Leeds University Business School
A Pragmatic Science Evaluation of
Scenario Planning for Strategic
Intervention
Professor Gerard P. Hodgkinson
Dr Mark P. Healey
Centre for Organizational Strategy, Learning and Change,
Leeds University Business School
Presented at Newcastle University Business School
16thHodgkinson
April 2008
© Copyright
and Healey 2007
Overview
 Background to scenario planning
 Design science approach to strategic intervention
 Multi-level theoretical framework
 Research process
 Illustrative findings from ongoing interview study
 Implications for research and practice
© Copyright Hodgkinson and Healey 2008
2007
The cognitive challenges of
organizational innovation and adaptation
• NASA
• The London Stock Exchange
• UK Prison Service
• Prudential
• Marks and Spencer PLC
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2007
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
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2007
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
Why does history repeat itself?
(Or why do organizations not learn?)
• Cognitive bias
• Cognitive inertia
• Group think
• Strategic drift
• Escalation of commitment
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2007
Cognitive bias and cognitive
inertia
• Brain is a limited capacity processor
• Therefore, reality is represented in simplified forms (‘mental
models’)
• Simplification strategies used in the construction of mental
models can lead to biased judgments and decisions
• Once formed these models act as filters and are highly
resistant to change
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2007
Cognitive Bias and Inertia In
Strategic Decision Processes
• Strategists may become overly dependent on their mental
models, thereby failing to notice key external changes until their
organization's capacity for successful adaptation has been
seriously undermined (Barr and Huff, 1997; Barr et al., 1992;
Hodgkinson, 1997, 2005; Reger and Palmer, 1996)
• To minimize this danger they should periodically engage in
processes of reflection and dialogue, in an attempt to attain the
requisite variety in mental models necessary in order to
anticipate the future and develop a strategically responsive
organization (Morecroft, 1994; Senge, 1990)
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2007
What is Scenario Planning?
 A group of techniques yielding depictions of
‘plausible futures’ to inform strategic decision
making, broaden strategic thinking, and aid
organizational learning
 Pioneered by Royal Dutch/Shell from mid1960s. Widely used as an aid to decision
analysis, forecasting, and strategic planning
(Schoemaker 1993)
 Popular in Europe (Malaska 1985, US
(Linneman & Klein 1983), and UK (Hodgkinson
et al. 2006)
© Copyright Hodgkinson and Healey 2008
2007
‘Which of the following analytical
tools were applied during the
workshop?’
SWOT
62.0%
Stakeholder analysis
30.0%
Scenario planning
28.5%
Market segmentation
22.6%
Competence analysis
21.5%
PEST(EL) analysis
17.2%
Value chain analysis
15.1%
BCG Matrix
8.6%
Porter’s Five Forces
8.5%
Cultural Web
5.5%
McKinsey’s 7 S’s
Other
5.3%
12.5%
Hodgkinson et al., LRP. © 2006 Elsevier limited
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
© Copyright Hodgkinson and Healey 2008
2007
Scenario Planning Techniques
• Systematic yet highly flexible
• Highly participative, involving extensive data gathering and
reflection, both at an individual and collective level
• Force strategists to explicitly confront the changing world
and consider its implications for the current strategy
• Use of speculation and human judgement in an attempt to
gain fresh insights and “bound” future uncertainties
• Directed toward stretching decision makers’ thinking about
their organization’s business model and its future
environment, overcoming corporate blind-spots, and
enhancing strategic flexibility
• Benefits of the ‘strategic conversation’
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2007
Scenario planning: A four step
process (after van der Heijden)
1. Identify the current competencies of the organization and
how these are configured to add value (‘the business
idea/virtuous circle’)
2. Identify key future trends and classify these into
‘uncertainties’ (things that might happen) and
‘predetermineds’ (developments in the pipeline)
3. Develop multiple scenarios that capture the
predetermineds and uncertainties
4. Expose the current business idea to the scenarios and
consider the implications (attempting to bound uncertainty
rather than predict it in probabilistic terms)
After: van der Heijden (1996), Scenarios: The art of strategic conversation, Chichester: Wiley.
