|
Although
scenarios in a narrow sense of the word are stories describing
the current and future states of the business environment,
scenario planning is normally understood to be an approach
towards dealing with all five steps.
Scenario
planning distinguishes itself from other more traditional
approaches to strategic planning through its explicit
approach towards ambiguity and uncertainty in the strategic
question. The most fundamental aspect of introducing uncertainty
in the strategic equation is that it turns planning for
the future from a once-off episodic activity into an ongoing
learning proposition. In a situation of uncertainty planning
becomes learning, which never stops. We have an in-built
urge to try to pin down situations, and to try to reach
a point where we have got it sorted out in our mind. If
uncertainty is acknowledged it is not any longer possible
to take this position of "we have done the planning,
we can now get on with making it happen". The idea
of continuous learning is less uncomfortable as it does
not give us this feeling of problem closure.
However,
strategy is about the future, and therefore involves uncertainty.
The traditional approach tries to eliminate uncertainty
from the strategic equation, by the assumption of the
existence of "experts" who have privileged knowledge
about "the most likely future", and who can
assess the probabilities of specific outcomes. Scenario
planning assumes that there is irreducible uncertainty
and ambiguity in any situation faced by the strategist,
and that successful strategy can only be developed in
full view of this.
The
study of scenario planning is the study of organisational
learning. Organisational learning involves the total system,
assuming that characteristics of the whole system become
apparent through its interaction with its environment,
based on empirical observation. Another aspect of the
learning system are the individuals who make up the organisation
and influence the whole. However, institutional cognition
and behaviour have emergent characteristics which are
not immediately apparent from the cognitive characteristics
of the members making up the institution. The total is
different from the sum of the parts. Understanding comes
from pursuing both perspectives.
A
number of assumptions underlie the reasoning in this book:
- Organisations
are made up of people who approach their organisational
actions in a thinking way.
- The
organisation does not simply behave as the sum of the
behaviour of individuals. Through their interactions
unique institutional behaviour emerges.
- Individual
strategies need to take account of the systemic properties
of the institution as a whole, if they are to lead to
their intended results.
The
managers I particularly want to reach are those running
successful organisations. They may be more in need of
a disciplined approach towards strategic management than
their colleagues facing serious problems, and they are
often not aware of it. There is something pernicious in
business success. An observation I have made over many
years of practice is that management teams in charge of
successful organisations show significantly more consensus
on strategy than teams in trouble. They often ascribe
their success to this clear and shared vision. In my view
it is equally true that the casual relation is the other
way around, and that success leads to focusing in the
team. Miller (1993) argues that most successful organisations
lapse into decline because they have developed too sharp
an edge. They narrow the focus of their attention to a
reducing set of strengths and functions, while neglecting
others. The organisation will become a more and more efficient
machine, doing fewer things increasingly well.
The
problem is known as the "Icarus" effect. Initially
the organisation may experience considerable success with
this focusing strategy. This will lead to strong re-inforcements
of the "success formula" through cognitive,
cultural and structural mechanisms. The problem arises
when societal change reduces interest in that one activity.
The organisation then finds that it does not have the
"requisite variety" (Ashby 1983) to take the
cognisance of, and adjust to, evolving needs.
Such
organisations and their management teams need to take
on board a disciplined way of looking outside their daily
business. In order to improve their perceptual capabilities
they need to become more nuanced in their understanding
of the business environment. The traditional rationalistic
approach to strategic management with its emphasis on
the organisation as a unitary actor is of limited help
here. What is needed is a more complete philosophy mobilising
the cognition, culture, structure and process throughout
the organisation. Only in this way can the company as
a whole acquire the perceptual skills needed to see, understand
and act on important changes in the business environment
across a wide front. This book approaches strategic management
with such an integrated focus.
HOW
TO USE THIS BOOK
The
book has four parts which cover the subject in the following
way. In Part One we will first of all discuss a number
of the underlying assumptions of traditional ways of thinking
about strategy. Specifically we will discuss three paradigms,
based on views of the world characterised by rationalism,
evolution and systemic process. Consideration of uncertainty
and ambiguity will allow us to see that all three are
valid perspectives on a situation which is too complex
to be packaged in only one of these views. We will then
argue that a synthesis can be achieved by the introduction
of the notion of institutional learning. We will show
how all three traditional views of strategy have a logical
place in the organisational learning loop. Finally we
will argue that scenario planning can be seen as a form
of such integrative institutional learning. Using that
as a basis we discuss what this means in terms of shaping
the approach with the objective of creating a practical
tool, using all modes of thinking about strategy.
In
Part Two we will discuss the theory of scenario thinking.
This is based on articulation of the characteristics of
the organisation itself, and consideration of the environment
in which it exists. The organisational "self"
is the starting point of skilful strategy. We will introduce
the concept of the "Business Idea" as a way
of making explicit those aspects of the organisation which
are crucially tied up with the question of survival and
development. In the environment we will be particularly
interested in ambiguity and uncertainty, which will lead
to a characterisation in the form of multiple, equally
plausible futures. We will then bring these two together
and address the question of how to judge the robustness
of the Business Idea in the future business environment.
Answering this will lead us towards an understanding of
strategic direction.
Part
Three introduces the practise of the scenario planning
process. Specifically we will discuss how a management
team can go about engaging in a thinking and discussion
process to surface the understanding of the executives
in a form which allows rational discussion leading to
strategic conclusions. We will also discuss how external
perspectives can be introduced into the process, to avoid
"institutional myopia". Although there are many
ways in which this can be achieved we will suggest specific
approaches that can be adopted by the inexperienced. Following
this approach a management team will articulate its shared
Business Idea, analyse its business environment in all
its uncertainty, analyse its competitive position, and
then discuss its strategic fit in the world. On the basis
of the conclusions reached it will articulate options
available for strategies to either improve the fit, or
develop its position by exploiting an already strong situation.
After
Part Three has taken the management team through a rational
thinking process to articulate its position, Part Four introduces
the wider institutional behaviour context. The institutional
learning model which underpins this book argues that strategy
development does not happen only within the management team
of an organisation, but involves almost all layers of decision
making. A management team which tries to develop strategy
in isolation will quickly find that there is not much relation
with the actual behaviour the organisation as a whole displays
in the world. If the ultimate aim is to make the organisation
more adaptable in a changing world, strategy processes must
pervade the organisation. Therefore we will need to address
both the formal planning and decision processes, and we
will discuss steps that can be undertaken to move the whole
organisation into a more skilful behavioural pattern. We
will also reach the conclusion that the introduction of
skilful scenario planning is not only a deliberate decision
by management, but also involves the culture in the organisation.
An organisation that wishes to move from a traditional rationalist
approach towards a corporate learning approach will need
to work towards changing the culture. This is a time consuming
process that will require not only a conscious decision,
but also persistence and consistency from the part of management.
They need to realise that they have embarked on a road that
will be demanding. On the other hand, we are discussing
questions of life and death for the organisation; it would
be unrealistic to expect survival to come for free.
|
