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Scenario Planning: An Innovative Approach to Strategy Development

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Scenario Planning: An Innovative Approach to Strategy Development

Maree Conway
Thinking Futures
Web: http://thinkingfutures.net
Email: maree.conway@thinkingfutures.net

Introduction

Strategic planning is about developing a plan to implement strategy. It is not about planning
strategically. As Mintzberg (1994:5) suggests, ‘strategic planning’ might well be an
oxymoron. The need for organisations to plan and monitor activities in order to focus
resources and effort and ensure future survival and growth has spawned an industry of
practitioners, consultants and education programs. Planing practitioners have their own
professional associations and have assumed a critical information role in organisations,
consultants sell a wide range of strategic planning approaches and tools, and strategic
planning is a core component of university business courses.

Strategic planning is a routine part of business practice, with an accompanying set of beliefs
and protocols that underpin day-to-day practice. Yet, as Mintzberg (1994:7) indicates,
‘planning lacks a clear definition of its own place in organizations’. The need to plan is
generally accepted, but the resulting plans themselves are often not successful in driving
implementation of an organisation’s strategy. Indeed, ‘while the need for planning has never
been greater, the relevance of most of today’s planning systems and tools is increasingly
marginal’(Fuller, 2003:2).

Traditional strategic planning models are increasingly viewed as not producing strategy that
can deal with complexity, uncertainty and rapid change in the external environment. While
understanding the external environment and then determining strategy to enable the best ‘fit’
in that environment is acknowledged as a primary reason for planning, traditional models are
decreasing in effectiveness. The apparent failure of corporate strategy even after extensive
planning, and the inability of many organisations to read signals in the external environment,
suggests that there is something missing from existing planning models. ‘It may well be that
the typical strategic planning exercise now conducted on a regular and formal basis and
infused with quantitative data misses the essence of the concept of strategy and what is
involved in thinking strategically’(Sidorowicz, 2000).

There is some recognition that this missing element is the capacity to develop and maintain a
systematic view of the future – a foresight capacity. Scenario planning is a futures
methodology now widely used by organisations and governments to incorporate such a
futures view into planning. While using scenario planning will introduce organisations to the
value of exploring the future, selection of a methodology is only one part of the integration of
a more comprehensive futures approach into strategy formation, decision making and
implementation – that is, to develop and sustain an organisational capacity for foresight.

“Strategic planning” is usually defined as including all three steps of strategy formation,
decision making and implementation – thinking about future strategy options, deciding on
options, and implementing those options. Futures approaches naturally ‘belong’ to the
thinking stage, but this only becomes apparent when strategic thinking, strategic decision

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making and strategic planning or implementation are defined as separate, but interrelated and
overlapping domains. The separation also addresses Mintzberg’s definitional concern by
placing some boundaries around the elements of the process, and clarifies the role and
purpose of ‘planning’ as a distinct and valuable activity.

Integrating a futures approach into traditional strategic planning models in order to develop a
foresight capacity requires not only an understanding of what a futures approach is - as
opposed to only using a methodology like scenario planning - but also a fundamental re-
conceptualisation of the strategic planning model itself. This paper therefore first explores
that re-conceptualisation in order to develop an alternative planning model before discussing
how the use of scenario planning provides an innovative approach to the strategy
development stage of that planning model.

Planning and Strategy

The relationship between strategy and planning is complex and interdependent, but few
works on strategic planning explore this relationship in any depth. Most strategic planning
models assume that strategy making is just one step in a defined and well understood
planning process, which results in the production of written plans that are then implemented
by staff across an organisation. The purpose and role of each stage in the overall planning
process, particularly the strategy development stage is, however, often not clear.

Understanding strategy development is important because organisations are at risk if strategy

fails or does not take into account signals of change in the external environment. Mintzberg
(1994:23-29) suggests that the process of strategy formation is often not understood, and
describes how strategy is defined in a number of ways by different planning schools: as a
plan, a pattern, position, perspective or ploy. Hodgson (2004) defines strategy for an
organisation as ‘the way the leaders of that organisation fulfil its mission in the environment
in which they find themselves.’ He goes on to say that ‘the environment includes all kinds of
factors that need to be taken into account – technical, social, political and ecological – and it
also includes the future, since missions have to be carried out over long periods of time’.
Van der Heijden (1994:8) states that ‘strategy is about the future, and therefore involves
uncertainty’.

