Scenario Planning as Part of Strategy Development

In my daily work, I hear the phrase “strategic planning” with such frequency that it has become by now a signal for “switching off”, i.e. stop paying attention…here we go again…not another strategy…and not the same strategy with different words, please! What a relief to read something actually intelligently written, like Conway’s article “Scenario Planning: An Innovative Approach to Strategy Development“, in which he makes a distinction between strategic planning and strategic thinking. Sure, it’s a piece dense with “management-speak”, but given the quality of ideas, one doesn’t mind the odd “innovative approach” or “setting direction”, or “immersion in foresight concepts”.

Conway argues that traditional strategic planning, based on deductive reasoning falls short of being effective in a complex, interdependent and highly uncertain environment in that it focuses more on past experience, data and fact driven thought processes. I’d like to call this the microscope-focused approach. What he advocates instead, or rather, in addition to, is “strategic thinking” as part of the planning process, or in other words, the ability to develop foresight capacity, a “big picture” view that is less concerned with the here and now of the details and the particular but adjusts the aperture to provide a universal, telescopic view. Of course, he doesn’t say “universal” vs. “particular”, which is how a philosopher might phrase the concept; nor does he use the microscope-telescope analogy, which would be more at home in the fields of myth, anthropology and psychology. Writing for a corporate audience, global vs. local is what one might expect to hear.

I think an interesting conclusion can be drawn from this observation. I believe Conway himself reaches this conclusion even if he doesn’t explicitly say so. In an environment of growing complexity and interdependence, strategic thinking implies being able to see connections that one might not do if he/she adheres to linear logic, and what’s more, one might never see by him/herself without the contribution of others. The crisscrossing of concepts from traditionally different disciplines and the fusion of individual brains into one collective intelligence is what strategic thinking for the 21st century seems to be all about.

I concur with Conway’s take on scenario planning as a way of creating alternative future narratives, and was happy to see the Dave Snowden reference on page 12. Although Snowden has become in the past few years a household brand name in (knowledge) management and a quote by him adorns the annual or centennial  corporate strategy paper of every Tom, Dick and Harry organization that likes to talk about “innovative approaches”, Snowden does often provide food for thought. [In my capacity as CKO, I once attended a presentation of his, which sparked enough interest to add his Cognitive Edge website/blog to my RSS feeds and read a number of articles he provides there under a creative commons license.] Conway outlines Snowden’s thoughts on the irrationality of human decision processes as a way of stressing the influence of human agency in strategy development. However, the quote ends too quickly. Elsewhere, when discussing the assumption of rational choice, Snowden goes through great pains to distinguish between “objective” reality and perceptions of reality. He argues that understanding these different perceptions or perspectives of reality can lead to strategic advantages and he sees narrative techniques (scenarios for our purposes) as a way to gain greater exposure to different perspectives:

The assumption of rational choice
Relaxing this assumption means that context and perspective become as important as rationality. This is an important reason that the Cynefin framework is not about “objective” reality but about perception and understanding; it helps us to think about the ways in which different people might be perceiving the same situation. For example, there is an old folk tale from India in which a wise man decides that in order to escape an impossible royal demand, he will fake insanity in the king’s court. He is operating in complex space because he is using cultural shorthands to provoke predictable reactions but is gambling that his ruse will seed the pattern he wants to create. He knows that from the perspective of his audience, who are operating in the space where things are bound by tradition and thus known, he appears to be acting chaotically, because they can conceive of no other reason for him to act this way in front of the king (who would surely behead him if he was faking). Thus by proving that he cannot be faking, he pulls off the fake. Understanding not only that there are different perspectives on an event or situation, but that this understanding can be used to one’s advantage, is the strategic benefit of relaxing this assumption. Narrative techniques are particularly suited to increasing one’s exposure to many perspectives on a situation. In management, there is much to be gained by understanding that entrained patterns determine reactions. This realization has major implications for organizational change and for branding and marketing. Our own work on narrative as a patterning device is gaining presence in this and other areas. Speculating, one of the most significant possible applications of this understanding is a move away from incentive-based targets and formal budgeting processes—both of which, we contend, produce as much negative as positive behavior. It is a truism to say that any explicit system will always be open to “gaming.” Paradox and dialectical reasoning are key tools for managers in the un-ordered domains.

