Turbulence-Proofing Your Scenarios

By Rick Docksai

Investing in an effective scenario-planning exercise and using the experience wisely can have a big payoff for organizations.

Scenario Planning in Organizations: How to Create, Use, and Assess Scenarios by Thomas J. Chermack. Berrett-Koehler. 2011. 272 pages. Paperback. $34.95.

Plenty of scenario-planning books tell readers how to build scenarios, but some pieces are missing. Few books offer advice for implementing scenarios or for determining if one’s organization is achieving optimal results from them, according to Colorado State University scenario-planning professor Thomas Chermack.

“Pick up any of the popular scenario planning books and check the index for assessment, evaluation, or results. I predict that you will not find these entries,” Chermack writes in Scenario Planning in Organizations.

Trying to pick up where he thinks other books have left off, Chermack introduces “performance-based scenario planning.” In his view, the work does not end with building scenarios. He presents tools for first developing scenarios, then carrying them out and measuring their comparative worth.

Chermack speaks through live narrative, using a real-life tech firm—he assigns it the alias “Technology Corporation”—which adopted scenario planning in order to better formulate mission strategies, more efficiently manage team projects, and execute needed internal reforms. A team of the corporation’s staff met for six rounds of planning throughout eight weeks.

The team compiled copious amounts of data about their organization’s business model, the industry environment, and the critical forces at play. They identified and ranked by strategic importance the factors that were certain and those that were uncertain. As Chermack explains, “When truly uncertain forces have been isolated, energy can be spent trying to understand those forces and how they might play out across a range of possible futures.”

Then they developed sets of scenarios that explored the external environment and how their organization would likely respond to changes within it. In follow-up sessions, they speculated how their scenarios might change if certain elements in the environment changed. Chermack calls this latter phase “wind tunneling,” in reference to the wind tunnels that aerodynamics researchers use to test new airplane models.

“Turbulence is an environmental characteristic that puts stress on the object in question, be it an airplane or an organization,” he writes.

Chermack lays out specifically how the team gathered data and analyzed it, and how they used Web sites, podcasts, and other digital media to communicate scenarios to each other and to the rest of their organization. He adds further suggestions for how any leader can effectively manage scenario projects and avoid many potential pitfalls.

Technology Corporation’s endeavor ends with the team members agreeing to expand from exclusive production of intellectual property to production of new, useful technology products. Toward that end, they formulate plans for more contracts with R&D partners, selling new technologies, and increasing cross-functional collaboration. Chermack observes that, as they worked, they noted approvingly that communication and understanding among their organization’s staff had improved markedly.

“Many expressed surprise that such a simple exercise could have such profound results,” he writes.

Finally, the team members assessed the results post-implementation. They completed short surveys about their satisfaction or dissatisfaction with the exercise and its degree of usefulness, and—more importantly, according to Chermack—what they learned: They detailed what they knew now that they did not know before, and how they and others would function differently following the scenario project. Chermack specifies several ideal survey formats and the kinds of questions that they should include.

“Learning is a prerequisite to change,” Chermack writes. “People cannot change their behaviors, have strategic insights, or create a novel way of seeing a situation if they have not learned.”

Chermack’s assessments also include performance questionnaires on the improved productivity, new ideas, and cost savings that participants expect will result from the scenario projects. Technology Corporation’s participants reported that an investment of $100,000 in the exercise generated ideas that would net them $250,000 in new revenue: a benefit of $150,000.

“While costs of scenario projects can seem high at first, consider the implications of saving from one major catastrophe or one major strategic insight,” writes Chermack.

Not all organization leaders are convinced that scenario activities hold merit. Chermack’s Scenario Planning in Organizations addresses their doubts head-on. The author acknowledges where prior scenario literature may have left unanswered questions, and he combines background theory and real-world strategizing to fill in the gaps. His book will be a useful addition to the libraries of organization leaders everywhere.

About the Reviewer

Rick Docksai is an assistant editor of THE FUTURIST. E-mail rdocksai@wfs.org.