By James Morrison and Ian Wilson

[Note: This is a re-formatted manuscript that was originally published in H. Didsbury (Ed.), Future Vision, Ideas, Insights, and Strategies. Bethesda, MD: The World Future Society, 1996. It is posted here with permission of The World Future Society.]

Planning is an iterative activity. If the world did not change, we would only have to develop one plan and stick to it. However, we live in a turbulent world. David Brinkley, during the breakup of the former Soviet Union, stated that each day seems to bring the dawn of a new era. Certainly the fall of the Berlin wall, the unification of Germany, the breakup of the Warsaw Pact, and the breakup of the Soviet Union, have transformed our world. The European Community may include Eastern Europe in the largest free trade zone the world has yet seen. In response, other free trade zones are in the making (e.g., the North American Free Trade Treaty between Canada, the United States and Mexico possibly incorporating countries in Central and in South America; Australia and New Zealand). Are these signals of another momentous event--international free trade with its concomitant dislocations of workforces and industries?

In such a world we need a planning model that allows us to anticipate the future and to use this anticipation in conjunction with an analysis of our organization--its culture, mission, strengths and weaknesses--to define strategic issues, to chart our direction by developing strategic vision and plans, to define how we will implement these plans and to specify how we will evaluate how well we are implementing these plans. The fact that the world is changing as we move forward in the future demands that the process be an iterative one.

We want our organizations to succeed. In order to prosper, we must acquire the support and resources our organization needs to fulfill its mission. We measure success by how well we accomplish our organization's mission and vision.

Strategic Management

Strategic management is a technique you can use to create a favorable future and help your organization to prosper. To create this favorable future, you must involve your organization's stakeholders (i.e., anyone with a vested interest in achieving your organization's goals) in envisioning the most desirable future and then in working together to make this vision a reality. The key to strategic management is to understand that people communicating and working together will create this future, not some words written down on paper.

Strategic management does not replace traditional management activities such as budgeting, planning, monitoring, marketing, reporting, and controlling. Rather, it integrates them into a broader context, taking into account the external environment, internal organizational capabilities, and your organization's overall purpose and direction.

Strategic management is congruent with the quality movement's emphasis on continuous improvement. Indeed, the emphasis on anticipating the needs of stakeholders is a critical component of external analysis. Certainly organizations that adopt a total quality management philosophy will be better prepared to meet the challenge of competing in the global economic marketplace.

Each organization's experience with strategic management is unique, reflecting the organization's distinct culture, environment, resources, structure, management style, and other organizational features. However, our experience in working with leaders and managers in a variety of organizations indicates that similar questions and concerns develop as organizations implement strategic management. Leaders who have addressed these questions and concerns have developed a common basis of experience that is valuable for those just beginning a strategic management process. This section summarizes some of the things we have learned in working with a variety of organizations. First, let's contrast strategic planning with strategic management.

Strategic planning marks the transition from operational planning to choosing a direction for the organization. Organizations that use a strategic planning model do so because they are sensitive to volatility in the external environment. With strategic planning, the planning focus goes beyond forecasting population shifts and concentrates on understanding changing stakeholder needs, technological developments, competitive position, and competitor initiatives. Decisions, then, are better attuned to the external world. Managers use strategic planning as a management function to allocate resources to programmed activities calculated to achieve a set of goals in a dynamic, competitive environment.

Strategic planning was pioneered by General Electric in the 1960s, widely adopted in the corporate world in the 1970s, and introduced to educational organizations in the early 80s. In the 1970s, however, when strategic planning was being widely applied, external events were still viewed as relatively stable, and planning was typically retrospective, or, at best, present oriented. Times were still good for businesses and other organizations. There was often a tendency for staff to prepare strategic plans--and for management to put them on the shelf. Strategy did not pervade day-to-day operations.

In contrast, strategic management not only creates plans attuned to assumptions about the future, but also focuses on using these plans as a blueprint for daily activities. The chief executive of a strategically managed organization must be able to imbue the organization with a strategic vision so that the organization's members are able to think big (institutionalized strategic thinking) and act big (institutionalized courage). The chief executive must be able to deal with the uncertainty of contemporary events and turn these events to the organization's advantage. Managers must be superb at continually adjusting competitive strategy, organizational structure, and modus operandi as the marketplace demands. In a strategically managed organization, top managers accept change as a permanent condition.

The Strategic Management Model

The building blocks for a comprehensive strategic management model are shown in Figure 1--external analysis, internal assessment, strategic direction, strategic plans, implementation, and performance evaluation.