C. F. Kurtz, D. J. Snowden, IBM SYSTEMS JOURNAL, VOL 42, NO 3, 2003, http://www.research.ibm.com/journal/sj/423/kurtz.pdf

Back to Conway, the scenario planning process he outlines is the same as that of Project Horizon. I wonder if the people responsible for managing that project did so intentionally, following Conway’s model or it was more of a Snowdean serendipity moment. I also wonder if the Project Horizon team answered the model questions from the decision tree for scenario planning that Conway provides. I must confess, I put the tree to test in terms of my own work and found it extremely difficult to answer the questions with “yes” and “no”. The reason for this is that it is often impossible to speak about an organization with one voice. There are, individuals, teams, silos, middle management, senior management – all open to change and dialogue to different degrees. Should one engage in scenario planning if the staff are open to change and dialogue but management isn’t and vice versa? If I attempt to answer this question, another point Conway makes comes to mind: “The organization will need to focus its foresight work – is it about helping the organization develop its preferred future and documenting that in a plan, or is it about considering all potential futures, whether possible, plausible or probable.” (p.21) From the point of view of management, I would say the focus tends to be on the former – developing your preferred future. From the point of view of staff – considering all options. How feasible is it then to apply scenario planning in a government organization, where both planning and decisions are more likely than not to be strictly top down? It takes a certain entrepreneurial spirit, of which government institutions are devoid almost by default, to engage in this type of exercise. Strategic or visionary thinkers are hardly welcome in such environments. At best, their boldest big picture strategy is dismissed as day-dreaming; at worst, it is seen as a threat to the managing body. In this respect, I find it commendable of the US government to support a project such as Horizon and would be very curious to know at what stage the project is two years after publishing the preliminary report. In particular, it would be interesting to know the progress on the Global Hazards Planning and Response capability, the US Government Partnership framework and the Global Affairs Learning Consortium since all these are sub-projects I am also trying to pursue in my work.

Scenario planning and the national security issue I’m working on (Russia and the Balkans):

I had already considered using scenarios prior to reading Conway and the project Horizon report, however, I’m not sure if scenario planning is appropriate when developing a situation assessment, which is the overarching analytical technique I’m applying to my project. In my view, a situation assessment should be limited to objective capabilities rather than alternative futures. I don’t think a situation assessment is or should be concerned with forecasting; rather it should be based on what Conway refers to as “traditional strategic planning” – deductive not inductive.

Still, had I chosen the same topic but a different method, I would apply scenario planning to examine potential “new” alliance formations on the Balkans. Bulgaria is a particularly interesting case due to its membership in both NATO and the EU, and its historical ties to Russia. Alternative scenarios could throw light on what role the country is going to play in terms of energy security in Europe. With four planned major pipeline routes transiting the country – 2 Russian projects and 2 EU/US-sponsored ones, it would be interesting to develop a scenario exercise to determine if Bulgaria will choose to “bandwagon” to the EU/US greater powers or become a Trojan horse by strengthening its ties with Russia. Other countries in the region (Romania and Serbia for instance) are less problematic because they have expressively stronger affinities to one camp or the other, hence the relatively low uncertainty would not merit the use of scenario planning. Greece could be another potential wild card despite its long history of NATO/EU membership. Dissatisfaction with some EU policies and a prospect of becoming a regional energy power through closer alliance with Russia, Greece’s behavior will be anything but predictable. Throw in Turkey’s contested EU application and the event that it actually succeeds, and a reshuffle of alliances and spheres of influence is sure to experience some major shifts. Cyprus, for one, will open its arms toward Russia even wider than it currently does.

To sum up, I would not apply scenario planning to my national security issue as long as I’m doing a situation assessment. However, I do believe scenario planning as a technique could be a valuable addition to long-term strategic analysis, especially when used to challenge assumptions about rational choice whether on an individual or a collective level.

 

 

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3 Responses

  1. Hi Linda
    I’ll read your blog about my article with interest but thought I should point out that you have made an interesting assumption that I am a male – I’m not! You might be interested in seeing Dave Snowden’s reaction to your blog and my article at:
    http://www.cognitive-edge.com/blogs/dave/2008/05/scenarios_use_and_abuse.php
    Maree

  2. Hi Maree,
    how ironic that I should fall prey to the same rational assumption I discussed in reference to Snowden! My sincerest apologies. For what it’s worth, I did very much enjoy reading your article and have passed it along to colleagues who are more involved in the strategic planning function at my organization than I am. I hope my labeling certain linguistic usages in the article “management speak” did not come as offensive. It’s funny how once you have some sort of interaction with a person, you become more considerate of their reactions than the ease with which one – I – tends to turn up one’s nose at certain language acrobatics. To be sure, my own reports on the progress of KM initiatives at my work are not devoid of that type of language.

    I briefly looked at Snowden’s response, but will have to read it in more peace and quiet at the end of the day.

    At any rate, thank you for meriting a student “paper” with your response. I’m flattered.

    Linda

  3. Hi Linda
    It was amusing given the topic! The ‘management speak’ reference didn’t bother me at all, because it was right – the audience was a group of statisticians and strategic planners from universities, and that is their language. And I think your closing comments are so true – scenarios are not universally useful, and need to be designed to fit the context. Their potential to jolt people out of the assumptions that they live by is the critical element and the hardest thing to achieve in practice.
    Maree

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