© Copyright Hodgkinson and Healey 2008
2007
The Generic Business Idea
Understanding
evolving needs
in society
Entrepreneurial
invention
Resources
“Unique, difficult
to emulate
Distinctive
elements that
differentiate from competencies
competitors”
Results
Competitive
Advantage
“Basis of value creation:
e.g. product/ service
differentiation or cost
leadership produced by
competencies”
Source: van der Heijden, K. (1996), Scenarios: The art of strategic conversation, Wiley, p. 69
The Kinder-Care Business Idea
Professional/
management/
financial resources
Land/buildings
Innovative
child care
Retention exteachers
Teacher
satisfaction
Revenue
Pay for
service
Parents’ good
feelings
Reputation
Working
parents
-ve
Parents’
financial
resources
Source: van der Heijden, K. (1996), Scenarios: The art of strategic conversation, Wiley, p. 71
Identifying uncertainties and
predetermineds
UNCERTAINTIES
Elements/events in the business environment that might
develop in different ways
E.g. SMS text messaging continues to grow versus
becomes obsolete; genetic modification of embryos is
legalised versus embryonic modification stays outlawed
PREDETERMINEDS
Elements/events in the business environment considered
predictable
E.g. Population continues to age; new gas pipeline opens
in Russia
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2007
Developing multiple scenarios
• Based on the previously identified uncertainties &
predetermineds
• Organize the selected uncertainties into a matrix, with each
cell describing a distinct future based on uncertainties
unfolding differently
• Write short narratives describing each scenario; incorporate
predetermineds and other uncertainties if appropriate
• Scenarios should be internally consistent and plausible
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2007
Building a scenario matrix
U2: Information use by
customers
U1: Changes in the newspaper
industry business model
Traditional – based on
advertising revenue
New – sale of information
and advertising separated
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
Example Narrative scenario
‘Cybermedia’
“Technology has progressed rapidly as predicted by futurists; the
ways in which consumers use and access information have
changed fundamentally. Most consumers either have
customized newspapers printed at their homes or access their
news through high-tech Internet appliances. The lines between
newspaper and television and other media channels have
blurred, as multi-media presentations of textual and visual
information proliferate. Business models have changed too:
newspapers derive revenue from national advertisers,
subscriptions, transaction services, and new businesses such as
being an intermediary for high-end purchases, high-technology
classifieds, and customer profiling. With the rise in electronic
distribution, newspapers are struggling to sell their antiquated
printing presses – generally at rock-bottom prices.”
Source: Schoemaker & Mavaddat (2000) ‘Scenario planning for disruptive technologies’, in Day et al (Eds.)
2007
Wharton on Managing Emerging Technologies, New York: Wiley, p.229 © Copyright Hodgkinson and Healey 2008
Expose business idea to scenarios
Understanding the
environment
(scenarios)
Understanding the
institution
(business idea)
Is this the right company for
these future environments?
If not: address competencies
If so: address strategic
choices
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2007
Variant scenario planning
techniques
•
Many variations of scenario planning techniques, beyond
the van der Heijden (1996) approach
•
Range from quantitative, probabilistic applications with a
forecasting emphasis to more qualitative approaches
emphasizing the cognitive and/or interpersonal and
organizational learning benefits
•
Range from half-day ‘frame-breaking’ sessions involving
select top management team members to lengthy 6-12
month ‘visioning’ exercises involving greater numbers of
different stakeholders
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2007
Do Scenario Techniques Work?
•
Lots of anecdotal evidence, including documented case studies of
success (e.g. Wack’s (1984a, 1984b) account of Shell)
•
Some laboratory evidence for influence of scenarios on stretching
decision makers’ judgements (see Healey & Hodgkinson, 2008)
•
But, evidence base underpinning scenario planning needs examining
and augmenting
•
Mainly case studies from practising advocates. Various positive
outcomes are ascribed to scenario processes
•
Despite benefits claimed by advocates, little known about conditions
under which scenario planning thrives or fails (Mintzberg 1994; cf.
Hodgkinson & Wright 2002; Healey & Hodgkinson, 2008)
•
More documented cases of failure are needed …
© Copyright Hodgkinson and Healey 2008
2007
Why Independent, Rigorous
Scientific Scrutiny?