The crucial issue is that the part about understanding the future is the least understood or
analysed element of strategic planning. While including mention of the future and long term
directions, traditional planning processes tend to focus on developing plans, and
implementation of those plans, at the expense of the initial steps of strategy development and
decision making. With a focus on documentation and implementation, consideration of
future options as an input into formulating strategy does not occur in any systematic way
over time. The line between planning elements therefore becomes blurred, as Mintzberg
(1994:32) indicates:

A major assumption of the strategic planning literature … is that all of these terms
necessarily go together. [That is] Strategy formation is a planning process, designed
or supported by planners, to plan in order to produce plans’.

Current definitions of strategic planning that include words describing consideration of the
future as part of the process therefore tend to assume that existence of a plan will be proof
that the future has been considered. In fact, what has usually happened is that the future has
been written about, but not explored in any systematic way.

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Strategy emerging from such traditional planning processes has been shown to be vulnerable
to rapid and unforeseen changes in the external environment, with organisations simply
unprepared to deal with that change. The resulting crisis management approach indicates
that while consideration of the future might be written on paper as a step in the planning
process, there is little scrutiny of the future and its potential impacts on those organisations.

Hodgson (2004) suggests that without such explorations of the future to deal with possible
uncertainties, strategic planning creates a default scenario: ‘a future that validates the plan
and this view of the future dominates … decision making’. This is generally a satisfactory
state of affairs until discontinuities and unexpected events in the external environment
undermine the plan completely. Hodgson (2004) writes that ‘we have to give a new meaning
to strategy’ which, this paper argues, needs to start with re-conceptualising the current
strategic planning model to better understand how strategy development occurs, and how the
future is taken into account in that process.

Why the Future?

Organisations today exist in environments that are changing rapidly and increasing in
complexity. Traditional methods of interpreting and understanding those environments work
well when the world is relatively stable, since futures can be extrapolated with relative
certainty. The plan built around the default scenario is the result of these processes. When the
default scenario fails, however, an organisation tends to enter crisis mode and become
reactive. Thinking more systematically about the future and planning to deal with possible
changes in the environment means that an organisation will have already considered and
agreed on alternative strategies, and will therefore be better prepared to adapt to change as it
occurs.

As already discussed, the term ‘future’ often appears in definitions and planning manuals.
There is, however, little commensurate discussion of how the future should be explored, or
what tools or methods to use to in this process that so the output can then be used to inform
the development of strategic options and choices. While describing the need to be flexible to
deal with future change, there is no discussion of how that flexibility is to be developed, nor
how to explore the changes the future might hold. Flexibility seems to be defined as
ensuring that a plan can be re-written quickly to deal with unexpected external events. The
idea that a plan could include an assessment of what such unexpected events might be, how
the organisation might respond, what information the organisation needs to be able to judge
when those possible events appear to becoming a reality, and incorporating those strategies
into the plan from the beginning is not part of the traditional strategic planning worldview.

Most organisational and university planning frameworks are remarkable similar. For
example, the Higher Education Funding Council for England (HEFCE) produced a good
practice guide to strategic planning for universities in the United Kingdom in June 2000. It
describes strategic planning as: ‘the part of the strategic management process which is
concerned with identifying the institution’s long term direction. It is a continuous, cyclical
activity with three main phases:

 planning – research and analysing strategy and plans, generating ideas and choices,
 documentation – documenting the plans,
 implementation and monitoring – taking action to achieve the agreed gaols, and
monitoring progress or non-achievement in order to adapt the future strategy.’

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While HEFCE writes that the focus is long-term, there are no good practice guidelines for
developing that long-term, future view for an organisation. The need for ‘the open
generation of ideas and choices’ is highlighted, but the planning process is no different from
others in that it generates:

 a long term plan – strategic or corporate plan – which includes overall strategy and
sets out the long term objectives and how these are to be achieved,
 an operating plan or statement which distils the actions required in the year ahead,
 actions necessary to effect implementation, and
 monitoring reports and information which highlight progress or the lack of it’.

HEFCE point out the need for frequent review of a university’s direction because
‘unforeseen changes in the internal and external environment are inevitable and may require
the objectives to be revised’, advising institutions that ‘there is no virtue in sticking doggedly
to a plan which has been overtaken by events. It is essential for all institutions to retain the
flexibility to adjust as circumstances change, so that they can exploit unexpected
opportunities and respond to unforeseen threats’. That is, be prepared to change your plan if
something unexpected happens, not prepare for the unexpected during your planning
process.

