected Excerpts from McKinsey Quarterly-

Scenarios expand your thinking

You will think more broadly if you develop a range of possible outcomes, each backed by the sequence of events that would lead to them. The exercise is particularly valuable because of a human quirk that leads us to expect that the future will resemble the past and that change will occur only gradually. By demonstrating how – and why – things could quite possibly become much better or worse, we increase our readiness for the range of possibilities the future may hold. You are obliged to ask yourself why the past might not be a helpful guide, and you may find some surprisingly compelling answers.

Scenarios uncover inevitable or near-inevitable futures

A sufficiently broad scenario-building effort yields another valuable result. As the analysis underlying each scenario proceeds, you often identify some particularly powerful drivers of change. These drivers result in outcomes that are the inevitable consequence of events that have already happened, or of trends that are already well developed. Shell, the pioneer in scenario planning, described these as “predetermined outcomes” and captured the essence of this idea with the saying, “It has rained in the mountains, so it will flood in the plains.” In developing scenarios, companies should search for predetermined outcomes- particularly unexpected ones, which are often the most powerful source of new insight uncovered in the scenario-development process.

Broadly speaking, there are four kinds of predetermined outcomes: demographic trends, economic action and reaction, the reversal of unsustainable trends, and scheduled events (which may be beyond the typical planning horizon).

Scenarios protect against ‘groupthink’

Often, the power structure in companies inhibits the free flow of debate. People in meetings typically agree with whatever the most senior person in the room says. In particularly hierarchical companies, employees will wait for the most senior executive to state an opinion before venturing their own-which then magically mirrors that of the senior person. Scenarios allow companies to break out of this trap by providing a political “safe haven” for contrarian thinking.

-Considering Scenarios-

Imagining and working through scenarios can save precious time, which allows for quicker organizational choices and actions. The most helpful scenarios to think through would be the most likely ones. Having a series of likely scenarios planned out would be a helpful arsenal for an organization. However, be sure to include some long term scenarios as well as the less likely scenarios which could have significant business impact (good or bad). Additionally, it’s important to update scenarios to maintain their value over time. As the business environment changes, so too should the scenarios you utilize. As the article states “to retain some relevance, a scenario must be a living thing… Scenarios get better if revised over time. It is useful to add one scenario for each that is discarded.”

Here are some scenarios that might be helpful to work through:

• What if the key materials your organization uses become scare and/or very expensive (for example – water shortages are predicted in the future), how would you adjust?
• What if real estate prices suddenly changes (this could be really expensive or really cheap – what would your organization do?), what might you sell? What might you buy?
• What if customer’s standard of living changes (meaning an economic challenges occurs, like our current recession), what would need to happen?
• What if formerly major product or service suddenly became unavailable, what would you do?
• What if a major competitor was temporarily paralyzed (litigation, shortage or some other disruption made it’s product/service unavailable to customers), how would you capture the surge of business?

-Closing-

Scenario planning is meant to be an exercise which helps an organization stay nimble, prepared, and able to improvise. By no means do scenarios exactly predict what actually happens in the market. If so, that’s a remarkably well prepared scenario plan. Scenarios are another tool in the strategist’s arsenal that helps inform decision making.

McKinsey Quarterly “The use and abuse of scenarios” https://www.mckinseyquarterly.com/ghost.aspx?ID=/The_use_and_abuse_of_scenarios_2463

Strengths Based Change – It’s Not Fluffy Stuff

-Introduction-

Frequent challenges surface against Appreciative Inquiry (AI), strength’s based coaching/consulting, and ‘soft skill’ focused activities. Those challenges often state that those kinds of activities are “fluffy”, offer little to no paths to business success or any real grounding in real or true business challenges. I won’t argue that some approaches do not match those challenges. However, those challenges are invalid if the strengths based change is done in such a way that it takes into account the whole picture (the good, the bad, and the not so pretty).

-Focus on the Strengths and Positives-

Grounding on the present reality, letting go of whatever is troubling, and being negative is ok. That’s true for strength based change initiatives as long as the process is meant to be a level setting experience that can then be catapulted into the positive focus.

Strengths based consulting/coaching builds upon whatever the best parts of an organization or individual has. The weaknesses are not meant to simply be avoided. On the contrary, they should be identified. Then, if there is energy around improving challenging areas, it’s a very helpful pursuit. However, it is often not as interesting, rewarding, or easy to improve a tough area. If that is the case, then finding where and how the weak area(s) can be compensated for or simply overcome by focusing on the best part(s) should be a priority task.

In AI summits, the negative baggage that people bring can, at times, be such a roadblock to the workshops that it must be addressed. Allowing time and ‘space’ for people to vent, acknowledge the challenges or difficulties that they have faced, and to understand what has happened previously in the organizational system can help people let go of their anxiety. Once the collective mindset has let go of the past, the group is more open to the future and the summit can resume.

-Example Activities & Framework-

To start with, identify the strengths, “best parts” and difficult areas from pursuits like these:

• Search for positive deviants in an organization (AI activity)
• Identification of best self for an individual (AI activity)
• 360 feedback process for an individual (my favorite being Hay Group’s ECI and ESCI)
• Strength Finder identification of an individual’s strengths
• The well known SWOT activity for an individual or organization (Strengths, Weaknesses, Opportunities, and Threats)
• Core competency analysis and breakdown for an organization
• Competitive analysis comparing organization against target competitors for an organization

Doing these kinds of activities should give a lot of information regarding how performance has been, what areas have shined and those areas that are challenging. Map those findings against the intended strategy to see what pursuits would be the most fitting with the organization or personal aspirations. Focusing on strengths is often more energizing, fun, and empowering because the intent would be to build upon what is already going well and to extend and find the optimal usage and fit of the strong areas. As a means of leveraging strengths, it is possible to find ways of eliminating or severely reducing the weak areas. For example, you may have an individual who is great at inspiring and leading her team. She can motivate and energize them very effectively, but has trouble creating strong analytically based presentations. A positive resolution to this weakness might be to find a finance team manager who does not have solid leadership skills. Each, in turn, could benefit from pairing up to mentor each other and potentially help with engagement or presentations. In a similar fashion, using a SWOT on an organization can be beneficial in a strategic manner if the pairing of strengths and opportunities can make the threats and/or weaknesses lessened or, better yet, completely irrelevant.

-Conclusion-

It does make sound business sense to have a strengths based approach. I’ve experienced people being very closed off and dismissive of an AI or positive-centric technique. However, once they experience the process, I’ve seen them transform into the most outspoken champions.