Potentially harmful effects to individuals and organizations, for
example:
Mild irritation (wasted resources)
Severe psychological trauma (bleak future)
Short-term relationship difficulties (within the team)
Lasting damage (beyond the team, triggered by
irreconcilable differences)
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2007
Three Lines of Inquiry
• Refinement of the mental model concept to develop
techniques that trigger meaningful cognitive change
(Chattopadhyay, Hodgkinson & Healey, 2006; Healey &
Hodgkinson, 2008)
• Development of insights into the design of facilitation
processes and team selection, based on an extrapolation
from the field of personality and social psychology
(Hodgkinson & Healey, 2008)
• Critical incident study of drivers of past successes and
failures, as reported by ‘expert’ facilitators (on going)
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2007
Optimizing the scenario team and
facilitation processes
Please consider the following issues:
 Who should be involved in scenario planning events, and why, where
the aim is to stimulate organizational innovation and change?
 What might be the consequences of only involving top-level managers?
 What might be the consequences of only involving middle-level
managers?
 What might be the consequences of attempting to involve individuals
from a mix of levels and departments within the organization?
 What might a desirable scenario team look like, and what would be the
consequences?
 Who should facilitate the exercise and why?
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2007
Optimizing the scenario team and
facilitation processes
• Consider how your answers to the previous questions might
affect the:
Quality of debate about strategic issues (including
scenarios generated)
The extent of open discussion and planning
The extent of consensus regarding strategic priorities and
future strategies
The nature and extent of conflict over strategic issues
The level of acceptance of need for change
The effectiveness of the implementation of the outcomes
of the scenario exercise
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2007
Strategy workshops survey
Hodgkinson et al., Long range planning. © 2006 Elsevier
limited
© Copyright
Hodgkinson and Healey 2008
2007
Strategy workshops survey
Hodgkinson et al., Long range planning. © 2006 Elsevier
limited
© Copyright
Hodgkinson and Healey 2008
2007
Learning From ‘Failure’: The
Case Of Beta Co
• The only published case to date of systematically
documented failure (for further details see Hodgkinson and
Wright, Organization Studies, 2002)
• Provider of specialist support service to businesses in an
industry marked by radical transformation
• Potentially, the company’s main offering could soon be
obsolete
• Our approach broadly followed van der Heijden (1996)
© Copyright Hodgkinson and Healey 2008
2007
Learning From ‘Failure’: The
Case Of Beta Co
• Nine individuals took part including the CEO, six other
members of the senior management team, and two
operational staff
• Interviews with the individual participants revealed marked
differences of interpretation
• Intention that these data should serve as the basic starting
point for debating the business idea, prior to moving
forward with scenario work
• However, severe difficulties were encountered from the
outset
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2007
Learning From ‘Failure’: The
Case Of Beta Co
• The CEO frequently intervened, in an attempt to control
both the processes and outcomes, eventually withdrawing
from all but the final stage of the exercise
• Clear evidence of dysfunctional processes at work, as
depicted in the conflict theory of decision making and the
literature on psychodynamic aspects of executive
behaviour
• Interpretation strongly supported by content analysis of
extensive field notes
© Copyright Hodgkinson and Healey 2008
2007
Moving Beyond the Beta Co.
Case
• Need to document more failures (and successes) to learn
about the effects of context
• Additional factors need to be investigated
• Need for a guiding framework
• Need for insights into the design of future scenario planning
interventions
© Copyright Hodgkinson and Healey 2008
2007
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
© Copyright Hodgkinson and Healey 2008
2007
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
Design science approach
 After Simon 1969, Sciences of the Artificial; also Dunbar &
Starbuck (2006), Romme & Endenburg (2006), van Aken
(2004, 2005)
 Where evidence is lacking, develop design propositions
from robust, established bodies of theory and research in
the wider management and social sciences
 Testing of these principles in action in diverse field settings
 At present, we have neither of these in relation to scenario
planning or strategy workshops more generally
 Hence, our ongoing work …
© Copyright Hodgkinson and Healey 2008
2007
Design science approach
 Development of a systematic, evidence-informed approach
to engineering cognitive tasks directed to deeperlevel/more effortful strategic deliberation (Chattopadhyay,
Hodgkinson & Healey, 2006; Healey & Hodgkinson, 2008)
 Importance of who gets involved and how for creating
conditions conducive to effective group information
processing and cooperative working (Hodgkinson & Healey,
2008)
 Approaches to the management/facilitation of sub-optimally
configured scenario teams
© Copyright Hodgkinson and Healey 2008
2007
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
© Copyright Hodgkinson and Healey 2008
2007
Configuring the scenario
team
• Variety of background/knowledge/skills within team
• Popular approaches concentrate on this, but ignore
potentially dysfunctional information processing
consequences of bringing together disparate groups
• Two ways to avoid problems with diverse teams:
 Manage social identity processes
 Personality configuration
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2007
Background characteristics
and social identity effects
•
When teams come together with different backgrounds
(e.g. age, experience, function), members may cling to their
existing subgroup identities, creating conflict between
subgroups (e.g. members from finance versus members
from marketing)
• Conflict can disrupt open communication and critical,
constructive dialogue about the future, which are critical to
scenario planning
© Copyright Hodgkinson and Healey 2008
2007
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 (“we’re in this together”), rather than
divisive (“it’s them versus us”) mentality
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2007
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
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2007
Implications of Personality Composition for the Design of Scenario Planning Teams
Extraversion
Openness
Trait
Key
Descriptors a
Relevant Indicative Findings
Intellectual,
creative,
complex,
imaginative,
artistic (vs.
