When economic warning signals are flashing, it’s time to take a close look at your organizational strategy. In this article, we’re going to look at scenario planning as a tool for strategic thinking. Including how to make it even more powerful with strategic planning.
If you read the news, it’s hard not to worry about the future of your nonprofit or business. Bloomberg has declared that: “Chief Executives, Economists Brace for Recession.” Over at CNBC, the news is that: “CEOs are the most pessimistic they’ve been in more than a decade as world faces a slowdown.”
What can an organizational leader do to prepare for choppy waters ahead?
Using Scenario Planning as a Tool for Strategic Thinking
In times like these, leaders often turn to a handful of business tools, including scenario planning.
Scenario planning is an iterative process to craft multiple plausible stories or scenarios about the future. One classic way of doing this is to start by identifying two major external trends that are currently in a state of flux. For example, many CEOs and Executive Directors would put “recession” on one axis. Another axis could be public health (a new pandemic) or pending national policies (such as changes to tax policy that may affect charitable giving).
After selecting your top two major and unstable trends, you then begin imagining how these trends could unfold. How would different areas of society be affected? For example, if there’s a major recession that lasts for several years, how might this affect areas related to your organization, like civic participation, community needs, and charitable giving?
This is where storytelling comes into play. Instead of just stating what would happen, scenario planning encourages participants to imagine a fully realized vision of the future. This includes telling the story of how each vision came to be. The resulting scenarios can become incredibly detailed.
What’s most valuable about the process, however, isn’t the scenarios themselves. At its core, we should treat scenario planning as a tool for strategic thinking. Scenario planning encourages leaders to think beyond the present moment—and to get creative. In the process, it transforms planning from reactionary to proactive.
Other ways to inspire strategic thinking
Scenario planning isn’t the only tool for strategic thinking that your organization can use. For example:
- Similar to scenario planning, an environmental scan helps you identify external factors that can influence your organization’s future decisions. This process doesn’t result in the creation of scenarios though. Instead, an environmental scan is often used as a starting point for strategic planning or other strategy conversations.
- A SWOT analysis focuses more internally, helping assess your organization’s internal strengths and weaknesses. This can be especially valuable if paired with an environmental scan, as you can identify which internal gaps could be exacerbated by external factors. A SWOT analysis is often undertaken at the start of a strategic planning process.
- Strategic planning is the most in-depth and multi-faceted of all the tools we’ve explored so far. A strategic planning process is designed to bring together stakeholders to create a shared vision for your organization’s future. Tools like a SWOT analysis often roll up into a strategic planning process. But what sets strategic planning apart is its focus on stakeholder engagement and creating alignment and buy-in across an organization.
Combining Scenario Planning and Strategic Planning
In a moment filled with uncertainty, it might seem counterintuitive to invest resources into creating a unifying vision for your organization’s future. What if the economy spirals into another Great Recession? What if your organization loses funding or customers? What if there’s another global pandemic?
These “what if” questions are exactly where scenario planning as a tool for strategic thinking can support your long-term planning. Integrating scenario planning tactics into your strategic planning process can help you prepare for HOW you can operate in different scenarios while keeping your goals front and center.
Because navigating troubled waters WITHOUT a roadmap for your organization’s future will be far harder than simply adjusting your route along the way.