Another example is that of Florida International University (FIU) which has defined planning
as ‘the process of identifying the desired future for the University and determining what
needs to be done to achieve that future’ (FIU, 2004). Their process appears more futures
oriented as it defines three stages: a discovery stage that defines mission, core values, vision,
factors in the external and internal environments that might impact future success; an
analysis stage that focuses on issues that need to be addressed to determine the desired future
and the institutional goals and strategies required for that future; and an operational stage that
focuses on how to resolve critical issues and achieve goals. The documentation goes on to
say that:

‘The structure is designed to produce the products needed to answer the questions
identified in the process. We are starting by building on the University goals,
philosophies, themes and challenges identified during the past decade. This
approach maximises our ability to collect and analyze data, generate insights
concerning the current environment of the University, and identify issues facing the
University of the 21st century … these insights will provide the basis for decisions
concerning the future goals of the University’. (emphasis added)

While there is a discovery phase in this planning process - which might infer a futures focus-
decisions about the future of the university are being made on analysis of the past and
present. The process is data driven, but the data are about the past and present, not the future.
There are no future “facts” – that is, facts that can be reduced to data - so there is no data
collection about the future: the authority of the past is dominant. Insights about the future
derived from data about the past and present do not take into account what might happen,
only what has happened, and what is happening. This “futures” gap is a fundamental flaw in
current planning approaches.

Data used in planning are mainly quantitative, suggesting an assumption that, following
analysis, a single interpretation is possible. The result is a desired, preferred, or default future
that has not incorporated any systematic collection of qualitative data, such as staff feelings,
beliefs and values about the future. Staff are generally consulted to comment on a draft plan,

4
and have opportunities to identify data elements (for example, performance indicators,
critical success measures), but are not usually involved in providing formal input in possible
futures for the university. The desired future will not therefore emerge from thoughtful
consideration of a range of alternative futures – the data will suggest a single future.

The planning focus is also often an internal one, which does not place the university in its
broader global context, even though environmental scanning has occurred and is
documented. Plans usually focus internally on the future of the university, with few plans
broaching the broader social responsibility a university might have for sustainability
generally, and for future generations, in any formal way.

The strong focus on the past and present to determine future strategy in current planning
processes becomes tenuous when considering Wilson’s premise that ‘all our decisions are
about the future, but all our knowledge is about the past’ (Wilson, 2000). It then seems
obvious that consideration of the future, as well as the past and present, is an essential part of
the planning process. Slaughter (2004:183-4) suggests, however, that even when
organisations do open up their processes to include futures approaches and methods, “it
remains the case that corporate approaches to futures tend to be epistemologically and
ideologically naïve, take, for example, a particular corporate or cultural ideology as ‘given’
and missing altogether the many options for critical analysis and reconceptualization upon
which lasting innovations may depend’.

Recognising the need to consider the future has only really become apparent as the external
environment has become more volatile and uncertain during the last quarter of the 20th
century. Exploring what might happen is critical when faced with such uncertainty, and
current processes which are focused around the past and present do not provide the
approaches, tools or methods required to understand the future. The challenge for planners
today, then, is to identify approaches, tools and methods in order to integrate an identifiable
and separate futures stage into existing planning processes. This challenge is already being
addressed in organisations today but, as least in universities, Slaughter’s statement that “late
20th century strategic planning has given way to what is now more commonly termed
strategic foresight” (Slaughter, 2004:19) is somewhat optimistic.

The Emergence of Strategic Foresight

Strategic foresight is ‘the ability to create and maintain a high quality and maintain a high
quality, coherent and functional forward view, and to use the insights arising in
organisationally useful ways’ (Slaughter, 1999:287). A shared forward view allows an
organisation to do one or more of the following: detect adverse conditions, guide policy,
shape strategy, and explore new markets, products and services. As already discussed, the
traditional strategic planning model often includes words about the future in its process, but
the development of strategic foresight as an integral and critical step in that process in order
to develop a better understanding of the future has not yet been achieved. That is, the need to
develop strategic foresight as a core organisational capacity and to build that capacity over
time has not been recognised.

Just as scanning and analysing the present and past external environment are defined as
separate steps in planning, so scanning and analysing the future needs to be defined as a
separate step, and tools and methods to facilitate that scanning need to be identified. One
way to shift strategic planning towards strategic foresight is to re-conceptualise the
traditional planning model as a three level, hierarchical process:

5
  strategic thinking
 strategic decision making
 strategic planning

Experts on strategic management, such as Mintzberg (1994) have characterized the essential
difference between strategic planning and strategic thinking. In essence, Mintzberg says,
strategic planning “has always been about analysis – breaking down a goal or set of
intentions into steps, formalized those steps so that they can be implemented, and articulating
the anticipated consequences or results of each step”. This is clearly an activity requiring
thinking which is strongly analytical, logical, deductive and pragmatic in order to ensure that
things stay ‘on track’.