unintellectual,
unimaginative
, simple,
imperceptive,
shallow)
High Openness is associated with divergent thinking,
constructive dissent and the effortful processing of
multiple perspectives (McCrae 1996)
Talkative,
assertive,
energetic,
bold (vs. shy,
quiet,
reserved,
inhibited,
withdrawn)
Individual Extraversion predicts the constructive
challenging of others’ perspectives (LePine and Van Dyne
2001) and moderates the negative effects of demographic
dissimilarity (Flynn et al 2001)
Managers high in Openness are tolerant of ambiguity and
interpret change as less stressful; thus they cope better
with, and are less likely to disengage from, change
activities (Wanberg & Banas 2000)
Teams comprising members higher in Openness
communicate more effectively (Barry and Stewart 1997)
and show greater agreement seeking and consensus
(Amason and Sapienza 1997)
Extraversion predicts socio-emotional and task inputs in
teams. Hence, teams comprising moderately extravert
members, or a moderate proportion of high extraverts,
outperform those dominated by high or low extraverts
(Barrick et al 1998; Barry and Stewart 1997)
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
Implications of Personality Composition for the Design of Scenario Planning Teams
Agreeableness
Neuroticism
Trait
a Trait
Key
Descriptorsa
Relevant Indicative Findings
Anxious,
moody,
envious,
emotional,
irritable (vs.
unemotional,
relaxed,
imperturbable
, unexcitable,
undemanding)
Neuroticism reduces the propensity to engage in
analytical behavior (Stewart, Fulmer, and Barrick 2005)
Kind,
cooperative,
sympathetic,
warm, helpful
(vs. cold,
unkind,
distrustful,
harsh, rude)
In politicized contexts, low Agreeableness individuals
are less cooperative and eschew organizational goals
(Witt et al. 2002)
Neuroticism heightens psychological distress during
organizational change (Moyle and Parkes 1999) and
increases escalation of commitment (Wong et al 2006)
Unable to inhibit their egoistic impulses, a single
highly Neurotic individual in a management team can
reduce social cohesion, thus undermining its
performance (Barrick et al. 1998)
The average level of team agreeableness is positively
associated with social cohesion, open communication,
conflict resolution, and task performance (Barrick et al.
1998; Neuman and Wright 1999)
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
Moderately agreeable teams
will exchange freely diverse
information and perspectives
and engage in constructive
debate when constructing and
analysing scenarios.
Conversely, overly agreeable
teams will eschew such debate
Team learning negatively is affected when teams are
composed of individuals high in Agreeableness (Ellis et
al 2003)
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
Trait
Key
Descriptors a
Conscientiousness
Implications of Personality Composition for the Design of Scenario Planning Teams
Organized,
systematic,
thorough,
neat,
efficient (vs.