Figure 1

External Analysis

A key premise of strategic management is that plans must be made on the basis of what has happened, is happening, and will happen in the world outside the organization with a focus on the threats and opportunities these external changes present to the organization. The external environment includes social, technological, economic, environmental, and political trends and developments.

There are two major reasons for beginning with an external analysis. First, this analysis will have implications for organizational change and development. Second, by having leaders from all functional areas of the organization involved in the analysis, it should be easier to obtain their cooperation in making adjustments in response to the external analysis.

Internal Assessment

We must understand why the organization has succeeded in the past, what it will take to succeed in the future, and how it must change to acquire the necessary capabilities to succeed in the future. To do this, we must:

• evaluate the organization's capacities--its management, program operations
• evaluate the organization's resources--people, money, facilities, technology, and information.
• review the organization's current capacities and future needs.
• compile a list of the strengths and weaknesses that will have the greatest influence on the organization's ability to capitalize on opportunities.

Strategic Direction

The organization has a mission, or reason for being. In this component we make explicit the strategic vision for the organization's future--an idea of where the organization is going and what it is to accomplish.

We use the information developed in the first two components, external analysis and internal assessment, to review the organization's mission, set goals, develop strategic vision, and determine the most critical issues the organization must address if it is going to achieve this vision. Mission review is the foundation and authority for taking specific actions. Goals are broad statements of what the senior leadership wants the organization to achieve. Strategic issues are the internal or external developments that could affect the organization's ability to achieve stated goals.

We use the following criteria to identify crucial strategic issues: (a) The impact they could have on the organization, (b) the likelihood that they will materialize, and (c) the time frame over which they could develop. We limit the list of issues to a manageable number (three to nine) to enhance the chances of securing the commitment and resources necessary to effectively act on them.

The objective of the strategic direction component is to help ensure that the organization's vision and goals:

• are compatible with the organization's capabilities and complement its culture
• foster commitment and cooperation among key constituencies
• maximize the benefits inherent in environmental opportunities and minimize the liabilities inherent in environmental threats
• enhance the organization's position relative to critical success factors (i.e., those organizational elements that distinguish success from failure) and its ability to achieve stated goals.

Strategic Plans

Once we agree on the direction the organization should take and the issues we must address to get there, we must derive strategies of how to get there. Developing strategies is the fourth step in the strategic planning process. We call this step strategic plans.

Strategic plans are the documented, specific courses of action that define how to deal with critical issues. They result from the development and evaluation of the alternatives available to the organization. If the critical strategic issues are truly important, and if the mission statement reflects the organization's fundamental priorities, the strategic plan should last for three to five years.

In this component we develop plans that reflect the following characteristics:

• creative, reflecting input from all the organization's important constituencies, both internal and external
• consistent with the organization's direction as expressed in its mission and goals
• position the organization so it can capitalize on its greatest strengths and opportunities and mitigate the effects of the most serious threats and weaknesses
• action-oriented and flexible.

Implementation

Strategic management is more than just developing strategic plans. It involves managing the organization strategically. From day to day, leaders must manage the organization so that its strategic plans are implemented.

Implementing strategic plans calls for development of the right organizational structure, systems, and culture, as well as the allocation of sufficient resources in the right places. Implementation--the execution of selected courses of action--is a crucial step in the strategic management process. It is essential to involve, from the very beginning of the process, individuals and groups who will help to carry out the strategic plan.

Implementation also requires ongoing motivation. This means showing individuals and groups how their work has helped achieve the organization's objectives. The plan must remain a highly visible driving force within the organization. Implementation of the plan must become an integral part of day-to-day operations. It is not something extra to do; it is the thing to do. As such, it is the impetus for motivation, recognition, and reward.

Performance Evaluation

One important system needed to support the strategic plan is a performance evaluation system. We need this to know if the plan is being carried out and if it is achieving the anticipated results.

Performance evaluation is the comparison between actual results and desired results. It keeps the planning and implementation phases of the management system on target by helping the organization adjust strategies, resources, and timing, as circumstances warrant.

In this step, we establish a system to monitor how well the organization is using its resources, whether or not it is achieving desired results, and whether or not it is on schedule. The monitoring and reporting system is continuous, with periodic output reviewed by teams, while major evaluations are conducted on an annual basis. A dual benefit of performance evaluation is that it subjects the strategic plan to discussion and testing in the context of the real world.