“Strategic thinking in contrast” he says, “is about synthesis. It involves intuition and
creativity” to formulate an integrated perspective or vision of where an organisation should
be heading. It is generally intuitive, experimental and disruptive (Liedtka, 1998) and
attempts to go beyond what purely logical thinking can inform. Because information about
potential futures is always incomplete, the thinking required for success in this activity needs
to be ‘synthetical’ and inductive, rather than analytical and deductive.

Foresight in an organisational context is best conceived and positioned as an aspect of

strategic thinking, which is meant to open up an expanded range of perceptions of the
strategic options available, so that strategy making is potential wiser. Strategic thinking is
concerned with exploration, often based on limited and patchy information and options, not
the steps needed for implementation of actions, which is the realm of strategic planning.

The interface between these two activities is strategy development or strategy making, where
a particular goal or objective is usually set or a decision made. Mintzberg, Ahlstrand and
Lampel (1998) discuss 10 major ‘schools’ of strategy and their different assumptions and
approaches. The ‘cognitive’ school is concerned with the ‘mysterious process’ of the actual
creation of strategy. The focus is on assessing options, examining choices, making a
decision, and/or setting a destination.

Strategic thinking is therefore about exploring options, strategy development is about making
decisions and setting directions, and strategic planning is about documenting and
implementing actions. All three are needed and vitally necessary for successfully
confronting the strategic environment.

As Wilson (2004) suggests, ‘there is little to be gained from developing a plan per se. There
is everything to be gained from the thinking that lies behind the plan--and the action that
follows it’. The three level framework (Voros and Conway, 2002) can be viewed as a
framework for implementing strategic foresight, as shown in Figure 1. This framework
includes all elements of the current planning process and integrates futures approaches at the
strategic thinking stage. It is the view – and hope - of the author that ultimately, strategic
planning will be seen not as an inclusive process as it is now, but as the implementation stage
of strategic foresight.

6
Foresight Strategic Thinking
Approaches Generating Options Options
and Methods
What might happen?

Strategic Decision Making

Making choices Decisions

Where will we go?

Strategic Planning
Taking Action
Action
What will we do?

Figure 1: Three Level ‘Strategic Foresight’ Framework

This conceptualisation is one fairly simplistic interpretation of strategic foresight in

organisations, but it makes clear that strategic planning does not disappear; it becomes a
critical element in a broader framework that includes a step that will allow the future to be
considered as an integral element in strategy formation. Strategic foresight can be positioned
in an organisation as ‘an element of strategic thinking which informs strategy making, which
directs strategic planning and action. Care [should be] taken to stress that it does not replace
strategic planning but rather enriches the context within which strategy is developed, planned
and executed’ (Conway and Voros, 2002).

Developing a Strategic Foresight Capacity

So, how might a strategic foresight process be developed in an organisation? Or, more
appropriately for this paper, how might strategy formation be re-conceptualised to include
foresight?

Slaughter (1996) describes a five stage process for the development of social foresight which
includes the development of foresight as a core competence across organisations. The five
levels of development are:

7
Level 1:recognition of foresight as an innate human capacity: every individual has the
capacity for foresight;
Level 2:immersion in foresight concepts: using foresight concepts and ideas to generate a
futures discourse;
Level 3:using foresight methodologies: use of key methods to make foresight “real;
Level 4:creating organisational niches: permanent, purpose built areas to focus foresight;
and
Level 5:foresight at the social level: where long-term thinking becomes the norm.

Slaughter indicates that foresight is an innate capacity of the human brain, and that everyone
holds the capacity to think about the future. Once there is this recognition, individuals can
immerse themselves in futures concepts, methods and approaches, before they begin to use
futures or foresight methodologies. Organisational niches need to be created to foster
foresight in the organisation so that it becomes the norm internally and, finally, social
foresight will be achieved when there are enough organisations in society using foresight.

Recognising that foresight is an innate human capacity of all staff in an organisation – that all
staff think about the future on a daily basis - means that, in the planning context, all staff are
capable of strategic thinking, not just the executive of an organisation. This is different from
a traditional perspective that ‘strategic thinking is a process that takes place in the mind of
the leader of an organisation’ (Sidorowicz, 2000), with the strategy taken to staff for
consultation to secure ‘buy-in’, followed by documenting the strategy in plans which are
implemented by staff by means of performance measures. There is an assumption here that
including specific actions and measures in performance plans of staff will ensure successful
implementation, which is not necessarily the case.

