Number 15: Summer 2001

 

Scenarios and Strategy  - divide and conquer

By Rick Fenton, Asymptote

This morning I entered “plan” into the Altavista search engine and received “About 43,706,763 pages found”. Planning is in our genes. Mental modeling has been hardwired into our species ever since the metaphoric first troupe of primates captured their first Mammoth with a plan. As a species we are now somewhat more sophisticated in our use of planning for survival (though still primates), but scenarios are nevertheless still very much a part of how we think and compete.

This article is a brief note on scenario planning and a simple twist that helps to improve the return on investment – keep the story separate from the strategy.

What Is planning? 

The answer used to be how to get from here to there. The classic A-B plan clarified where we are – point A, where we wanted to go – point B, and how to fill the gap. Then life became more complex. Chaos theory tells us that complexity breeds unpredictability, and without predictability forecasting the future is futile. To this hue and cry has been added best-seller titles like, End of Science (Horgan, 1996) and Out Of Control (Kelly, 1994). Reductionism may have delivered us from the Middle Ages into the new millennium, but complexity theory will be needed to get beyond this.

Position B is not stationary and in our journey we are often and unavoidably blown off course, forced to make other plans. Enter scenario planning.

What is scenario planning? 

Point B becomes a goal that we accept might not be fully attainable. As Porter (1996) would argue, managers need to accept trade-offs. How we approach B must change because we cannot predict the future (if we could, this argument and this article would be irrelevant). So we have multiple futures in which to rehearse our bumpy ride, believing that forewarned is forearmed. Scenarios provide road maps into the future for the troupe to synchronize on - Fuller (1998) of The Monitor Company speaks of the importance of such maps, to align and communicate.

And we all use scenarios “What do you think it will be like tomorrow?” In America, the popularity of the weather channels speaks to our appetite for scenarios. Scenarios are the basis for our strategies in life – shall I bring the umbrella or dress for sun? So far so good.

Why not scenario planning? 

Again I launched my Web browser and entered “scenario*” into Altavista. This time I received “About 2,041,237 pages found”, a mere pittance. So I entered “plan* and not scenario*” and received “About 42,867,467 pages found”. Conclusion: scenario planning is about 20 times less popular than more traditional forms! Why?

If scenarios are so useful, why does scenario planning lack popularity? Why is scenario planning not universal in management? I offer two reasons, neither being a lack of chaos in our environment. The first reason is the word scenario - a deceiving word so commonly used it has too many meanings. I submit the other more substantive reason is most scenario plans unwittingly mix church and state – scenarios and strategy. The amalgam of common-interest and self-interest yields strategy-bonded-scenarios that must be guarded to their corporate graves, and beyond.

Divide and conquer. 

The problem of binding scenarios with strategy is the scenario development necessarily becomes a contained. Worse, it is a closed process whereas to be most effective scenario development should be as inclusive and open as possible.  

By liberating scenarios from strategies, scenarios can be open to precisely what is needed – diversity of opinion and perspective. The genetic make-up of a scenario needs challenge in order to become viable and survive beyond derivative strategies that necessarily come and go. A good analogy from the aerospace industry is the wind tunnel. Wind tunnels provide arbitrarily specified wind and climate conditions to test aircraft designs. A good wind tunnel is the work of many experts, without knowledge of subsequent, competitive aircraft designs (strategic plans).

Another analogy that suites the biological view of business (Clippinger,1999) is to consider scenarios as the genotype (hardware, wiring diagram) and strategy as the phenotype (software, behaviour).

How Does It Work?

Simply. Scenarios are crafted in context, and this is important to keep the team on track. But once the scenarios begin to take form they come to life; they become the context whilst confidential information fades away. In this form, the scenario framework can be shared broadly for enrichment, challenged and refined by inclusion of factors of highest volatility and impact. Individual organizations are then free to utilize the scenario framework in the sanctuary of their private strategy chambers, to sustain competitiveness to the best of their individual abilities.

Some scenario planning methods are better designed for separation than others, but it is generally a procedural matter to create an effective separation. The relatively few scenarios published on the Web are in separated form, but unfortunately the vast majority is not.

Enter the Open Source Scenario

By separating scenarios from strategy, scenario development and distribution can openly engage many expert contributors. In the vernacular of open source software, there are many more eyeballs to find the bugs and make improvements. And like open source software, there is now building a community of interest in developing open source scenarios to take advantage of the separation and harness diversity.

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© Rick Fenton / Through the Loop Consulting Ltd 1998-2001