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The Advantages of Integrating Scenario Planning and Strategic Planning

Strategic planning has long been a core part of the Facilities Management set of deliverables. As the planning environment becomes ever more ambiguous, the utility of scenario planning increases. Including scenario planning as a part of your strategic planning process allows you to plan for a range of environmental conditions and establish signposts that will help you understand the journey as it progresses. Understanding, you can then anticipate and adjust along the way.

Strategic planning is a mature discipline, one that FM’s participate in to help their organizations align enterprise strategy. The process forces us to focus on the future with the intent of designing a set of actions and measures that will take us to a desired position in that future. Generally, we do so with the expectation of influencing the future and how we will be positioned in it. The process provides knowledge about needs, threats and assets, and results in a plan for direction, continuity, resourcing, and leadership.

But what happens when the future, or the path to it, forget to follow our script? Our recent past and current experience is not our first global surprise. One lesson that emerges from these experiences is that strategic planning must allow for a range of possible events, including even potential doomsday options, as unlikely as we may believe them to be. Planning for a range of possible futures and recognizing their early warning signs is where scenario planning comes in.

Scenario planning not only includes plans for different planning contexts; it also includes signposts that allow us to predict which direction reality is headed in. Defining indicators of a given direction or condition allows us to establish corrective or hedging actions in advance. This essentially amounts to pre-planning contingency responses to events that may not be optimal according to our plan, but which when correctly implemented allow us to redirect, recover, or revise our strategy and tactics. One big lesson of the pandemic is that no “that couldn’t happen” assumption should be taken seriously. And, if an assumption is taken seriously there must be a set of planned mitigation strategies and actions.

Both strategic planning and scenario planning can include a heavy reliance on assumptions about future states. It is therefore important to determine in advance which assumptions you believe will be structurally important, meaning, they will have a determinate effect on possible outcomes. Not all assumptions will. Re-allocating resources or shifting strategy in response to an emerging condition which validates an assumption which is not a key determinate can be a costly mistake. It is critical therefore, that assumption-based planning be rigorously tested. One way to do so is to game strategic planning scenarios and your reactions to them.

Game theory, long in use as a strategic planning tool, tests assumptions, conditions, and response actions in real time. This allows us to apply a stress test to planning options and behaviors. Doing so informs us in advance about which strategies and tactics are most likely to be successful when employed against specific conditions, sharpens decision making, and helps evaluate and develop leaders who will be called upon when times are tough. An example you are likely familiar with is a disaster response tabletop exercise. You have done the planning and I am sure you have exercised your plan, including disruptive inputs that challenge those engaged in the exercise to adapt and adjust. When used to test strategic or scenario planning this same type of “game” is applied to other business functions. What if, for example, the “disaster” is a hostile takeover attempt by a major competitor? How would your company recognize and react to the early warning signs and changing business conditions that result? What actions would you take to counter the threat, and how might you adjust your strategy in response to an evolving context?

Objectivity and rigor are keys to well thought out strategic and scenario plans. Both require pragmatic and disciplined approaches to assure planning integrity. Common planning pitfalls include limiting the scope of the planning effort, focusing on known issues/threats without gathering business intelligence on emerging threats, using scenarios as a training tool rather than to develop strategy, lack of executive leadership and participation, and a willingness to play it safe without pressing to discover or illuminate capability or capacity gaps. Each of these planning behaviors diminish exercise value and can instill a false sense of security.

Strategic planning seeks to navigate a way to a desired future, scenario planning focuses on preparing for a variety of paths to multiple future states and how each may be optimized. Integrating the focus of strategic planning with scenario planning’s emphasis on a changing set of risks and opportunities provides a comprehensive planning context and increases confidence.

Ken Burkhalter is a facilities and project management consultant, focused on strategic planning, capital projects, and organizational development. You can contact him at ken@kburkhalter.com

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