Environmental Analysis in the Context of Strategic Management

Wayne Gretzky. one of American hockey's all-time greats, once said, "I skate to where the puck will be." The external analysis component of strategic planning has the task of ascertaining where the puck will be. This component consists of scanning the environment to identify changing trends and potential developments, monitoring specific trends and patterns, and forecasting the future direction of these changes and potential developments. Merged with an internal assessment of the organization's vision, mission, strengths, and weaknesses, external analysis assists decision makers in formulating strategic directions and strategic plans (see Figure 1).

Environmental Scanning

Aguilar (1967) identified four modes of collecting scanning information. Undirected viewing consists of reading a variety of publications for no specific purpose other than to "be informed." Conditioned viewing consists of responding to this information in terms of assessing its relevance to the organization. Informal searching consists of actively seeking specific information, but doing it in a relatively unstructured way. This is in contrast to formal searching, a proactive mode entailing formal methodologies for obtaining information for specific purposes.

Morrison, Renfro, and Boucher (1984) condensed these modes to passive and active scanning. Passive scanning is what most of us do when we read journals and newspapers. We tend to read the same kinds of materials--our local newspaper, perhaps a national newspaper like the New York Times or The Wall Street Journal, and an industry newspaper. We don't tend to read In These Times or Rolling Stone. The organizational consequences of passive scanning are (1) we do not systematically use the information as intelligence information for the organization and (2) we miss ideas that may signal changes in the macro-environment that could affect our organization. In order to broaden our perspective and to fight the myopia inherent in us all, we need to use active scanning.

Active scanning focuses attention on information resources that span the broad areas of social, technological, economic, environmental and political sectors--locally, regionally, nationally, and globally. In active scanning, it is important to include information resources that represent different dimensions of the same category (i.e., include The New Republic and The National Review for the political sector, national level). The list of information resources described later are in a matrix of information resources at the national and international social, technological, economic, environmental, and political (STEEP) levels.

Fahey, King, and Narayanan (1981) described a typology of systems of scanning used by organizations. Irregular systems are used on an ad hoc basis and tend to be crisis initiated. These systems are used when a planning committee needs information for planning assumptions, and conducts a scan for that purpose only. Periodic systems are invoked when the director of planning or of research periodically updates that scan, perhaps in preparation for a new planning cycle. Continuous systems use the active scanning mode of data collection to systematically inform the strategic planning function in an organization. The rationale undergirding this mode is that potentially relevant "data" are limited only by one's conception of the relevant macroenvironment. These data are inherently scattered, vague, imprecise, and come from a host of varied sources. Since early signals often show up in unexpected places, the scanning purview must be broad and ongoing.

The goal of environmental scanning is to alert decision-makers to potentially significant external impingements before they have crystallized so that decision-makers may have as much lead time as possible to consider and to plan for the implications of th is change. Consequently, the scope of environmental scanning is broad--like viewing a radar screen with a 360 degree sweep to pick up any signal of change in the external environment.

Environmental Monitoring

The terms scanning and monitoring are often used interchangeably, but monitoring follows scanning. Every possible change or potential shift in the macro-environment cannot be given equal attention. We select items by defining topics or ideas that are incorporated in "the interesting future"--the period in which major policy options adopted now could probably have significant effect (Renfro & Morrison, 1983, p. 5). The signals of change identified in scanning, if interpreted as having potential impact on the organization, must be monitored. The goal of monitoring is to assemble sufficient data to discern the past and future direction of trends or to enable us to estimate the strength of indicators of potential events. Thus, scanning enables you to identify critical trends and potential events. In monitoring use descriptors or indicators of these trends and potential events as key words in your systematic search to obtain information about them. When collecting data in the monitoring activity, look for information that contains forecasts and perhaps speculation about the implications of the trend or event for schools.

Forecasting

Forecasting entails ascertaining the future direction of trends or the probability that potential events will occur within a certain timeframe (e.g., 10 years). Trend forecasting may be accomplished mathematically (e.g., using regression techniques) or judgmentally. A problem with mathematical forecasting is that this technique is based entirely on historical data and a conceptual framework that requires that all relevant independent variables have been identified and measured. Moreover, this technique cannot take account of developments that may affect the relationship between relevant variables or the projected trend itself.

Judgmental forecasting requires that members of the planning team read the information gathered in the monitoring stage, and, using their judgment, estimate the direction, speed, scope, and intensity of change in trends and events. How long will it take for a new development in educational technology to become commonplace? Will present concern over the education of the children of migrant workers result in legislation? Will the change in the demographic composition of the population intensify? These are the kinds of questions that form the grist for forecasting. Their answers can be straightforward projections by planning team members, or can be addressed by multiple scenarios laying out different paths of likely developments focused around the immediate question.

