Tailoring scenario planning to the

company culture
David Mason

I
David Mason is a partner in Skylight t is likely that the events of 9/11 and the resulting changes in the world business
Associates LLP. He has been working with environment will inspire a resurgence of interest in scenario planning. If past
scenarios since 1980 and was President of experience holds true, scenario planning will succeed brilliantly in some situations
Northeast Consulting Resources, the
and completely fail in others. After reviewing scenario planning projects in a number
organization that created and trademarked
of organizations, there seem to be two predominant causes of failure (1) a lack of
‘‘Future Mapping’’. It merged with
NerveWire in 1999. agreement on the purpose of the effort and (2) a lack of understanding about how
([email protected]) scenarios might help different organizational cultures and styles.

To avoid these two pitfalls, leaders need a way to assess the potential usefulness of
scenarios using the culture of their organization and the goals of the effort as context.
The diagram accompanying this article shows three cultural types of organizations –
leader driven, plan driven and evidence driven (see Exhibit 1). Each of these cultures
uses scenarios for three different purposes – directional strategy, contingency planning,
learning and team building. Compare, for example the cultures of a leader-driven
computer systems company, a plan-driven telephone company, and an evidence-
driven oil company. Clearly each has different managerial mindsets and different kinds
of issues. The needs of such organizations and their expectations regarding outputs
from a scenario project are completely different and require different approaches to
using scenarios.

Leader-driven cultures

Cultures like Intel and Sun and Microsoft are examples of leader-driven companies.
These organizations are out to change the world, and have a good shot at doing so.
They like being labeled revolutionaries. They try to upset the status quo. Failures are
expected and accepted in the course of everyday business. Rank-and-Žle employees
expect management to set the direction, but they resent detailed task planning; given
a direction, they expect to be trusted get it done. While management of most
companies would like to think their organization is leader driven, there are, in fact, very
few of these types of organizations.

The way leader-driven organizations use scenarios is dependent upon on the task at
hand.

Directional strategy. In leader-driven organizations scenarios are often about basic

directional strategy. North? South? Where is the company trying to go? Scenario

DOI 10.1108/10878570310464402 VOL. 31 NO. 2 2003, pp. 25-28, ã MCB UP Limited, ISSN 1087-8572
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 ‘‘ Leaders need a way to assess the potential
usefulness of scenarios using the culture of their
organization and the goals of the effort as
context.
’’
planning is a framework used to structure such a debate. Up to 100 people, or even
more, may have input or participate in workshops. But, in the end, the leader decides
and everyone follows, leaving the debate behind. With the direction set, middle
managers effectively self-organize to get the work done. In a truly leader-driven
culture, the leader’s direct reports are leaders too, and they don’t want detailed
directions from the boss; some even resent it. The trust goes two ways: managers
trust the leader’s decision and the leader trusts the managers’ ability to execute. And
they don’t let each other down.

Contingency planning. Sometimes leader-driven cultures use scenarios for

contingency planning, examining the big ‘‘What ifs’’ that the organization faces.
Common topics in business include large revenue drops, disruptive technologies,
large M&A moves by competitors, etc. These are about sensitizing the leadership
group to possible changes, not decision making on a speciŽc topic. War games might
be a better term than scenario planning to describe these efforts to rehearse actions
leading up to and during bad times. In situations where the scenarios actually come to
pass, project participants often remark that their response was better than it might
have been simply because they had spent some time thinking about the possibility.

Learning and team building. Leader-driven cultures also use scenarios to open up
the idea space in the organization in search of out-of-the-box ideas and inputs. On a
particular set of issues, (for example: should a network operator acquire content
businesses?) the leader seeks to attract all the people who really know something
about the issue in the company to bring their ideas together using scenarios as a way
to structure the discussion. At their best, these leaders make scenarios a way for
people to work new ideas into the planning and decision making system.

Plan-driven cultures
Plan-driven cultures are found in more stable business environments. Banks,
telephone companies (especially Yellow Pages), public utilities etc. are typical
examples. These organizations are built to deliver a completely reliable service or
product – indeed, failure to deliver is simply unacceptable. These cultures are the
opposite of the revolutionaries. They value stability. They want to see change coming
far in advance and manage their way through it with a minimum of disruption.

Directional strategy. If the outcome of scenario work is directional strategy, all you’ll
get is a yawn at these organizations. ‘‘Ah, the vision, great, I got it’’. Scenarios only
become real and useful to these managers in plan-driven cultures when the events
leading to an endstate are treated as critical path lists. For each event, they can
describe the outcome they want, the resources they require, and a time frame for
action; then they assign responsibility to individuals or teams. They want to know what
success or failure looks like at each step of the way so they can course correct as early
as possible if they need to do so.

