Driving Strategic Conversations
“Plans are nothing; planning is everything.”
All too often as executive teams attempt to develop visions of the future and define strategic plans for growth and profitability, they descend into arguments focused on differing predictions about the economy, or technology, or the workforce.
Or they become distracted by “bright shiny objects” like powerful new technologies (driverless cars, voice recognition, holographic distributed meetings – you know what I mean) that may be fascinating but usually have little to do with their own business.
Like so many other areas of organizational leadership, developing new kinds of conversations and new forms of inquiry about the future are critical components of organizational leadership.
Historically, strategic planning was all about focusing an organization’s attention on a particular marketplace and ensuring that it had the operational capabilities to compete effectively in that market segment. And today most strategic plans continue to make explicit assumptions about future trends, estimated probabilities, and include educated guesses about what’s going to happen.
However, in today’s highly volatile and unpredictable world, assuming any kind of predictability in the marketplace can be fatal. Traditional strategic planning is worse than useless when dealing with the uncertainties of today’s economy. Indeed, I believe that traditional thinking about the future, as if it were actually singular, and knowable, is downright dangerous.
Most strategic planning conversations embody several fundamental assumptions that are obviously false in today’s business environment:
- industry conditions are relatively stable and predictable;
- we can extrapolate current trends into the future with reasonable accuracy;
- customers and competitors are well known and will remain so;
- competitors play by the same basic rules that have governed the industry and its distribution channels in the recent past;
- there is one “right” picture of the future, and it can be predicted by the careful analysis of trends and their underlying drivers; and
- strategic planning can be done periodically (typically once a year) as a way to step back from daily operations and be reflective about the future.
Anyone who thinks about the state of business today recognizes how irrelevant and even misleading those assumptions are. What we need instead are ways of thinking and – especially – talking about the future that move at the speed of the Internet, embrace uncertainty, and prepare the organization to move in several different possible directions, sometimes simultaneously.
The task of senior executives is to sort out which small number of possible futures is most likely to occur, and how those alternative futures will affect their organization. More importantly, they need to develop a range of options and determine the skills and resources required to cope with (or to create) any particular future scenario.
The best way I know to embrace uncertainty and engage in constructive, collaborative speculation about the future is called scenario planning.
Arie de Geus, Peter Schwartz, and their colleagues at Shell Oil in the 1970’s are generally credited with being the “inventors” of scenario planning. And if there is a “bible” of scenario planning—what it’s about, why it’s important, and how to do it—it’s Peter Schwartz’s 1991 book The Art of the Long View (Doubleday Business).
Scenarios are stories about the future that, when taken together, describe a range of plausible future states of an industry, its markets, and a particular business. Scenarios are a tool for dealing with rapid change, uncertainty, and inherent unpredictability. Scenarios are not predictions of the future; rather, they are images of possible futures, taken from the perspective of the present
Because scenarios are developed explicitly to describe a range of possibilities, they help organizational leaders to open their minds to the inherent uncertainties in the future, and to consider a number of alternative “what-if” possibilities without needing to choose or commit exclusively to any one most-likely outcome. Scenario analysis enables managers, business planners, and executive teams to develop multiple options for action that can be compared and assessed in advance of the need to implement them.
An effective scenario suggests critical implications for the organization and contains personal meaning for the people who build it. Scenarios are useful tools primarily because they facilitate—indeed, require—a strategic conversation about the unpredictable outcomes of today’s rapidly changing business environment.
And it’s the conversational component of strategic planning that matters the most. As President Eisenhower suggested many years ago, the plans are not the thing. What matters is the planning – the activities and the conversations that decision-makers engage in as they confront important questions about future conditions.
And I believe the biggest challenge executives face is approaching those conversations with an open mind and a vivid imagination. There’s no better way to shut down a good conversation than by saying something like “You’re wrong.”