For organisations and staff to think about the future in their routine planning requires overt
processes to be put in place that surface individual thoughts about the future, and then allow
a collective consideration of those views. As Voros (2002) indicates, organisational foresight
requires thinking to move from thinking within individual brains to thinking shared among
many, from implicit to explicit, from individual to collective, and from unconscious to
conscious, before an organisation can begin to systematically think about its future and use
subsequent insights in its strategy formation.

At this point, it is also important to recognise that all staff in organisations have their own
particular worldviews, conditioned and developed over time. Unless staff are aware of these
worldviews, and are open to having them challenged, moving foresight to an explicit activity
in organisations is problematic. Following Snowden (2003:1), the influence of human
agency in strategy development is often, despite appearances and an abundance of data, not
rational:

“Humans do not make rational, logical decisions based on information input, instead
they pattern match with either their own experience, or collective experience
expressed as stories. It isn’t even a best fit pattern match, but a first fit pattern match
… The human brain is also subject to habituation, things that we do frequently create
habitual patterns which both enable rapid decision making, but also entrain behaviour
in such a manner that we literally do not see things that fail to match the patterns of
our expectations”.

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Exploring the concept of worldview and its influence on strategic decision making is beyond
the scope of this paper. The interrelationships among organisational power, personal ego and
organisational rewards on such decision making can have both positive and negative impacts
on foresight work, however, and cannot be underestimated.

Futures Concepts and Methods

Thinking about the future requires an understanding of futures concepts. Only when such an
understanding is present can explicit futures methodologies, such as scenario planning, be
introduced in an organisation. Traditional strategic planning processes are already equipped
to analyse and understand the past and the present, which is essential, since such
understanding provides the foundation for understanding the future. As Bell (2000) points
out “the action that takes place in the present is what shapes the future” and, ‘understanding
the present allows people to attain an orienting perspective to provide a basis for moving
forward’. While understanding the present requires knowledge of the past, however, it must
also be connected with the future:

‘There are two processes that are centrally involved in constructing the present: one
is the interpretation of past experience; the other is the anticipation of possible
futures. The two processes are not in opposition … They are mutually reinforcing.’
(Slaughter, 2000).

Understanding the future requires its own set of analytical tools. Once the importance of
linking past, present and future is acknowledged, organisations can use a range of tools and
methods to explore their futures. This exploration can involve consideration of the level of
depth at which they will operate: pragmatic, progressive or civilisational, and the type of
methods they will use: input, paradigmatic, analytical or iterative (Slaughter, 1999).

Slaughter discusses in some detail the depth of futures work, and the current dominance of
superficial ‘pop’ futures in much western work. Most organisations work at the pragmatic
level, focusing on current issues. Choice of methodologies will depend on how effectively
the organisation has engaged in a futures discourse, and which methods are most appropriate
to analyse the organisation and its environments.

Further discussion in this paper of methodologies to drive implementation of strategic

foresight will focus on scenario planning, but it is worth noting that a generic foresight
process has been developed by Voros (2003) to provide a framework for understanding how
foresight ‘fits’ into existing strategy formation and planning processes. The process is
depicted in Figure 2.

9
 Layers of Questioning

Inputs things happening

Analysis “what seems to be happening?”

Foresight
Interpretation “what’s really happening?”

“Pro-Spection” “what could happen?”

Outputs “what might we need to do?”

Strategy “what will we do?”

Foresight & Planning Unit

Figure 2: Generic Foresight Process (Joseph Voros, 2003)

This process indicates that while the term ‘foresight’ might be new, the capacity for ‘doing’
foresight in organisations already exists. Elements of a foresight approach are already in
place and now need to be surfaced to include an overt futures view. Traditional strategic
planning methods are usually focused at the analysis and interpretation stage of foresight,
with the prospection stage either not included or not done in enough depth. It is adding the
prospection stage and maintaining it over time that will develop and embed a strategic
foresight capability in organisations. Scenario planning is one methodology that operates at
the prospection stage.

Scenario Planning and Strategy Development

There is a large and growing literature on the use of scenario planning in organisations. Shell
International is recognised for its pioneering work in the 1960s and 1970s, and the Global
Business Network (GBN), based in California in the USA, are leading exponents of the
methodology. Scenario planning, like any method, is not without its flaws and
idiosyncrasies, but it represents a systematic, structured and easily grasped approach to
exploring the future.

The aim of scenario planning, like any futures method, is not to predict the future, since that
is impossible. Scenario planning integrates past and present information, and works with
staff to interpret that information in order to explore future strategic possibilities for their
organisation. The process generates scenarios, stories about potential futures that are
grounded in analysis and interpretation of information by staff, and agreement about key
external drivers of change likely to be critical for the organisation.

