It sounds like an understatement to say that we are in a moment filled with uncertainty. Freezes in federal funding, new caps on indirect costs, and sudden changes in policy are disrupting well-laid plans.
The last time I heard this much concern from our community was during the early days of the COVID-19 pandemic. Back then, nonprofits struggled to keep the lights on and continue serving their communities. Businesses struggled to find ways to maintain operations. And they did it all while dealing with ever-changing financial, health, and policy realities.
In such complex times, nonprofit and business leaders can turn to a variety of tools to help them better plan for and navigate the unknown. Today, we’re going to look at a tool called scenario planning.
What Is Scenario Planning?
Scenario planning is an iterative process to craft multiple plausible stories or scenarios about the future. These scenarios illuminate the potential dynamics in which an organization will be operating, particularly during times of rapid change or uncertainty.
The act of developing scenarios enables leaders to strategically prepare for different conditions and transition from reacting to planning proactively.
Scenario planning is especially powerful when coupled with a process like strategic planning where you are developing a cohesive vision and goals that can further guide decision-making.
How Does Scenario Planning Work?
A classic way to start scenario planning is to identify two major external trends that are currently in a state of flux. These trends should be significant, beyond your control, and unstable.
For example, today, you might include changes in government funding and policy/regulatory changes related to your organization’s area of work.
After selecting your top two trends, you then begin imagining how these trends could unfold for society as a whole over a defined time period (such as 12-18 months). Usually, you will choose several elements of society that will be affected by your driving trends that you will track across different scenarios. These elements should generally be related to society and societal structure, markets and customer behavior, and your industry or sector overall.
You’ll aim for four different full-fledged scenarios informed by a continuum of how your two major trends could unfold.
For example, in one scenario, there might be no more government funding for community services, but policy that affects your work directly might not change. How might this scenario affect community needs, the nonprofit and social services sector overall, and even charitable giving? What might happen nationally vs locally?
Scenario Planning as a Tool for Strategic Thinking
The act of developing these four different scenarios pushes leaders to think beyond our fears and our hopes. Instead, we have to lean into storytelling—imagining what could happen and how the external and internal environments in which we operate could be affected.
The resulting scenarios can become incredibly detailed. They also might be scary or upsetting. But the act of developing them actually empowers us to better navigate the challenges that may arise. We can even identify key indicators that a scenario is becoming more and more likely—meaning we can respond more quickly and strategically.
Of course, because we are dealing with highly volatile trends, it’s unlikely that any single scenario you develop will be how reality unfolds. And that is OK! The biggest value in scenario planning is the process of shifting to more strategic thinking.
Thinking Through Your Decision Points in Different Scenarios
The final stage in scenario planning is strategizing for how your unique organization will be affected in each scenario and the types of decisions you might need to make.
Then, you can work your way back to the present and start planning for how you can prepare your organization TODAY to be more agile and sustainable in different scenarios.
Introducing Scenario Thinking to Your Team
If your organization is larger, you’ll want to think through how you communicate about your scenario planning work. Often, just knowing that leaders are planning for how to navigate different and potentially challenging scenarios can provide staff members with a sense of calm.
Generally, you don’t want to share every specific scenario you develop, as this can be overwhelming. But you DO want to share:
- That you are undertaking scenario planning and who is involved.
- The trends you are using for your scenario thinking.
- The final action steps you identify for the organization to take now to better prepare for different future scenarios.
More Tools for Strategy Planning During Uncertain Times
Scenario planning is a powerful tool for navigating uncertain times, but it’s not the only one. With our strategic planning clients, we also use tools like environmental scans and SWOT analyses to lay the groundwork for long-range goal-setting and nimble, values-driven decision-making.