Scenarios as a Forecasting Tool

Anyone who has anything to do with planning for any type of organization immediately and instinctively turns to some sort of forecast of the future as a starting point. Why? Because we have all been educated to believe that if we are to make decisions about the future of an organization, we must first know what the future that the organization will have to deal with will be like.

On the face of it, that is a reasonable proposition. Yet in reality we are asking for the impossible--certainty and predictability in an uncertain world. The further out the horizon of forecasting, the more unreasonable is the demand. But, even for the shorter term the expectation of precision is a snare and a delusion.

The future is, in a profound sense, unknowable. But not everything is uncertain; some things are relatively predictable. We can do a respectable job of "sensing" the basic dynamics of the future and the alternative courses they might take. Building on this foundation, scenarios steer us on a middle course between a misguided reliance on prediction and a despairing belief that we can do nothing to envision the future, and, therefore, cannot shape our future.

Scenario-Based Planning

The term "scenario" is taken from the world of theater and film, and refers to a brief synopsis of the plot of a play or movie. In a planning context, scenarios can be described as "stories of possible futures that the institution might encounter." Scenarios are graphic and dynamic, revealing an evolving future. They are holistic, combining social, technological, economic, environmental, and political trends and events, the qualitative as well as the quantitative. They focus our attention on potential contingencies and discontinuities, thereby stimulating us to think more creatively and productively about the future.

By basing decisions on alternative futures, and by testing planned actions against the different conditions these scenarios present, we are better able to prepare for uncertainty, and to endure that our decisions are as resilient and flexible as possible to deal with contingencies that we might deem "unthinkable."

The SRI Model

One way to develop scenarios is to turn the job over to a brilliant futurist or an imaginative planner to sketch out alternative possible futures that our planning should consider. The fundamental problem with this approach, however appealing it might be, is that the decision-makers--those who will ultimately use the scenarios--do not "own" them: the scenarios remain for ever the product of someone else's thinking, and so lack the credibility necessary for them to be the basis for action.

To deal with this problem a team at SRI International developed an approach that (a) is a structured blending of rationality and intuition, and (b) relies on decision-makers themselves to develop their own scenarios. We found, in a wide variety of organizations, corporate and non-profit alike, that we could build into the process the highest degree of understanding and commitment to use the scenarios.

The approach utilizes a relatively simple six-step process (See Figure 2).

Figure 2

Step l: Organizational Decision(s): The process starts, not by plunging into a description of the future, but rather by clarifying the strategic decisions that we are faced with, and which the scenarios should help us address. The decision can be as broad as the strategic future of the organization (e.g., "What vision of our future school/university should we pursue?) or as specific as the development of a new program (e.g., "Should we use electronic communications networks to promote individualized, off-campus/at-home educational programs?"). Regardless of the scope of the decision, clarifying the "decision focus" of the whole process is doubly important. In the first place, it serves to remind us that scenarios are not an end in themselves: they are a means to help us make better strategic decisions. They must, therefore, be grounded in our planning needs. Secondly, this focus considerably eases the problem of how to use the scenarios. Without it, the scenarios would too easily drift into broad generalizations about the future of our society; and their implications for our particular organization would be lost.

Step 2: Key Decision Factors: Having thought through the strategic decision we want to make, we are then in a better position to examine the "key decision factors." It is easiest to think of these factors as "the main things we would like to know about the future in order to make our decision." Granted that we cannot actually know the future, it would still be helpful--if we are planning for an educational institution--if we had some "fix" on, say, potential student population, availability of funding, or the state of information technology in the year 2000 (or whenever our planning horizon is). Once again, clarifying in our minds what the essential decision factors are helps to focus the work-process on what is important for our planning purposes.

Step 3: Environmental Forces: Next, we need to identify and assess key forces that will shape the future of these "key decision factors." We can think of these forces as falling into one of two categories--micro-forces that impact most directly and specifically on education, such as changing work force skill requirements, government's role in education, and "privatization" of schools; and macro-trends such as shifting demographic patterns, economic growth and income distribution, and the diffusion of information technology. The better we understand the multiplicity, interaction and uncertainties of these forces, the more realistic our planning is likely to be and the better able we can be to prepare ourselves for sudden shifts in trends and the onset of what would otherwise be surprises.