10
Because scenario planning is strongly, but not exclusively, qualitative, and because
individual reactions to the process will be influenced by individual worldviews, its
acceptance as a valid process in developing strategy varies widely. The current focus in
organisations on ‘data driven decision making’ creates a relatively hostile environment for
the predominantly qualitative approach of scenario planning.

Scenario planning, or scenario thinking as termed by GBN, can be both qualitative and
quantitative in its approach, depending on the particular organisation and the worldview of
the leader and /or planner who is introducing it. Since the outcome of the initial stage of
scenario planning is stories, however, those in organisations who are committed to, and
familiar with, quantitative inputs into planning processes, will find stories difficult to both
accept and use to inform their thinking about potential strategies.

One of the common mistakes that undermines the efficacy of scenario planning is to finish
the process with the scenarios themselves, which encourages a response along the lines of
“well, that’s interesting, but so what?” or “fluffy and irrelevant”. Scenarios are only useful if
they trigger a continuing conversation about the future, that starts with questions like “what
if” or “if we did this, how would that roll out in one of our scenario worlds?”, or “is this
robust across all scenario worlds?”. Scenarios aim not to predict the future for an
organisation, but to open up the conversation that leads to decision making about which
future strategies to pursue. Scenarios enrich that conversation, and challenge long held, often
outdated assumptions about the organisation’s future, leading to the identification of potential
options that may not previously have been visible.

Scenarios risk rejection, however, precisely because they do challenge assumptions and rely
on the willingness of participants to test the relevance of their worldviews in a changing
world. When an executive responds with ‘I don’t need to be told how to think about the
future’, or ‘I think about the future everyday, and this process is an insult’, or ‘I’m happy
with the quality of my strategic thinking’, one can be reasonably assured that the reaction is
about the readiness of that person to open his or her worldview to challenge, and not the
validity of the method. The point here is that the reactions of individuals to scenario planning
in particular, and futures approaches in general, are valid as individual reactions. Scenarios,
however, deal with the collective, not with the individual, and with the future of the
organisation, not the future of the individual – even those these are all inextricably linked.
Individual staff, therefore, must be willing to share their individual beliefs about the future,
and to transcend their individual reactions to be able to explore organisational futures and
develop a shared forward view that informs strategic decision making.

The imperative for planners introducing scenario planning, then, is to take great care in
working with decision makers from the beginning to involve them in the development and
implementation of the process in their organisation. The place of scenario planning and
strategic foresight in the strategy development process must be clear from the beginning.

11
The Scenario Planning Process
Figure 3 below shows the basic, five stage, scenario planning process, as developed by the
Global Business Network (GBN). This section draws on the GBN approach, as described
most recently for the non-profit sector (GBN, 2004).

As indicated above, the development of the scenario stories occurs at Stage 3, so ending a
scenario planning at this stage is premature, and negates the impact of the last two stages,
which focus on action and implementation.

Stage 1: Orient
Interviews
Focal issue

Stage 5: Monitor
Leading indicators
Stage 2: Explore Monitoring system
Critical uncertainties
Pre-determined
elements

Stage 4: Act
Implications
Stage 3: Synthesize Strategic agenda
Scenario framework
Scenarios

Figure 3: The Basic Scenario Planning Process

(developed by GBN, 2004)

Stage 1 begins with a series of structured interviews and discussions with key staff to find out
more about challenges facing the organisation and the assumptions held by those staff about
those challenges. It is often useful to include external ‘thought leaders’ at this stage to gain
an outside perspective on challenges. At the end of this stage, there should be some clarity
around the focus issue or question that will anchor the rest of the scenario planning process.
Examples of focal issues for universities are:

Over the next 10 years, should our institution get smaller in order to get bigger?
How will student administration services be delivered in 10 years time?
How will the way undergraduate students expect to learn change over the next 20 years?

Stage 2 is about exploring drivers of change in the external environment that will affect the
focal issue. Drivers of change relate to the education environment, or the external
environment of any organisation, and the broader social environment, as shown in Figure 4.

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 Social Environment
Driving
Forces
Education
Environment Factors / Trends
Issues / Forces
Social
Suppliers Students
Technological
Educational Economic
Organisation Ecological
Political
Customers …
Clients
Members of Competitors
Wider Society Driving
Forces
Adapted from K. van der Heijden
Figure 4: The Environments of an Educational Organisation

The purpose of this stage is to broaden thinking beyond the urgency and immediacy of the
here and now, and to seek to identify those external forces that may have an unexpected
impact on the organisation in the future. Such forces can be ‘predetermined elements’ in that
their development and impact is relatively well understood over a given timeframe, such as
predictable cuts in public spending and demographic shifts. Other driving forces are more
unpredictable. These ‘critical uncertainties’ are likely to have a significant impact on the
future of the organisation, but little will be known about their impact in the given timeframe.

