It’s nearly impossible to grasp the massive shifts we’re seeing all around us today. The growth of the global economy and explosion of communication technology have radically changed our world over the past ten years. In that same decade, 300,000 nonprofit organizations have been registered in the US at a time when lines between the public, private, and social sectors are getting blurrier by the day. The landscape is shifting under our feet and we’re dealing with more complex challenges than ever before.
Gone are the days of creating a plan and then executing it in a predictable, linear way. It’s the nonprofits that adapt quickly and manage their strategies dynamically that will succeed in the days ahead , and scenario planning can be just the thing to get you out of your box — making sense of your environment, generating new ideas, testing a strategy that is already in place, or just learning and adapting faster.
If you’re like me, you’ll be surprised to learn that scenario planning is not about predicting the future (a scenario virtually never happens the way you write it up). Instead, the process of imagining several potential futures will make you dramatically more aware of the forces acting on you and your organization today.
Scenario planning can work well when…
- You are facing a complex dilemma and your path is unclear.
- Your environment is very uncertain.
- Your organization’s senior leaders support the scenario thinking process.
- You are willing to dedicate some time and resources to the process.
- Your organization is open to dialogue and change.
What you’ll need
Robust scenario planning usually takes place over two or three one-day workshops, which can include 20-30 people who are knowledgeable about and affected by the issue you’re exploring. Participants need to be curious and open-minded, and represent a wide range of perspectives. Depending on the size of the group, you will probably want three or four facilitators to organize the participants, lead the sessions, conduct additional interviews, and edit the final versions of the scenarios.
There are usually a few common steps in scenario planning:
Step 1: Define your topic and timeline
As you begin the scenario planning process, you’ll want to choose a specific topic. This is the step that focuses your whole exploration, so it is important to understand the related challenges, issues, and underlying assumptions. In my experience, it can be very helpful to conduct interviews with knowledgeable people who are stakeholders in your organization or thought leaders in your area of work. As you get closer to your final topic, choose a time horizon that fits. An organization using scenario planning to inform a three-year program may want to explore the coming five years. A nonprofit exploring its funding model may want to look out across the next fifteen.
As you finalize your topic, shape it in the form of an objective question that fits your timeframe. For instance, you may want to know “Over the next ten years, should [Organization X] focus on smaller programs in order to grow stronger?”
Step 2: Discover the major uncertainties (drivers)
What are the biggest forces and factors that will affect your question during the timeframe you’re exploring? It might be helpful at this point to do a PEST (political, economic, social, technological) Analysis. Once you’ve identified the biggest forces and factors, rank them in order of importance, then rank the most important factors by how uncertain they are. If your stakeholders don’t reach simple consensus, you can use a ranking tool (I like Paired Comparisons, though it takes a bit of time). Some factors will pretty straightforward and predictable (“Givens”). Others will be both critically important and very uncertain—these will be the “Drivers” of your scenarios.
By the end of this step, you will need to identify two main Drivers to focus your scenarios. For each of these two Drivers, you’ll describe two polar extremes. For instance, for the Driver of the State of the Economy, you might describe the extremes as “Weak Economy” and “Strong Economy.” For the Role of Government, you might say that the ends of the axis are “Less Government” and “More Government.”
Once you have your two Drivers described in this way, you can cross the two axes to create a matrix — what Sascha Meinert calls a “future compass” — which creates a framework for four scenarios.
Imagine what scenarios 1, 2, 3, and 4 would look like. What if there is a strong economy and less government? What about a strong economy with more government? How would these affect your organization and its environment? As you try to envision each of the four possible scenarios, ask yourself: Do the combined critical uncertainties produce believable and useful stories of the future?
Step 3: Build your scenarios
Next you’ll develop a narrative storyline for each of the quadrants in your future compass. Each story needs to begin today and proceed through the defined timeframe, contrasting the alternatives and their consequences so they can be compared. If you are developing them at a workshop, you would probably divide into small groups, with each working on a specific scenario before presenting it back to the large group. John Kotter likes to remind us that “Our minds are wired for stories, not abstract ideas.” A well-written scenario storyline can quickly communicate complex concepts by describing how characters in the story act and react to the driving forces, and will leave a lasting impression on the listener or reader.
The goal of the scenarios is to be simple but compelling, and to stimulate new thinking. The point of the exercise is not that one particular scenario will turn out to be true, but that there is new sensitivity about the major uncertainties, and awareness about how you might react to them.
A good scenario is (adapted from Meinert, p. 19)…
- Novel: The future is not just an extension of the present; it will have elements of surprise.
- Multifaceted: The present isn’t one-dimensional nor black and white; why should one impose such limitations on the future? Every scenario should be equally complex, likely and ambiguous.
- Believable: A scenario should be surprising and unexpected, but it has to be internally consistent and logical, showing relationships of interdependency, and exploring cause and effect.
- Comprehensive: It should combine trends and developments on various issues—how do individuals, communities, business and interact with social, political, economic and cultural trends and developments?
Step 4: Consider implications, actions, and changes
Once your scenarios are fully developed, work with your group to fully imagine what it would be like to live and work within each one. Ask yourself, “If this scenario is the future, what actions would we take today to prepare for it? What would we change?” The answers to these questions are your implications. Are there any implications that hold true across all (or most) of the scenarios? Are there any that are dramatically different? These commonalities and differences will often reveal the strategic choices you will need to make.
Step 5: Monitor for early warning signals
With your organization, identify some warning signals that might indicate when a particular scenario is beginning to unfold. A leading indicator such as a significant piece of legislation or particular economic developments might help you know when to make one of the strategic choices you identified in Step 4.
For more detail on leading your own scenario planning process, check out a couple of free tools: Sascha Meinert’s 2014 Field Manual for Scenario Building and the Global Business Network’s 2004 What If? The Art of Scenario Thinking for Nonprofits. For a more comprehensive walkthrough, I like Thomas Chermack’s Scenario Planning in Organizations: How to Create, Use, and Assess Scenarios.
Have you seen scenario planning at work? I’d love to hear about it.