Scenario Planning and Innovation

  

Your company has spent the last twelve months developing software that you believe in revolutionizing how people use social media.  As the CEO of the company, you were proud of the progress that your team has made.   The week before the anticipated release date, your engineers tell you that the server architecture that supports the software had crashed.   Scrambling to find a solution, you asked your engineer about the possibility of moving and utilizing the cloud architecture.  Regrettably, your engineers informed you that they are unfamiliar with the security of the cloud and the risk that entails further investigation.  Either rebuilding the server infrastructure or securely adopting the cloud will take weeks.   You began to panic but had no choice but to inform your stakeholders of the temporary delay of the release until a later date.  Imagine instead that everything went smoothly with the release of the software, but shortly after the release, the overwhelming popularity began to take a toll on your network and infrastructure.  Without any preparations, the result may be the same or even worse.  The scenario presented here is just an example of one of the many ways in which a problem may arise when we least expected.   Therefore it is vital to look ahead and expect the best and the worst, especially when dealing with something unknown.

 Figure 1. Cone of uncertainty (Nagel et al., 2020)

As a security engineer, I learn to expect the worse and navigate around this scenario.  Yet, there are circumstances beyond our control, such as human errors and issues that stem from other areas.  When confronted y something new, people often develop blind spots for poor outcomes (Schwarze & Taylor, 2017).  To illustrate this issue, we can think of the blind men asking to describe the elephant based on the parts they are touching – ear, leg, tusk- we can see that they can not procure the complete picture unless they are put together.  Scenario planning is very much like the process of putting together the pieces of the possible future.   Human nature subconsciously assumes that tomorrow will be a lot like what we experienced yesterday and today (Aldrich, 2018).  But when facing new scenarios or events like a loss of a person, a job, or other catastrophic events caught off guard, we do not know what to do.  For example, the sudden spread of the Covid-19 had brought the world into chaos nobody had prepared for.    Many people died, and businesses were shut down, and some could not recover even today.  Yet, some companies blossomed as a result.   I believe that the result is not just from the demand for new services but from these organizations offering new services knowing that there will be a demand for them.   Before the Covid-19 pandemic, I only know of two brands of hand sanitizers, and now I can probably list at least fifteen.  

Scenario planning is necessary for an organization's long-term success and survival (Balarezo & Nielsen, 2017).  It brings strategies to improve learning, challenge prevailing mindsets, remedy cognitive biases, and enhance sense-making.  The use of scenario planning makes organizations more prepared to cope with uncertainties inherent in every business environment.  It works based on the assumption that the future is not constant and risk can come from economic, political, cultural, social, and other conditions.  Understanding these scenarios allows management to strategize better and to allocate resources where it is needed most.  Schwarze and Taylor (2017) reference the prediction that a physician would give to a dying patient.   The physician would first assess the situation based on the patient's age, history of health condition, current conditions, etc.  Like scenario planning, the physician would provide the patients with the worst case, best case, and likely case scenarios.  Any treatments that are performed will come with certain risks.  Before administering the treatment, the physicians have to understand the risk and how to deal with each of the risks they face.   Such anticipation allows the physician to navigate the difficulties ahead.     

Scenario Planning for Innovations

Innovations come with inherent risks that organizations need to become aware of.  Some innovations were thought of as good but failed in implementation.  There are also promising innovations that could never see the light of day due to lack of management support, resources, etc.   Some innovations failed because someone else was able to release something similar ahead of time.  That is why we have seen changes n the way organizations operate in the face of these new and different challenges.   For example, DevOps' creation and adoption allow organizations to release the software early rather than wait for a completed product.  DevOps also allows the users, stakeholders, and customers to give immediate feedback to make further changes instead of at the very end.  The integration of security in the development lifecycle, for example, is another strategy adopted as the result of scenario planning.   According to Aldrich (2018), scenario planning provides a cost-benefit when it is deployed as a supporting tool within a broader decision support system.  Scenario planning helps create a portfolio of highly plausible futures that are diverse, useful, and relevant.   Since the future changes every day and a single change affect other changes like an avalanche, it is important to adopt scenario planning and monitoring as a continuous process (Balarezo & Nielsen, 2017).  Figure 2 shows the scenario development process that organizations typically undertake.

Figure 2. Scenario development process (Mariton, 2016)

Based on the first-hand experience with the failure and the success of organizations in the face of the Covid-19 pandemic, we see that the need for more extreme adaptation of scenario planning has become more evident.   Those that cm out ahead are not those that predicted the future correctly but are those that anticipated many different futures and made necessary preparations for it.  What you successfully predicted today may not have the same future tomorrow.  

 

 

References

Aldrich, S. C. (2018). Integrating Scenario Planning and Cost-Benefit Methods. The Hastings Center Report, 48 Suppl 1, S65–S69. https://doi-org.coloradotech.idm.oclc.org/10.1002/hast.821

Balarezo, J., & Nielsen, B. B. (2017). Scenario planning as organizational intervention: An integrative framework and future research directions. Review of International Business and Strategy, 27(1), 2-52. https://coloradotech.idm.oclc.org/login?url=https://www.proquest.com/scholarly-journals/scenario-planning-as-organizational-intervention/docview/1876466217/se-2?accountid=144789

Mariton, J. (2016).  Strategizing under uncertainty.  https://www.smestrategy.net/blog/what-is-scenario-planning-and-how-to-use-it

Nagel, R., Dominick, S., Ekola, T. (2020). Mitigate risks with scenario planning.  Hazen and Sawyer.  https://www.hazenandsawyer.com/publications/navigate-the-path-ahead-scenario-planning/

Schwarze, M. L., & Taylor, L. J. (2017). Managing uncertainty — harnessing the power of scenario planning. The New England Journal of Medicine, 377(3), 206-208. http://dx.doi.org/10.1056/NEJMp1704149