Professional Documents
Culture Documents
Scenario Planning
Scenario Planning
Overview
NASA
The London Stock Exchange
UK Prison Service
Prudential
Marks and Spencer PLC
Major contention
Each of these cases illustrates one or more fundamental,
generic processes highly pertinent to managing technology,
innovation, and/or change
In each case key decision makers were unwilling or unable
to recognize that the assumptions and beliefs informing
their actions were deeply flawed
Strategic Drift
Source: G. Johnson (1987). Strategic Change and the Management Process.
Oxford: Blackwell. (Adapted with permission from the author)
Environmental
Change
Amount
of
Change
PHASE 1
Incremental
Change
PHASE 2
Strategic
Drift
PHASE 3
Flux
TIME
G. Johnson 1987
PHASE 4
Transformational
Change or
Demise
62.0%
Stakeholder analysis
30.0%
Scenario planning
28.5%
Market segmentation
22.6%
Competence analysis
21.5%
PEST(EL) analysis
17.2%
15.1%
BCG Matrix
8.6%
8.5%
Cultural Web
5.5%
McKinseys 7 Ss
Other
5.3%
12.5%
Objectives
To develop new academically rigorous knowledge
enabling users and would be users of scenario-planning
and related approaches to appreciate the complexities
involved in the design of successful interventions
Three lines of inquiry, broadly grouped under a design
science umbrella, variously addressing aspects of team
design, facilitation, group dynamics and information
processing with a view to enhancing the effectiveness of
scenario-based approaches in fostering innovation and
organizational adaptation
Understanding
evolving needs
in society
Entrepreneurial
invention
Resources
Unique, difficult
to emulate
elements that
differentiate from
competitors
Results
Distinctive
competencies
Competitive
Advantage
Source: van der Heijden, K. (1996), Scenarios: The art of strategic conversation, Wiley, p. 69
Land/buildings
Innovative
child care
Retention exteachers
Teacher
satisfaction
Revenue
Pay for
service
-ve
Parents good
feelings
Reputation
Working
parents
Parents
financial
resources
Source: van der Heijden, K. (1996), Scenarios: The art of strategic conversation, Wiley, p. 71
Minor
change
Business as
usual with a
twist
Unbundling of
information and
advertising
Radical
change
Consumers in
control
Cybermedia
Source: Schoemaker & Mavaddat (2000) Scenario planning for disruptive technologies, in Day et al (Eds.)
Wharton on Managing Emerging Technologies, New York: Wiley, p.224
Understanding the
institution
(business idea)
Research Process
Started with insights from Hodgkinson & Wright (2002)
Conceptualization of scenario planning as input-processoutput model, underpinned by extensive review of wider
management and social science literatures
Design principles derived from framework and theorizing
Empirical study as an approach to field testing these
principles, with a view to validating, elaborating and refining
them
Outer context
(social, economic, political and technological)
Facilitator
will & skill
Scenario team processes
and outcomes
Team
composition
Inner context
(culture, structure and micro-politics)
Figure 1: Guiding Framework for Design Science Approach
Research Process
Started with insights from Hodgkinson & Wright (2002)
Conceptualization of scenario planning as input-processoutput model, underpinned by extensive review of wider
management and social science literatures
Design principles derived from framework and theorizing
Empirical study as an approach to field testing these
principles, with a view to validating, elaborating and refining
them
Background characteristics
and social identity effects
Background characteristics
and social identity effects
To avoid harmful conflict between subgroups:
Select team members who identify with multiple functional areas
within the organization
Avoid configuring the scenario team into factions
With diverse/factional groups, one solution is to build and emphasize
the common identity of the scenario team:
Emphasize shared fate of all participants/organization
Set and highlight shared goals
Structure tasks to facilitate collaboration between members of
different subgroups
Build collective (were in this together), rather than divisive (its them
versus us) mentality
Influence of Personality
Personality of scenario team
Five factor model of human personality
Tools to assess personality and inform team selection and
facilitation techniques
Select scenario team for appropriate blend of personalities
If selection infeasible, need to adapt facilitation process to
the personality profile of the team
Extraversion
Openness
Trait
Key
Descriptors a
Intellectual,
creative,
complex,
imaginative,
artistic (vs.
unintellectual,
unimaginative
, simple,
imperceptive,
shallow)
Talkative,
assertive,
energetic,
bold (vs. shy,
quiet,
reserved,
inhibited,
withdrawn)
Hypothesized Role in
Scenario Teams
Scenario teams high in
Openness will experience less
anxiety and cope better when
responding to future
contingencies, generate and
analyse more effectively
challenging scenarios, be
more willing to accept
diverse perspectives, will
generate alternative strategic
responses of higher quality
with greater fluency, and will
explore more readily new
strategic directions than
teams low in Openness
Scenario teams comprising
moderate Extraversion
members, and teams with a
moderate proportion of high
Extraversion members, will
engage in more effective
elaboration regarding
strategic issues than teams
comprising a majority of high
or low Extraversion members
Source: Hodgkinson and Healey (2008). Toward a (pragmatic) science of strategic intervention: Design propositions for
scenario planning, Organization Studies, Sage Publications 2008
Agreeableness
Neuroticism
Trait
Key
Descriptorsa
Anxious,
moody,
envious,
emotional,
irritable (vs.