Stage 3 is about synthesis and integration where the information, both qualitative and
quantitative, gathered so far is used to create scenarios. Driving forces are prioritised in
terms of (i) the degree of importance to the focal issue, and (ii) the degree of uncertainty
surrounding the forces. The two or three key forces are the critical uncertainties that will
inform the development of scenarios. This is a key point: scenarios are developed based on
drivers whose future impact is uncertain, rather than drivers whose impact is known or
reasonably certain, which are often already being dealt with in the here and now. The value
of scenarios comes from exploring the unknown to determine its impact on the known. Stage
3 is an intensive, iterative step involving the development of a scenario matrix, fleshing out
the future worlds generated as a result, and creating narratives that describe how the focal
issue would play out in each of those worlds.

Stage 4 deals with action. “The test of a good set of scenarios is not whether in the end it
turns out to portray the future accurately, but whether it enables an organization to learn,
adapt, and take effective action” (GBN, 2004: 30). This stage involves considering questions
such as:

What if this scenario is the future?

What actions would I take today to prepare?
Are there actions I could take to create a desirable future, or to move away from a negative
one?

13
Answers to these questions are termed ‘scenario implications’ and are used to look for
implications that are present in all scenario worlds, or vary across worlds. The question to
then ask is whether or not those differences highlight any strategic choices that will need to
be investigated further. As the scenario worlds are explored over time, the resulting patterns
and insights form the basis of discussion about the organisation’s strategic agenda – those
priorities that will focus long-term action. The pre-determined elements identified during the
scenario development stage can also be used to focus strategy. The outcomes of Stage 4 are
the identification of implications that hold true in all scenario worlds, and the identification
of predetermined elements that cannot be easily dismissed in strategy development. This
stage is sometimes called ‘wind-tunnelling’ where possible strategies are developed and then
tested in each scenario world.

During this stage, wildcards can be used to provide a ‘jolt’ to thinking and to generate more
strategic options. A wildcard is a low probability, high impact event that would change the
world – or the organisation – overnight. An example of a wildcard is “a terrorist attack on a
major US city”. This wildcard was part of a ‘wildcard pack’ used in a scenario workshop at
the author’s workplace on 11 September 2001. The time difference meant that participants in
the workshop went home that night and watched the twin towers in New York collapse, and
the world change overnight: an unfortunate but powerful example of the rationale for
considering wildcards in strategy development.

Stage 5, the last phase, deals with continual monitoring of external drivers and trends to
facilitate adjustments to agreed strategy. A monitoring system needs to include indicators
that can be tracked to judge whether a particular scenario world is beginning to emerge,
which means some of the implications begin to be more important than others, and some of
the uncertainties begin to be pre-determined. Such indicators are a signal of impending
significant change, and a clear sign that organisational strategy should be reviewed.

There are other scenario planning processes, and scenarios can be used in conjunction with
other planning and futures tools and methods. All scenario work, however, integrates
information about the external environment with the knowledge and expertise of staff. As
such, it is a highly participative process and demands strong conceptual work of the staff
involved in order to integrate what is often a disparate range of information, attitudes, and
knowledge.

Decision Time

It is, however, not always appropriate to use scenario planning to inform strategy
development. Using scenarios in an organisation which is not ‘futures ready’ will be an
interesting process, but will result in little, if any, significant shifts in strategic thinking. All
futures methodologies require participants to have open minds, and a willingness to suspend
disbelief to see what emerges from discussions. Scenario planning is an approach very
different from the way in which ‘traditional’ strategy development and planning is
conducted.

The following decision tree (Figure 5), again adapted from GBN work, is a simple way to
decide whether scenario planning is an appropriate tool for an organisation. It is important to
note that it is probably better to not undertake a scenario planning exercise unless the
answers to the questions in the decision tree are ‘yes’. The risk of alienating participants
from futures processes is high if they as individuals, and the organisation as a whole, are not
‘futures ready’.

14
 If the problem is clear and the solution
is clear, do not use scenarios. But be
What type of problem or challenge do careful: the solution is not always as
you need to address? straightforward as it is originally
Clear problem
& solution perceived to be.
Clear or unclear
problem with no
clear solution
If the degree of uncertainty is very low
and the outcomes largely
How much uncertainty surrounds the predetermined, scenarios will be less
key issue? helpful. Tools for continual
Low
uncertainty improvement may be more
appropriate.
Medium to high
uncertainty
If the leadership wants (or needs) to
Is the organisation open to change? maintain the status quo, scenarios may
No not be right for you.