Contingency planning. In these cultures, scenarios are often part of formal training
about how the company will respond to a particular event or series of events. For
example, the telephone company trains management for Želd service roles; when

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Exhibit 1

Leader driven – Plan driven – Evidence driven –

proactive pursuit future proof act, but watch

Directional strategy The presenting issue is a choice In addition to Directional Before coming to agreement on
of basic directional strategy for Strategy, the events selected are directional strategy, management
the corporation, business unit, treated as critical path issues requires time to match real world
product line, function, etc. Many with goals, resources, time events to the scenario event
have input, then the leader commitments, etc. paths. With sufŽcient evidence to
decides and everyone follows. act, they move swiftly.
Contingency planning About rehearsing broad Detailed scenarios describing a Real world events are matched
responses to sudden large-scale response to a particular event or to scenario events to give ‘‘early
change. A 40 percent revenue series of events. Used for training warning’’ of changes. Many
drop, disruptive technologies, response teams, for example. decisions are tested for viability
etc. ‘‘How would we act if . . .’’. under all scenarios before
proceeding.
Learning, team building etc. Uses scenarios to search for Teaches scenarios as a tool for Reaches out broadly, constantly
completely different ideas. Make broad use. Works at different seeking ideas and inputs that
scenarios the way people work levels of granularity with different enhance or threaten the future of
new ideas into the system. levels of people. the company. The executive
team can use this to keep
aligned.

there is a strike, the management staff picks up tools and goes out to do installations.
Airlines have detailed response protocols for accidents. It was not just luck that Wall
Street could re-open so quickly; all the banks had disaster recovery plans that were
very well developed and detailed. Training in ‘‘planned response scenarios’’ is routine
at these companies.
Learning and team building. Plan-driven companies should try to make scenario
planning a tool for common usage, not just a talisman for use by the high priests of
strategy and corporate decision making.

Evidence-driven cultures

Evidence-driven cultures develop in highly capital intensive industries that have very
long time horizons. For example, the oil companies need 10 years to open a new Želd
or build a reŽnery. The military has even longer time frames – 10 years to deploy a
weapon system that will have to operate for 30+ years. There are huge costs to being
wrong in these situations! Leaders in the oil industry and the military have to make
long-term commitments that can’t be withdrawn quickly and without great loss. So
real evidence is of paramount value to these cultures.
Directional strategy. In evidence-driven cultures, scenarios (event paths leading to
different endstates) provide a framework of expectations to match up with the real
world as it develops. For 6 to 12 months after Žrst creating the scenarios, these
organizations won’t use them for decision making. The scenarios are, after all, just
hypothetical constructs at the time they are created. These cultures do not make
decisions on hypothetical constructs. But as events occur, movement toward one
endstate and away from others can be observed. With mounting evidence, it is only a
matter of time until there is sufŽcient conŽdence to make a decision. Accumulating
evidence will eventually make the chance of being wrong unlikely. Of course, at some
point a bet needs to be placed and if everyone knows the right answer, there’s little to
be gained from the bet. But the possibility of failure is greatly reduced.
Contingency planning. Evidence-driven organizations anticipate that the conse-
quence of bad decisions will be high costs. Their managers will want to know how a

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 proposed action would fare under all the scenarios. An investment that works under all
the scenarios is a much better idea that a move that only works under one scenario. In
such cultures, once a decision is made, managers are alert for ‘‘early warning’’ events
that suggest the decision should be reviewed or reversed. Such organizations want to
be the Žrst to know they made a mistake, so they can alter their strategy before the
market Žnds out. A number of service Žrms have devised programs that tie news feeds
from the Internet into Žltering software that can attach relevant current news reports to
key scenario events and automatically notify appropriate people.

Learning and team building. These are generally very large operations and they use
scenarios as a way to reach out broadly, constantly seeking ideas and inputs that
enhance or threaten the future of the operation. They seek to learn everything they can
that might be relevant. Royal Dutch Shell is, of course, famous for this activity. This is
also where scenario projects can easily be derailed, going off into what clients believe
are irrelevant Želds far from the issues of interest to the organization.

We need to imagine the answers to many questions

The world has new questions about the future now than it did before September 11,
2001. The attacks on New York and Washington show the potential of terror to force
nations to react. The US declared a worldwide war on terror and invaded Afghanistan.
Then it targeted Iraq. But many nations feel threatened by a Pax Americana. Will
the US be seen as an economic and military bully, or a friend to repressed people
worldwide?

Anthrax contamination through the US mail has proved that weapons of mass
destruction don’t require military infrastructure to be effective. So will terrorists use
such weapons to wage international war?

We are in a signiŽcant recession that lingers on. When will an upturn occur and what
sectors will lead it?

The vaunted computing and communications industry has been knocked hard by an
incredibly swift deceleration. But we know that technical progress in computing,
networking and biotech will continue its relentless push forward, not slowing down a
bit even if markets are soft. What technical breakthroughs and industry consolidations
in the information and communications industry will transform a wide variety of other
markets?

At some point you will Žnd your organization needs to use scenarios as a framework
for logically discussing such issues and many others.

When you do, keep in mind that the way your structure your scenario project should
take into account your organization’s culture, and the questions you ask in scenarios
should match the answers your organization most needs.

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