unemotional,
relaxed,
imperturbable
, unexcitable,
undemanding)
Hypothesized Role in
Scenario Teams
The presence of high
Neuroticism team members will
inhibit elaboration in
constructing and analysing
scenarios, constrain the creative
generation of appropriate
strategic responses, and
increase the likelihood of
dysfunctional defensiveavoidance behaviours, thereby
derailing the intervention
process
Kind,
In politicized contexts, low Agreeableness individuals
Moderately agreeable teams
cooperative,
are less cooperative and eschew organizational goals
will exchange freely diverse
sympathetic,
(Witt et al. 2002)
information and perspectives
warm, helpful
and engage in constructive
The
average
level
of
team
agreeableness
is
positively
(vs. cold,
debate when constructing and
associated
with
social
cohesion,
open
communication,
unkind,
analysing scenarios.
conflict
resolution,
and
task
performance
(Barrick
et
al.
Source:
Hodgkinson and Healey (2008). Toward a (pragmatic) science of strategicConversely,
intervention:overly
Designagreeable
propositions for
distrustful,
1998;
Neuman
and
Wright
1999)
scenario planning, Organization Studies, Sage Publications
harsh, rude)
teams 2008
will eschew such debate
Conscientiousness
Trait
Key
Descriptors a
Organized,
systematic,
thorough,
neat,
efficient (vs.
disorganized
, careless,
inefficient,
impractical,
sloppy)
Hypothesized Role in
Scenario Teams
Trait descriptors are sample marker adjectives taken from Goldberg (1992)
Source: Hodgkinson and Healey (2008). Toward a (pragmatic) science of strategic intervention: Design propositions for
scenario planning, Organization Studies, Sage Publications 2008
Outer context
(social, economic, political and technological)
Facilitator
will & skill
Scenario team processes
and outcomes
Team
composition
Inner context
(culture, structure and micro-politics)
Figure 2: Guiding Framework for Critical Incident Study
PROCESSES
Organizational
outcomes
Environmental
change
Nature of change in task environment:
discontinuous versus continuous
Rate of change in task environment:
low, moderate, high
Structural
responsiveness
of the organization
Internal structures,
systems, & routines
Internal politicization
Psychological climate
Composition of
scenario team
Informational & demographic diversity
Personality composition (Big Five)
OUTPUTS
Organizational change:
successful versus unsuccessful
Strategic adaptability: high versus low
Scenario team
processes
Inter-subgroup processes
Politicking & coalitional behaviour
Intra-team conflict & elaboration
Team information processing
Strategic problem solving &
decision making activities
Facilitation
Intervention design
Managing behavioural dynamics
Stimulating team elaboration
Political will and skill
Intervention
outcomes
Mental models:
revised versus reinforced
Strategic ideas, decisions, solutions:
high versus low quality
Strategic alternatives:
robust versus weak
Extent of strategic consensus:
high versus low
Commitment to strategic change:
high versus low
Critical incident 1
Multinational Manufacturer
It was a big manufacturing organization operating in Europe. The MD had
a massive ego We did a nine-month programme, running a workshop in
Merseyside. The problem was perceived to be structure The groups
were working to identify key issues for [their sector] to enable them to
operate globally. [As part of the scenario process] we gave them
magazines and posters to build pictures of the future They were very
creative not what Id expect from a bunch of engineering managers. The
chairman came up to me at 4pm and told me that this was extraordinary.
Then the MD arrived, and told people to stop what they are doing. People
were tall and upright, but by the time he had finished they were all looking at
the floor. The effect was like a boiling water enema - the more junior people
thought they had been betrayed, the senior people thought oh hes done it
again. There was blubbing in the loo and that sort of thing He was in
charge he was top dog, he was going to tell them what to do, he knew all
the answers and the answer was cost cutting There was a long internal
process to correct this. The project as it was defined didnt happen.
Nobody wanted to go on the [strategy workshop] teams. It was a huge
waste of money and time and everything else.
(Facilitator, negative incident)
Copyright Hodgkinson and Healey 2008
2007
Critical incident 2
Small ICT service provider
[The organization concerned] was a bit like a
dysfunctional family. There was antagonism between
departments and all kinds of stuff going on They didnt
benefit from the outputs in the way that other organizations
did. A lot of organizational change had happened, which
was very fresh and painful. There was a lot of uncertainty
and discomfort. Lots of infighting when we had a coffee
break it was a bit like being at a family wedding. There
were lots of bitchy asides they used it [the SP exercise]
as an opportunity to bring out aggressions that were
already there ... But if you look at the internal drivers [of
future change in the business environment] that they
mentioned,
they
were
communication
between
departments, organizational culture, staff morale, staff
attitude, staff understanding of the organization. You could
tell what was going on in that organization.
