The COVID-19 crisis presents a decision making environment with many critical uncertainties. Yet, association executives will be faced with the need to make strategically sound decisions. More so, there will be an expectation that the decision making process itself is sound and strategic. In this environment, scenario planning is an ideal methodology to use as a framework for one’s decision making process.
The benefits of scenario planning are many. Scenario planning creates a framework for thinking strategically and informs sound decision making. If used properly, scenario planning forces us to apply diverse perspective to problem identification and problem investigation (the three key elements of strategy development and strategic problem solving), in a manner that moves from divergence to convergence.
Scenario planning pushes us to think beyond what we might ordinarily consider. The methodology is known to provoke significant strategic insight. The goal is to use scenarios to think critically about various aspects of your organization or particular issues confronting your organization. There are number of different scenario planning schools of thought and a couple of different approaches: inductive and deductive. The following steps provide a simplified scenario planning process that takes into consideration principles from a number of the schools of thought and applies a deductive approach.
16 steps to implement scenario planning
The following steps address the two major segments of scenario planning: creating the scenarios (steps 1 – 11) and using the scenarios (steps 12 – 16). Engage a diverse group of people in the process with the goal of achieving optimal diversity.
- Identify the issue, challenge or question you want to address. For example, the issue might be an upcoming annual meeting or tradeshow or your dues renewal cycle. There will most likely be a number of issues; if so, prioritize the issues and pick the top priority issue to start with.
- Use a virtual or live workshop to brainstorm and capture what the participants perceive are the major forces in the environment related to the issue. Forces are factors that could influence the success or failure of the decision or issue. For example, if the issue is your upcoming meeting, forces might include prohibition on travel, fear of travel, rebound of the virus, financial position of attendees, viable online meeting or education alternatives. The goal is to identify as many forces as possible; at this stage, it is all about quantity, not the quality of the idea.
- Group the ideas into categories or buckets and clean the duplicates. Consider these groups or categories to be the major forces. At this point, you may want to also engage in a STEEP analysis to determine if there are any additional forces that should be added to your list.
- Analyze the list to determine if there are any predetermined items on the list. These would be forces where the outcomes are predetermined, usually because they have already taken place or are currently underway. In scenario planning it is the uncertainties that we are most interested in.
- Rank the forces based on the relative impact on the organization or the question/issue identified in step one above. You may want to post them horizontally along a wall or on a matrix with the forces with the least impact toward the left and the forces with the greatest potential impact toward the right. As participants rank the forces, they should be encouraged to engage in dialogue which will assist the group in forming mental models around the various forces and situations. Keep in mind that high impact forces are defined as those that have the power to fundamentally reshape the organization or challenge/issue you are addressing. It is the high impact forces that will typically provoke significant strategic insight.
- Next, rank the forces by uncertainty. Use a vertical axis to rank uncertainty. Move the forces with greater uncertainty toward the ceiling and those with lower uncertainty toward the floor. Similar to the impact ranking, disagreement may arise and the group should be encouraged to engage in dialogue, which will result in the development of mental models and the emergence of consensus.
- Ultimately your forces are plotted on an X, Y axes grid.
- Choose two independent variables (forces) from the critical uncertainties’ quadrant. It is important that you choose “useful” forces. For example, using the meeting example from above, the first force might be fear of travel and a second one could be attendee financial position/state.
- Plot the two forces on a 2 X 2 matrix. It is from the four quadrants that you will build the scenario logic. The themes of the four scenarios will become apparent. In the diagram below, using the meetings example forces in step 8 above, Scenario I becomes the scenario where fear of travel is high and the attendees are experiencing significant financial difficulty. In Scenario II, fear of travel is low and the attendees are experiencing significant financial difficulty. Scenario III is the scenario where fear of travel is low and the attendees are not experiencing financial difficulty. Finally, in Scenario IV, fear of travel is high and attendees are not experiencing financial difficulty.
- Begin to fill in the scenarios. The goal is to paint a picture or build a story for each scenario. Keep in mind, the scenario logics must be plausible, challenging and relevant. You want the scenarios to challenge current thinking and be relevant to your deepest concerns. If some of the scenarios don’t meet the test of plausible, challenging and relevant, pick different critical uncertainties to use as your forces.
- Once initial scenario logics are built out by a diverse group of participants, assign each scenario to a staff member (or volunteer) to do additional research to fill out the scenario logics.
- Keeping the original question or issue top of mind, engage in dialogue and conversation to answer the following questions: what have we learned throughout the scenario development process that relates to our original question; how would we answer the original question in each scenario; what additional information would we want or like to know; for each scenario, what are the opportunities and threats, what are the driving forces, what is uncertain, what is inevitable; what different ways of solving our strategic dilemma are suggested by entertaining these scenarios?
- What general actions would we recommend around the initial problem, question, or issue having considered each of these scenarios and their implications.
- Identify possible actions or strategies for each of the scenarios.
- Identify strategies that are robust (strategies that can succeed in multiple quadrants) and hedging strategies (strategies that can succeed in only one quadrant but protect you from a plausible calamity).
- Make your informed, strategic decision on how to move forward.
Notes on Designing the Process
From a design standpoint, you may want to consider holding two to three workshops to execute the scenario planning process. For example, depending on your final design steps 1 through 7 might take one-half to three-quarters of a day. Identifying the forces to be used in the scenario matrix and beginning to build out the scenario logic will most likely take one-quarter to one-half day (steps 8 through 10) and might be undertaken at your first workshop or at a second, stand-alone workshop. A separate workshop would be used to complete steps 12 through 15 above.
As you make your final decisions on how to move forward, keep in mind that scenario planning is an ideal framework to make strategic decisions in an environment full of uncertainties. However, the decision making process can be further strengthened by incorporating other problem solving methodology and theory into your scenario planning framework.