Scenario Planning

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,
Presented at Newcastle University Business School

16 Hodgkinson
April 2008
Copyright
and Healey 2007
th
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

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

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

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

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)

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)
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%
Porters Five Forces
8.5%
Cultural Web
5.5%
McKinseys 7 Ss
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

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 organizations business model and its future
environment, overcoming corporate blind-spots, and
enhancing strategic flexibility
Benefits of the strategic conversation
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.

2007
The Generic Business Idea
Understanding
evolving needs
in society
Entrepreneurial
invention
Resources
Unique, difficult
to emulate
elements that
differentiate from
competitors
Results
Distinctive
competencies
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
-ve
Parents good
feelings
Reputation
Working
parents
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
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

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.)
Wharton on Managing Emerging Technologies, New York: Wiley, p.229 Copyright Hodgkinson and Healey 2008
2007
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
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

2007
Do Scenario Techniques Work?
Lots of anecdotal evidence, including documented case studies of

success (e.g. Wacks (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

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)

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)

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?

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
2007
Strategy workshops survey
Hodgkinson et al., Long range planning.

2006
Copyright
Hodgkinson and Healey 2008
2007
Strategy workshops survey
Hodgkinson et al., Long range planning.

2006
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 companys main offering could soon be
obsolete
Our approach broadly followed van der Heijden (1996)

2007

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

2007

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

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

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

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
2007
Design science approach

Development of a systematic, evidence-informed approach
to engineering cognitive tasks directed to deeper-level/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

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

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

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

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 (were in this together), rather than divisive (its them
versus us) mentality

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

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
Agreeableness
Neuroticism
Trait
Key
Descriptorsa
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)
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)
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
Kind,
In politicized contexts, low Agreeableness individuals
Moderately agreeable teams
cooperative,
are less cooperative and eschew organizational goals
will exchange freely diverse
sympathetic,
(Witt et al. 2002)
information and perspectives
warm, helpful
and engage in constructive
The
average
level
of
team
agreeableness
is
positively
(vs. cold,
debate when constructing and
associated
with
social
cohesion,
open
communication,
unkind,
analysing scenarios.
conflict
resolution,
and
task
performance
(Barrick
et
al.
Source:
Hodgkinson and Healey (2008). Toward a (pragmatic) science of strategicConversely,
intervention:overly
Designagreeable
propositions for
distrustful,
1998;
Neuman
and
Wright
1999)
scenario planning, Organization Studies, Sage Publications
harsh, rude)
teams 2008
will eschew such debate
Conscientiousness
Trait
Key
Descriptors a
Organized,
systematic,
thorough,
neat,
efficient (vs.
disorganized
, careless,
inefficient,
impractical,
sloppy)
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)
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
Trait 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 re-categorization 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
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

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

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

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
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 Id 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 hes 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 didnt 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)
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 didnt
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)
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 wasnt 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)

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
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

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), 479-496. 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

2007
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

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Leeds University Business School

A Pragmatic Science Evaluation of

Presented at Newcastle University Business School

Background to scenario planning

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The cognitive challenges of

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Why does history repeat itself?

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Cognitive bias and cognitive

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Cognitive Bias and Inertia In

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What is Scenario Planning?

Which of the following analytical

Value chain analysis

Porters Five Forces

Hodgkinson et al., LRP. 2006 Elsevier limited

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