(Facilitator, negative incident)
Copyright Hodgkinson and Healey 2008
2007
PROCESSES
Organizational
outcomes
Environmental
change
Nature of change in task environment:
discontinuous versus continuous
Rate of change in task environment:
low, moderate, high
Structural
responsiveness
of the organization
Internal structures,
systems, & routines
Internal politicization
Psychological climate
Composition of
scenario team
Informational & demographic diversity
Personality composition (Big Five)
OUTPUTS
Organizational change:
successful versus unsuccessful
Strategic adaptability: high versus low
Scenario team
processes
Inter-subgroup processes
Politicking & coalitional behaviour
Intra-team conflict & elaboration
Team information processing
Strategic problem solving &
decision making activities
Facilitation
Intervention design
Managing behavioural dynamics
Stimulating team elaboration
Political will and skill
Intervention
outcomes
Mental models:
revised versus reinforced
Strategic ideas, decisions, solutions:
high versus low quality
Strategic alternatives:
robust versus weak
Extent of strategic consensus:
high versus low
Commitment to strategic change:
high versus low
Summary
Organizations often fail to adapt and change because of
cognitive inertia, escalation of commitment and groupthink
Scenario planning is a technique to facilitate strategic
change: aim is to stretch thinking and aid learning
Various approaches to scenario planning, including the four
step process (after van der Hiejden)
The evidence base for this and other approaches has been,
hitherto, largely anecdotal
Work conducted by my colleagues and I at AIM
Research/COSLAC has laid important foundations for
taking the evidence base to a new level, while also
providing some useful guidelines for practice
Copyright Hodgkinson and Healey 2008
2007
Summary
Evidence base for, and recent advances in, scenario
planning
Recommended Reading
1.
Delbridge, R. Gratton, L. Johnson, G. et al. (2006) The Exceptional Manager: Making the Difference. Oxford: Oxford University
Press. Provides a useful overview of the concepts of inertia and strategic drift, and relevant background material on the cognitive
and related challenges pertaining to innovation and decision making in organizations
2.
Healey, M. P. and G. P. Hodgkinson (2008) 'Troubling futures: Scenarios and scenario planning for organizational decision
making,' in Oxford Handbook of Organizational Decision Making. eds. G. P. Hodgkinson and W. H. Starbuck, Oxford: Oxford
University Press. Outlines the cognitive benefits and pitfalls of multiple scenario analysis
3.
Hodgkinson, G. P. and Healey, M. P. (2008) Toward a (pragmatic) science of strategic intervention: Design propositions for
scenario planning, Organization Studies, 29, 435-457. An analysis of how team composition and facilitation can be designed to
produce effective scenario planning processes and outcomes
4.
Hodgkinson, Gerard P. and Paul R. Sparrow 2002, The Competent Organization: A Psychological Analysis of the Strategic
Management Process, Buckingham: Open University Press. Provides a comprehensive analysis of the psychological and
information processing challenges facing decision makers in contemporary organizations
5.
Hodgkinson, G. P., R. Whittington, G. Johnson, and M. Schwarz 2006, "The Role of Strategy Workshops in Strategy Development
Processes: Formality, Communication, Coordination and Inclusion," Long Range Planning, 39 (5), 479-496. Reports findings from
a large-scale survey of strategy workshop practices
6.
Hodgkinson, Gerard P. and George Wright 2002, "Confronting strategic inertia in a top management team: Learning from failure,"
Organization Studies, 23 (6), 949-977. An entertaining and insightful case of a failed scenario planning exercise, analysed from a
decision making/psychodynamic perspective
7.
Ringland, G. 1998, Scenario planning: Managing for the Future, Chichester: Wiley. Describes several case-studies of scenario
planning in various contexts, illustrating various approaches to scenario planning that differ from that adopted in the class exercise
8.
(A) van der Heijden, Kees 1996, Scenarios - The art of strategic conversation, Chichester: John Wiley. (B) van der Heijden, Kees,
Ron Bradfield, George Burt, George Cairns, and George Wright 2002, The sixth sense: Accelerating organizational learning with
scenarios, New York: John Wiley. Two books outlining the principles and practices of scenario planning from a learning
perspective
FURTHER INFORMATION
Professor Gerard P. Hodgkinson
Professor of Organizational Behaviour and Strategic Management, and
Director, Centre for Organizational Strategy, Learning and Change (COSLAC),
Leeds University Business School: gph@lubs.leeds.ac.uk
Dr Mark P. Healey
Senior Research Fellow, Centre for Organizational Strategy, Learning and Change
(COSLAC), Leeds University Business School: busmph@leeds.ac.uk