I opened a scenario workshop recently by suggesting there were at least two ways to do strategic planning (and, of course, there are more).
One approach extrapolates a line of regression beyond the current time period (this year for example) forward into the future. With this approach a steady trajectory of growth is forecast with risks associated with ‘unknowns’ accounted for by applying a contingency factor – usually a (small) percentage plus or minus of the total projected data (sales, profits, widgets etc. ). I went on to suggest that this method has been popular with organisations and industries that have been operating for some time – like the taxi industry.
The mental models that underpin this approach to planning see the future in pretty much the same ways as it sees the past. It acknowledges that there will be some bumps along the road but these will be overcome as they have always been.
By contrast the mental models of the second approach accept that the future is unknown and that there are forces at work that can, and most likely will, have a profound impact on the organisation’s future. Such forces operate under labels such as technology, competition, political influence, the economy, environment and social system with which we tentatively connect and reconnect.
The world we inhabit today has an increasing probability of surprise. Entrepreneurs have at their disposal tools and information that enable individuals, from countries rich and poor, to compete head-on with not just large organisations but whole industries. Knowledge disseminated through education aimed at mass markets has contributed to the creativity, capability, drive and beliefs of millions that they don’t have to accept the world as they found it – that they have, in fact, the power to reinvent it. And they have increasingly available evidence to back up their beliefs. You don’t need me to list the number, size and scope of disruption today. That news is readily available.
With proof of the disrupting power of technology, social change, and inventiveness, however, the mental models of seeing the future as a continuation of the past are shown to be defunct. Or are they?
My read of the world today is that there is much change. Yet there remains much familiarity. Sure, we might pin a map on our Uber app to get a ride to a party rather than call a taxi, but we still work, tend to our families, exercise and eat. We still like to ‘get away’ on holidays, read books, bank and wear nice clothes. Aspects of life have changed and will continue to change but life, so far at least, goes on. And whilst fiction writers and futurists warn of a coming threat to humanity, the probability of total automation or the annihilation of the human race in the near-term seems preposterous. Of higher probability is that humanity will devise ways of adjusting and fitting with its future.
And this brings us to an important point. While some suggest that the old model of developing strategy based on what we know from the past should be completely replaced, it’s my view that this argument is poorly founded. Instead, I advocate that organisations supplement and strengthen their existing strategic management approach with tools, processes and capabilities attuned to disruptive forces as an adjunct to existing approaches. Put another way, mine is an AND argument that encourages synthesis of both rear and forward-looking information. Organisations need to continue drawing from their past and current pool of experiences and information and maintain intelligence gathering from current sources. That said, organisations cannot rely on this old approach alone.
How might organisations begin to strengthen their strategy management capability to ensure it is more attuned to the dynamics of the current environment? There are a range of foresight tools that are an appropriate addition to the sensing and sense making tools of strategic management. These include Delphi, the Futures Diamond, Theory U, and Integral Futures. These can easily be learned by teams and employed across strategy processes. The challenge with introducing these sorts of tools in organisations that have been doing strategy a particular way for a long period of time is that they are different; perhaps too different for team-members to really buy into a) their use and b) the outputs they produce.
As a result, the introduction of foresight tools should be accompanied by a program of change goaled to enhance thinking and expand old mental models. Such a program needs to target shifts in thinking of individuals, as well as routines and processes, culture and perhaps even identity. It’s also important to be realistic with such initiatives as shifts in mental models, culture and identity happen at a pace completely different to that of introducing tools alone. The risk is, introduce the tools without the changes in thinking and the tools could easily die out before their usefulness is truly felt. Worse, such a failure might end up in the pile of failures labelled “we tried that”, making revisiting such an initiative even more difficult.
Such a program should also include mechanisms that encourage diverse participation and involvement in strategic processes. Here, by diversity I mean diversity of thinking, perspectives and attitudes. Again, the goal is to expand mental models in order to welcome and produce fresh insights. These won’t come by reinforcing the current social systems ‘in group’ participation, sameness of thinking and old biased decision filters. As critical thinking capability expands, an organisation can introduce additional foresight tools such as systems thinking and scenarios to those I’ve mentioned above.
Communication systems too must be enhanced to ensure well-formed ideas surface, are heard and are acted on. In enabling teams up, down and across the organisation to participate in the development of foresight capability, organisations are tapping into the enormous tacit potential of their workforce, helping to build strategies that navigate organisations towards achieving their goals, and investing in the sustainability of the organisation’s future.