The Impact of Scenario Planning

A version of this article appeared in the Spring 2018 edition of Outcomes magazine.

The Board’s Role & Responsibility in Planning

Here is what I believe.  The board is responsible for the mission, vision and over-arching plans of your organization.   Those elected to the board answer a call to be stewards of the organization’s purpose, health and effectiveness.  Board members must remember the weight and responsibility of the moral duty they bear, the work they oversee and the talents entrusted to them.  The board has an essential role in organizational impact.

To complement its role in strategic planning, the board must seek and select an effective CEO.  Then, the board must step back, empowering and supporting the CEO to fashion, resource, implement and execute annual operational plans that achieve the board-adopted strategic goals.

Effective boards foster effective organizations; they encourage and model an organization-wide culture of planning and execution, innovation and growth. 

How about you?  Does your board pass the Board Strategic Planning test?  Take out a piece of paper.  It’s time for a Pop Quiz. 

Pop Quiz

1. True or False.  Our board and CEO create long-range strategic goals; then, the CEO works with staff leadership to create annual operational goals to fulfill mission, vision and strategic plans.
2. Our board has charged our CEO with creating contingency plans to deal with:
   a. Drastic downturns in financial markets
   b. Internal tragedies or legal crises
   c. Sudden declines in donor support
   d. All of the above
   e. None of the above
3. If you were to audit your board meeting minutes from the last three years, how much time was spent addressing long-range, strategic planning and the organization’s future?
   a. 10%
   b. 25%
   c. 50% or above

Answers:

1. True
2. D
3. C

Bonus Question

1. Who in your organization should be focused on and looking to the future? _______________

Answer:
The Board & the CEO

The Board’s Planning Challenges

Though board chairs, CEOs and board members know intuitively that they should be focused on the future, they constantly deal with obstacles that divert the board’s attention.  Here are three barriers that can obscure a board’s future focus:

• The Tendency to Become Complacent—Boards may be complacent due to long-term success, a strong CEO, a pass-through board culture, a lack of vision, dependence on staff.
• The Tyranny of the Present—Boards may not see the future because they are managing the present; often, staff interests and activity keep them focused on today.
• The Pace of Change—Boards may become overwhelmed with the pace and content of change in today’s culture.  Business schools call this VUCA (volatility, uncertainty, complexity, ambiguity).

Identify Driving Forces in Your Future

Fashioning strategic plans (3-5 years) is not the end of the board’s long-range planning responsibility; effective boards must scan the horizon for driving forces that will affect the organization’s future.  These driving forces may be internal or external.  Boards must anticipate and identify obstacles and opportunities that may challenge or shape the organization’s future.  Do you maintain a list of predetermined elements that will, and critical uncertainties that may, affect your success?  Here’s a start:

The Potential & Purpose of Scenario Planning

What happens once you’ve identified these driving forces? How does a board prepare for gradual shifts and radical disruption from within and without?  How do you explore alternative strategies, organizational paradigms, and new delivery of services?  How can you set aside long held mindsets in order to consider new programs?

Consider scenario planning.  Scenario planning has become a valuable tool in the strategic conversation.  It engages internal and external stakeholders, creates research-based narratives that foster dialog about the organization’s future and reinforces a culture of innovation and growth.

Scenario planning emerged in the 1970’s.  Since then, corporate leaders have found the process and product of scenario planning to be an effective way to “suspend disbelief” and “try on” new futures.  Peter Schwartz, The Art of the Long View, has become a standard in the field; Thomas Chermack, Scenario Planning in Organizations, provides a practical overview.  Though scenario planning is prevalent in many for-profit corporations, it has yet to be well utilized in nonprofit world.

When should an organization utilize scenario planning?  The answer varies; the focal point of the process can be organization-wide “big ideas”, the possibility of a new program, or coping with an external crisis or opportunity.  Here are three examples:

• The Transformative Gift—A nonprofit charity anticipates an estate gift of $25 million.  You wish to explore varied uses of this transformative asset.
• The New Paradigm—You are a centralized, brick and mortar company headquartered in the US.  You want to determine if you should go international, decentralize and expand to 5 countries in 10 years.
• Coping with the Crash—You were set back by the 2007—2009 Great Recession.  You vowed to be prepared, to have options, if you ever experienced another catastrophic downturn.

The Process of Scenario Planning

Much of the value of scenario planning is found in the process itself.  Though boards are ultimately responsible for long-range strategic planning, the scenario planning process engages an array of stakeholders, encourages energetic dialog about the organization’s future and tests the strength of your strategies.  Scenario planning positions and prepares you to deal with future uncertainties.

Here are the essential phases in the Scenario Planning Process:

Phase 1—Establish the Need for Scenario Planning and Identify the Purpose

• Initiate & Resource the Process, Appoint/Secure Facilitator
• Communicate the Purpose to Stakeholders
• Form the Scenario Planning Team (Board members, Staff leaders)

Phase 2—Conduct Scenario Research, Identify Driving Forces

• Recruit and Establish Internal and External Research Teams (Board, Staff, External Experts, Stakeholders)
• Conduct Internal Analysis—identify internal driving forces (Interviews/SWOT/Longitudinal data)
• Conduct External Analysis—identify external driving forces (STEEP—Social, Technology, Economic, Environmental, Political)
• Compile Findings/Convene Internal and External Teams
• Identify Most Important and Most Uncertain Elements
• Select Primary Driving Forces Related to Your Scenario Planning Purpose

Phase 3—Select Scenario Plots, Create Scenarios

• Create Plots and Select Titles
• Write Four Scenarios—Plausible, Relevant, Challenging (Avoid best-case, worst-case, business-as-usual)

Phase 4—Engage in Scenario Dialog & Strategic Assessment

• Invite Stakeholders into Scenario Dialog
• Review Purpose, Present Scenarios, Rehearse and React to the Four Futures
• Wind Tunnel Test Institutional Strategies within Scenario Dynamics
• Use Research and Imagined Futures to Shape Strategy
• Develop Scenario Planning Culture/Practice On-Going Strategic Conversations

The Power of Scenario Planning

Scenario planning provides Boards and organizational leadership with a powerful tool.  Organizations change.  Yet we, and the organizations we serve, are naturally resistant to change.  Scenario planning capitalizes on the power of story to lower our defenses, “question our belief in the inevitability of more of the same,” and “challenge the official future.” (Schwartz)  Scenario planning enables you to assess and improve your Strategy, Structure, Culture and Resources. (Chermack)

Taking the time to identify and explore the meta-factors that may affect your organization’s future is the responsibility of the board and staff leadership.  The scenario planning process can be a significant asset, helping leaders look to the horizon and prepare to deal with the risks and rewards that lie ahead.