Appendix H
Scenario-Based Strategic Planning as Described by the Futures Group 1

Charles M. Thomas

The Futures Group

Scenario-based planning is a technique for managing uncertainty not prediction. Organizations typically choose this planning technique when

  • the ambiguity in their operating environment is high

  • the pace of change and degree of turmoil is accelerating

  • their planning horizon tends to stretch out to ten years or more

When scenarios are used for planning, the intent is not to predict what the market will be and then build a master plan, but rather to ask what the future might hold and then identify the actions that can be taken today that will work no matter how the future turns out. As a result, the technique tends to rely more on expert judgment and less on quantitative forecasts such as market size or share. Although the payoff from the use of scenarios can be quite high, their use and development require intensive and highly customized efforts.

To develop scenarios, an organization must first cast a wide net so as to identify the many potential issues, trends, and factors in the operating environment (past, present, and future) that can have an impact on the organization. These issues and trends are called mission drivers or business drivers, and whether the objective is to explore organizational portfolio strategy or a technology investment strategy, this initial research and brainstorming should not be restricted.

With the drivers nominated, the next step is to reduce the breadth of the examination and bring some rigor and systematic analysis to categorizing the business drivers. This involves clustering and synthesizing all the drivers (typically as many as 150 to 200) into the macrolevel issues that define the overall decision planning environment. These macrolevel clusters become the fundamental assumptions of the planning effort, the base assumptions upon which the scenarios are built. These macrolevel assumptions are called "dimensions." They define the boundaries (dimensions) of the scenario planning space.

1  

This appendix has been edited for style and consistency.



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OCR for page 127
Maintaining U.S. Leadership in Aeronautics: Scenario-Based Strategic Planning for NASA's Aeronautics Enterprise Appendix H Scenario-Based Strategic Planning as Described by the Futures Group 1 Charles M. Thomas The Futures Group Scenario-based planning is a technique for managing uncertainty not prediction. Organizations typically choose this planning technique when the ambiguity in their operating environment is high the pace of change and degree of turmoil is accelerating their planning horizon tends to stretch out to ten years or more When scenarios are used for planning, the intent is not to predict what the market will be and then build a master plan, but rather to ask what the future might hold and then identify the actions that can be taken today that will work no matter how the future turns out. As a result, the technique tends to rely more on expert judgment and less on quantitative forecasts such as market size or share. Although the payoff from the use of scenarios can be quite high, their use and development require intensive and highly customized efforts. To develop scenarios, an organization must first cast a wide net so as to identify the many potential issues, trends, and factors in the operating environment (past, present, and future) that can have an impact on the organization. These issues and trends are called mission drivers or business drivers, and whether the objective is to explore organizational portfolio strategy or a technology investment strategy, this initial research and brainstorming should not be restricted. With the drivers nominated, the next step is to reduce the breadth of the examination and bring some rigor and systematic analysis to categorizing the business drivers. This involves clustering and synthesizing all the drivers (typically as many as 150 to 200) into the macrolevel issues that define the overall decision planning environment. These macrolevel clusters become the fundamental assumptions of the planning effort, the base assumptions upon which the scenarios are built. These macrolevel assumptions are called "dimensions." They define the boundaries (dimensions) of the scenario planning space. 1   This appendix has been edited for style and consistency.

OCR for page 127
Maintaining U.S. Leadership in Aeronautics: Scenario-Based Strategic Planning for NASA's Aeronautics Enterprise To understand this better, one can take a visual image by thinking of a cube as "future space." Somewhere inside that cube is where an organization's future lies. That cube represents the planning space. The first task is to make sure that the cube encompasses all the issues relevant to the business. Everything that is important to consider must be "inside" that cube—those are the mission drivers. To define the dimensions, one describes the boundaries (the dimensions) of that cube or planning space. By defining the dimensions carefully, one sets the boundary conditions of the planning environment. The scenarios used are chosen from the inside of that cube, strategically selected to cover the range of threats and opportunities resident in the planning space that is defined with the dimensions. NASA, outside experts, and the Aeronautics and Space Engineering Board (ASEB) steering committee worked jointly to nominate the mission drivers, select the dimensions, and chose the scenarios to be studied in detail. The scenario space that emerged from the dimensions chosen are shown in Figure H-1 (the dimensions are arrayed along the top). The scenarios chosen for development are highlighted. FIGURE H-1: NASA global scenarios—scenario space matrix. The Futures Group, Science Applications International Corporation, and NASA spent approximately eight weeks developing the scenario details (carefully following the advice of the steering committee concerning the intent of the scenarios chosen) and producing the narratives. The scenario documents contained narrative future histories,

OCR for page 127
Maintaining U.S. Leadership in Aeronautics: Scenario-Based Strategic Planning for NASA's Aeronautics Enterprise scenario contingent forecasts of key time series data, and detailed examination of the end states on 2015–2020. Scenario planning is a form of due diligence in planning. The organization is asked to "live" in each of the scenarios (in a sense, to insert their business judgment into each scenario) and ask "what should we do here to survive?" What are the customer needs in my scenario , what are the constraints on my behavior in my scenario, etc.? In this case, NASA and the ASEB steering committee divided themselves into "world teams" and investigated the needs for aeronautics products and services in each scenario independently. That independent work was then synthesized into a short list of needs and opportunities that were robust across all the scenarios. The output of a scenario planning exercise is a robust core set of product ideas, services, or organizational strategies that are viable no matter how the future actually evolves. Figure H-2 illustrates that process. FIGURE H-2 Organizational strategies. Scenario-based planning is a powerful tool to manage the uncertainties that surround important organizational or technology investment decisions. The scenarios provide decision makers with a window on potential future market needs. Scenarios provide a tool for a systematic and innovative consideration of new customer needs and a method for evaluating the long-term viability of current organizational structures, product ideas, or technology developments. Scenarios help set future market-driven priorities for technology investment plans so that they are more than just lengthy wish lists.