disorganized
, careless,
inefficient,
impractical,
sloppy)
a Trait
Relevant Indicative Findings
Conscientiousness is related positively to work
performance at the individual (Barrick and Mount
1991) and group (Neuman and Wright 1999) levels
of analysis
Teams make the most accurate decisions when their
leaders and all members are high in
Conscientiousness (LePine et al. 1997)
High levels of intra-team variance in
Conscientiousness is associated with perceived
input inequalities, heightened conflict and reduced
team performance (Barrick et al 1998)
Hypothesized Role in
Scenario Teams
Scenario teams comprising
a majority of high
Conscientiousness
members will engage more
effortfully in scenario
construction and analysis,
increasing the likelihood
of attaining the requisite
cognitive outcomes
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
Illustrative Design Propositions
• Design Proposition 3 (Identity Management):
When working with an informationally diverse scenario
team, to reduce inter-subgroup bias and facilitate the
elaborative processing required for effective scenario
construction and analysis, stimulate superordinate recategorization by emphasizing the shared fate of the
scenario team and establishing common goals
• Design Proposition 4 (Personality Configuration):
To ensure effective coping with change and willingness to
explore new avenues of inquiry, and facilitate novel
thinking, the exchange of diverse perspectives and ideas,
meaningful consideration of challenging scenarios and the
generation of high quality responses to scenarios, wherever
possible select participants high in Openness to Experience
© Copyright Hodgkinson and Healey 2008
2007
Facilitating Scenario Teams with
Different Personality Profiles
• When selecting the team on the basis of personality is
infeasible, it is important to be aware of the profile of the
team and its likely effects
• Can help overcome shortcomings in composition by
adapting facilitation to the nature of the team
© Copyright Hodgkinson and Healey 2008
2007
Adapting Facilitation to the
Personality Profile of the Team
• When dealing with a scenario team comprising members
low in Openness, facilitators should introduce techniques
directed toward fostering innovative thinking in order to
generate challenging and plausible scenarios and creative
strategies for dealing with the contingencies so envisioned
Involve ‘remarkable people’
Use devils advocacy when generating scenarios
Introduce dialectical thinking tasks when analyzing how
the organization might best respond to scenarios
© Copyright Hodgkinson and Healey 2008
2007
Adapting Facilitation to the
Personality Profile of the Team
• When dealing with a scenario team dominated by high
Extraversion participants, the role of the facilitator is to
ensure that debate and the exchange of perspectives
regarding strategic issues remains within functional levels,
and does not degenerate into interpersonal conflict that
might create rifts and limit meaningful dialogue
• When dealing with a scenario team dominated by low
Extraversion members (i.e. introverts), facilitators need to
develop a climate of mutual trust within the scenario team,
to encourage participants to be forthcoming with their
opinions regarding strategic issues
© Copyright Hodgkinson and Healey 2008
2007
Critical Incident Study
Critical incident technique (Flanagan 1954)
Collation of successful and unsuccessful scenario
episodes from experienced facilitators
Narrative retrospective reports provide rich detail of
micro-strategy processes and behaviours
Incidents give insight into processes and outcomes
Cross section of organizations: public/private;
SMEs/multinationals; manufacturing/service;
dynamic/stable environments
© Copyright Hodgkinson and Healey 2008
2007
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
Model of the Scenario Planning Process
INPUTS/ CONSTRAINTS
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 I’d 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 he’s
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 didn’t
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 didn’t
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
Critical incident 3 – Multinational
technology manufacturer
“It was a two day exercise with the heads of NPD and strategy
for technology x [to look at impact of technological change]. We
had a really good client group ... they were willing to play with
and try out ideas ... this created good chemistry on the day. The
forces of personality played a role ... they were a good group,
whereas other groups have not been so good. There was
sharing and exploration of the different poles rather than
slanging matches between the different camps. There was
something about the playful quality of the day – a willingness to
try new things, and enlisting the team into them ... the framing of
the day helped this. And the process was successful. It wasn’t
just the information they took away that was valuable – it was
the changing of their way of thinking [about their strategy in
relation to technological change]”.
(Facilitator, Positive incident)
© Copyright Hodgkinson and Healey 2008
2007
Model of the Scenario Planning Process
INPUTS/ CONSTRAINTS
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 and Conclusions
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
•
Who is involved and how the exercise is facilitated matter:
 Configuration of the team in terms of member
background characteristics and personalities (social
identity and personality effects) will influence processes
and outcomes
 Where team design is difficult, effective facilitation can
overcome shortcomings in team configuration
© Copyright Hodgkinson and Healey 2008
2007
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), 479496. 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
© Copyright Hodgkinson and Healey 2008
2007
Leeds University Business School
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
© Copyright Hodgkinson and Healey 2007