Strategic planning when anything could happen

Long-term planning in the world as it stands at the moment might seem like a bit of a mug’s game. But that’s not because things change. Change, after all, is to be expected. Rather, it’s because everything’s changing. And it’s changing a lot. We can’t take anything for granted any more. This doesn’t mean that we shouldn’t bother with long-term plans, though. It just means that we need to approach them in a different way.

Planning for the future when we have absolutely no idea how that future is going to look will always be a challenging task. We used to know what the variables were and the ranges within which they would fluctuate. But not now. From the COVID-19 pandemic and social distancing to the still-present prospect of a ‘no deal’ Brexit, everything is changing. None of the things we though we knew can be taken for granted any more.

This doesn’t mean, though, that we can give up on long-term planning.

Long-term goals, strategies and plans tell us where we want to get to. They tell us what is important to us and how we should prioritise our time, effort and resources. They help to ensure that everyone is working together. And they help us to avoid the descent into short-term firefighting that can so easily result from lack of a clear vision. Without long-term plans, we and our organisations are like rudderless ships in a storm.

Operating in a period of flux does, however, mean that we can’t rely on the forecasting methods and models that have, until now, served us well. Because they are based on a more stable environment, where the future will look more or less like today, just with some of the variables shifted around a bit.

We don’t know what tomorrow will look like, but the chances of it bearing even a passing resemblance to yesterday seem slim, at best.

If we can’t plan for the future, then, we’re going to need to do something a bit radical. We’re going to need to plan for more than one possible version of the future. We’re going to need to identify a number of different ways that our organisation, sector or country could look in the future… and plan for all of them. This brings us quite firmly into the realm of a technique called scenario planning.

Scenario planning

Scenario planning is an approach to long-term strategic planning that encourages us to identify different – yet entirely feasible – versions of how the future could look. We’re not saying that these futures will happen, just that they might happen. That they could happen.

There are lots of different ways of developing a suitably diverse suite of scenarios. At the most basic, you can just sit down with a cup of tea and think some up. But it’s better to approach things in a slightly more organised way, to make sure that you come up with a suitably broad range of scenarios to consider.

My favourite approach is one called the ‘two axes’ technique, which works particularly well if you are operating in an environment with a limited number of factors that could result in significant change. The idea is to select the two main factors – or drivers of change – and plot them on two intersecting axes.

Take, for example, the situation set out in the figure below, where the two main factors influencing the future are (a) whether we develop a COVID-19 vaccine that allows social distancing rules to be dropped and (b) whether we end up with a Brexit that encourages or inhibits the arrival of workers from abroad.

As you can see, we end up with a 2×2 matrix and four potential scenarios. I’ve given them names to make it easier to identify them. It’s important, though, that the names are neutral, so that we don’t imply any value judgements about the different scenarios. If we were doing this properly, we could also write a short profile about each scenario, explaining what it would be like and what it would mean for us or for our organisation.

Planning for the future(s)

Once we have these scenarios, we can start to think about how we would plan for each of them. It might be that we can come up with a strategy that would work in all four scenarios. But it’s more likely that we’re going to need to formulate a different strategy for each of the different scenarios. Or, at the very least, a strategy that includes different options for the different ways in which the future could pan out.

Given the nature of the uncertainty in the example set out above, our most likely approach in this case is to find a way of adapting what we do to address the uncertainty in the situation. Just like how universities, for example, are currently exploring ways of delivering teaching to students in a socially-distanced manner. And how industries that are reliant on migrant workers – such as agriculture – are trying to find ways to cope without their usual temporary workforce.

The formulation of these scenarios doesn’t, of course, tell us what the future will bring. But it does help us to frame the uncertainty in a way that makes it easier for us to decide what to do about it.

We might, for example, be able to identify a course of action that will have a positive pay-off in all of the scenarios that we have identified. That would be pretty much ideal for most public sector and not-for-profit organisations, as it minimises the risk to the organisation and allows it to keep the wheels turning.

We might need, though, to identify a different strategic response to each of the four scenarios, so that we can implement the relevant one when it becomes necessary. We might even need to switch from one strategy to another if circumstances change. So in our example above, we might opt to follow one course of action until a COVID-19 vaccine is developed and a different one should a successful vaccine allow social distancing measures to be relaxed.

In a more competitive commercial situation, we might identify a course of action that would provide us with a highly positive outcome in one or more scenarios and a less-positive outcome in one or more of the others. Depending on our attitude to risk, the potential returns associated with this approach might be appealing. But the potential downside might well put us off.

Alternatively, we might want to simply take sufficient action to allow our organisation to continue to function, in however basic a form, in whatever scenario might come to pass. This might be a sensible appoach for a ‘mission critical’ organisation or function, like the emergency services. The organisation can then take further action once it knows with a bit more certainty how things are going to be. (The NHS ‘Nightingale’ hospitals are an excellent example of this.)

Either way, by using scenario planning to identify how the future might look, we give ourselves something that we can plan for. We still don’t know exactly what will happen, but by focusing on the main elements of uncertainty we do, at least, know what could happen. And in times like these, that’s probably about the best we can hope for.

This is an updated version of an article I first posted a few years ago. It focused then on the impact of Brexit and government funding cuts. These uncertainties haven’t gone away, but have obviously been compounded – and, indeed, overshadowed – by the COVID-19 pandemic.

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