Next, we need to sort out these trends, ranking each in terms of its strength of impact on the organization and degree of uncertainty of the trend developing as we conjecture (a simple "High-Medium-Low" scoring system as portrayed in Figure 3 will suffice). As a result of this sorting out, we can focus our attention on:

• "High impact/low uncertainty" forces--these are (we think!) the relative certainties in our future for which our planning must prepare.
• "High impact/high uncertainty" forces--these are the potential shapers of different futures (scenarios) for which our planning should prepare.

Figure 3

Step 4: Scenario Logics: This step is the heart of the process and establishes the basic structure of the scenarios. If we examine the "high impact/high uncertainty" forces, we will likely find that most of them can be grouped around two or three critical "axes of uncertainty." Each of these axes presents two opposite "logics"--different views or theories of "the way the world might work" in the future. For example, one axis might pose the alternative views that "education will continue to be primarily a public sector responsibility" or "privatization of education will increase dramatically as the role of government in our society decreases." (Bear in mind that these are polar opposites, with intervening mid-points: but the essence of scenarios is, not to examine every, possibility, but to force our planning to consider the possibility of drastically different futures.)

The interplay of these axes and their alternative logics will present us with the basis for selecting 3-4 scenarios that we believe effectively bound the "envelope of uncertainty" that faces us.

Step 5: Scenarios: What do we end up with? What do scenarios look like? There are many forms that scenarios can take, but the three most important features are:

• Compelling "story lines"--Remember: scenarios are not descriptions of end-points (e.g., what does education in the year 2000 look like), but narratives of how events might unfold between now and then, given the dynamics ("scenario logics") we have assigned to that particular scenario. These story lines should be dramatic, compelling, logical, and plausible.
• Highly descriptive titles that convey the essence of what is happening in each case. After people have read the story lines, they should find the titles to be more memorable encapsulations of the scenario.
• A table of comparative descriptions, to help planners and decision-makers see how the scenarios differ along given dimensions (e.g., student body demographics, available funding, business-education partnerships).

Step 6: Strategic Implications. This is the stage at which we seek to interpret the scenarios, linking them back to the strategic decision(s) we focused on in Step 1. There are many ways of looking at this question of "strategic implications," but perhaps the simplest and most direct approach is to answer two questions:

1. What are the main opportunities and threats that each scenario poses for our organization?
2. How well prepared are we (or can we be) to seize these opportunities and avert or minimize the threats?

How Can You Use Scenarios?

Beyond the opportunities/threats assessment exercise in step 6, there are several approaches to using scenarios in strategy development that are worth considering.

Perhaps the most obvious way to use scenarios is to employ them, in effect, as "test beds" for the organization's current strategy. What is a "strategy"? In simple terms, a strategy deals with the "how," "when" and "where" of an organization's actions to achieve its vision. Every organization has a strategy (although often it is not clearly spelled out) so this use should always be possible. This exercise can be as straightforward as a judgmental assessment by workshop participants as to how well (or badly) the strategy "plays out" in each scenario. A start would be to go through an opportunities/threats assessment (see above), and then to use this assessment to address a second set of questions. Are we satisfied with the resilience of our current strategy, its flexibility to deal with different possible conditions? Are there things we could do to improve its resilience? And (importantly) are there contingency plans we should put in place to help us move in a different direction, should that be necessary?

Another use of scenarios is to stimulate us to explore new strategy options. Look at it this way: scenarios portray different futures, and these different futures would obviously require different strategies. Our difficulty lies in not knowing which future will evolve. We can, however, go beyond evaluating our current strategy to exploring these new options, scenario by scenario. We do not have to develop a complete strategy for each scenario; we need merely use our imagination to start some "what if" thinking. Frequently we will find that a new option, one that we thought of in connection with, say, a "High Privatization" scenario, might be a good action to take in any case; maybe not to the same extent, but a "good bet" surely.

The fundamental argument for scenario planning goes somewhat like this. In an age of incremental change, it is safe to say that incremental changes in our strategies will suffice. However, an age of discontinuities and massive uncertainties requires discontinuous strategies, sometimes radical changes from our past practices. The powerful feature of scenarios is that they stretch the envelope of our thinking, both about the future and about our strategies.

Conclusion

The tools of environmental analysis--scanning, monitoring, forecasting, scenario planning--used in the context of a model that uses these tools to expand vision, formulate strategic direction and strategic plans, implement these plans, and evaluate the implementation, enable us to shape the future of our organization and meet the challenges of global change.

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