Yes

If the organisation is in a crisis and

Is the organisation open to dialogue? there is too much urgency for a
No reflective conversation about potential
change, scenarios may not be right for
you.
Yes

Does the group have these necessary If not, secure the necessary resources
resources: before moving on.
(i) a credible leader for the process No
and someone who can take
responsibility for the output,
(ii) time to dedicate to the process,
(iii) resources for external facilitation
and support (eg interviewing and
research)?

Yes

ENGAGE IN SCENARIO
PLANNING

Figure 5: Decision Tree for Scenario Planning

Adapted from GBN, 2004

15
Building Strategic Foresight
How then, might explicit futures processes be merged with strategic planning to create
strategic foresight, and subsequently create a process in which futures methodologies such as
scenario planning are considered valid? Some suggestions derived from the literature follow.

 Initial work should be with staff in the organisation, as well as the executive managers. If
all staff have the capacity to think strategically, organisations who tap into this ability by
generating a futures discourse will develop, over time, a level of awareness or
consciousness about how to think about the future in planning processes. Without this
consciousness, any work on using futures methods and tools is likely to be less than
successful.

 The organisation needs to understand its role in sustainability generally – that is,
acknowledging a degree of responsibility for the planet and for future generations (see
Slaughter, 2000; Tough, 2000).

 Developing an understanding of the context in which the organisation’s strategy will be

developed: pragmatic, progressive or civilisational is an important step. Is the
organisation going to make an attempt to contribute to the civilisational challenge, or will
it be pragmatic? Realistically, most planning will occur in the pragmatic area but, over
time, an organisation could set its vision on a broader, more global agenda.

 The organisation will need to focus its foresight work – is it about helping the
organisation develop its preferred future and documenting that in a plan, or is it about
considering all potential futures, whether possible, plausible or probable.

 The use of a range of methodologies, both quantitative and qualitative, over time is also
important. As the organisation becomes “futures aware”, more complex and challenging
methodologies can be used. Starting with scenario planning, for example, can be
valuable as long as it is not the only methodology ever used. All methods have flaws,
and a range of methods will help ensure outputs are well-founded.

 Incorporating a more humanistic approach into planning will strengthen output as well.
The “human factor” is critical for implementation, both in terms of ensuring success and
being able to obstruct implementation. Building in roles of staff at the strategy formation
stage as well as implementation may well help to improve chances of successful
implementation.

Hines (2002:339) points out that evidence suggests that ‘using futures thinking and tools
improves our decision-making and our lives, on a personal, organization, and
community/social and global level’, but that changing an entire organisation and building the
future into strategy formation, requires ‘an enlightened CEO and upper management that sees
the need for this thinking. This, unfortunately, remains the small minority of situations’
(Hines, 2002:340). This remains a significant challenge for planners wishing to integrate a
futures approach in their processes. As Hines suggests, the past is known and familiar, the
present is about dealing with current problems and issues, while the future is unknown and
unknowable.

16
Concluding Comments

This paper has discussed the need to re-conceptualise the traditional strategic planning model
as strategic foresight in order to identify strategic thinking both as a separate realm of activity
and as the organisational ‘home’ of foresight. Integrating futures approaches into planning
means that a foresight capacity can develop over time, so that organisations can use strategic
foresight rather than strategic planning to develop strategy. It then discussed a particular
futures methodology -the scenario planning process - and its use in organisations.

Making better and wiser decisions about future directions and strategy today is a fundamental
aim of strategic foresight. Increasing the depth of knowledge available to underpin decision
making about strategy options by analysing a combination of past, present and future
information can only strengthen the foundation upon which an organisation’s strategy is
built. The evidence suggests that those organisations that embrace foresight will have
successful strategy, while hindsight will indicate that a lack of strategic foresight was a major
contributor to organisational failure.

Slaughter (1999:300) provides the final statement of a rationale for strategic foresight in
organisations:

‘The near term future can be clearly understood by developing the right capacities,
asking the right questions and nurturing the right people. The careful use of such
resources provides organisational access to an evolving structural overview of the
next couple of decades … Organisations that participate effectively in this process
will find a range of valuable outcomes: they will seldom be overtaken by change,
they will not succumb to crisis management, they will find it easy to avoid problems
and seize opportunities, they will develop long term vision and a kind of forward
looking prescience … strategic foresight can supply a coherent forward view that will
be a cornerstone of organisational success in the 21st century’.

17
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