Are you wondering whether a scenario planning process or a strategic planning process is right for your organization?
The future is bristling with uncertainty, which is a challenge for nonprofit organizations and businesses alike. As leaders our primary goal is to steward our organizations and our people. With so many unknowns, it’s tempting to want to plan for every possible scenario.
Luckily, we have two complementary tools at our disposal: scenario planning and strategic planning.
So, how are these two tools different, and how can they help your organization?
Scenario Planning vs Strategic Planning
What is a scenario planning process?
Scenario planning is an iterative process to craft multiple plausible stories or scenarios about the future. This involves identifying key external trends and tracing how they may affect the environment within which an organization will need to operate.
The scenario planning process can feel technical, with charts detailing trends and driving forces. But at its heart scenario planning is about storytelling. The aim is to help leaders think more expansively about the future in order to better prepare for potential challenges.
What is a strategic planning process?
Strategic planning is a structured process to guide an organization in creating, documenting and committing to a shared vision for the future, including the strategies, goals, objectives and activities that will bring that vision to life.
Like scenario planning, strategic planning is designed to look into the future. But the process, goals and outputs are quite different.
How are they different?
The biggest difference between scenario and strategic planning is the approach to envisioning the future:
- A scenario planning process starts in the present and projects how trends may affect an organization’s future.
- A strategic planning process starts from a future vision for an organization and works backward to outline how an organization can achieve that vision.
As a result, the outputs are also very different. Scenario planning produces a set of scenarios, whereas strategic planning produces a strategic plan.
When and How Do Organizations Use Both Tools?
Organizations often turn to the scenario planning process when faced with unpredictable external uncertainties. For example:
- The early days of the COVID pandemic prompted many nonprofits and businesses to launch scenario planning. With multiple public health, economic, political, and other uncertainties, leaders were desperate for tools to guide short and long-term decision-making.
- More recently, even the most established companies in the tech sector are increasingly preparing for multiple different economic and business scenarios. According to the New York Times, for 2023 planning at Google, managers are reportedly “being asked to draft plans on how to handle 10 different budget scenarios.”
In contrast, organizations undertake strategic planning at any time. Indeed, we recommend that organizations always operate with a current and relevant strategic plan. A strategic plan provides a roadmap for your organization’s future. And trying to drive in unfamiliar territory without a roadmap (or GPS) can lead to disaster.
Scenario Planning Complements Strategic Planning
Like a SWOT analysis or environmental scan, scenario planning is a tool in your strategic planning toolbox. In scenario planning, you map different potential futures—and the challenges and opportunities they may present. This can help prepare your organization to develop more creative and dynamic strategies to achieve your goals. But it doesn’t replace a strategic plan.