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Scenario planning

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What is scenario planning?

Scenario planning is used to help assess uncertainties in your external environment which allows you to open choices for the future. It involves making assumptions on what the future is going to be and how your operating environment will change over time.

Scenario planning helps you stimulate new thinking and explore uncertainties. Instead of focusing just on what you do know, you invest time on what you don't know. Often, as a result, you end up being more certain about the future.

It can be used when you need to make sense of your future operating environment. This may be as part of a strategy exercise (see for example Brook's use of scenarios), but is also helpful when something changes and the organisation faces a challenge or barrier.

Why use scenario planning?

Scenario planning can be used both to look generally at what might happen in the environment – eg the economy – and to help think specifically about how an organisation might fare within that particular environment.

Developing scenarios can help you understand the dynamics of change and makes the future more tangible and less frightening. When an organisation understands possible changes, and can put them in context, it is in a far better position to protect itself against possible threats.

Steps for scenario planning

Here are three steps and some questions which can help you develop and plan scenarios for your organisation. We have also listed considerations for any organisation embarking on scenario planning.

1. Mapping the environment

  • What is our objective, what do we want to achieve?
  • What are we most uncertain about in the future, what obstacles stand in our way?
  • What information do we have which can help inform our thinking on these uncertainties?
  • How significantly might these uncertainties impact on our work or organisation, how likely is this to happen? Remember this impact might be positive as well as negative.

2. Identifying scenarios

Identify a set of scenarios based on your mapping and decide some key timeframes, eg six months; one, three, five years.

How many scenarios you pick and the timeframe you decide to plan for will depend on your situation. Remember: perfect is the enemy of good. This is not an exact science, try and keep the number of scenarios manageable.

Try to avoid just picking the most likely outcomes, consider also mapping those which will have the most significant impact.

For each of your scenarios consider the impact on:

  • beneficiates and the work we do
  • staff and volunteers
  • income and investments
  • suppliers and funders
  • partners and other key stakeholders.

3. Developing plans and continually reviewing

  • For each of the scenarios you have identified, what will this mean for our charity, what will we need to do differently?
  • What plans will we need to develop to operate successfully and achieve our objectives if these scenarios play out?
  • Do we need more information to help inform this planning?
  • How will we know we if a scenario is becoming a reality? Can we work back from the scenario to say what will the indicators be?
  • How will we record our scenario planning and keep it under regular review?  

Considerations

Use of evidence: You should make sure the evidence you use to inform mapping is as accurate and timely as possible, but remember it is impossible to predict the future accurately. It’s unlikely any of your potential scenarios will be exactly right, so closely monitoring indicators using current information is important.

Complexity: This can feel like a complex process and your mapping may throw up lots of potential outcomes. Do not get bogged down in thinking about all the possible iterations of scenarios as this often misses the point of the exercise. Its better to have a handful of scenarios which you keep under review than it is to have a long list of every iteration.

Who to involve: Sometimes it is helpful to involve stakeholders in thinking about the future, but other times you need to make decisions quickly. In developing a strategy, it might be wise to hear from lots of voices. When faced with imminent financial difficulty, wider stakeholder consultation may not be possible. You will need to decide what is appropriate given your situation. It may also be helpful to involve an independent facilitator in scenario planning who can frame questions objectively.

The human element: There is a human side to scenario planning which needs to be managed carefully. Some scenarios you create may be disheartening, others will be ambitious and daunting. Think about how you will manage people’s responses carefully.

Risk management: One of the most valuable outcomes of scenario planning is developing a better understanding the risks and opportunities facing your charity. It’s important that this analysis work doesn’t sit in a drawer. It should inform board discussions and your risk register.  

Page last edited May 26, 2020

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