September 21, 2020

Scenario Planning to Guide the Digital Journey

Peter Kennedy
Managing Principal

No question, the COVID-19 global pandemic has accelerated the digitalization revolution to a previously unimaginable pace.  

Operating environments – customers, products, services, workers, supply chains, facilities, systems, regulations, and certainly corporate cultures – have been fundamentally shaken by the disruptive effects of COVID. Organizations have had to rethink what they do, how they do it, and even what they are, in this radically changed environment. 

The considerations, dilemmas and choices faced by large organizations on their digital journeys are numerous and complex. Most obviously, they involve multi-layered decisions on data, software, applications, vendors, infrastructure, partnerships, processes, and security.  Since COVID’s onset, these decisions have only grown more urgent.

Trust is huge, too. “Trust is an important consideration when workers are remote,” says Trevor Jones, an FSG collaborator who heads up the Business Intelligence and Analytics consultancy Thorogood.  “Companies that have established high levels of trust with their employees and suppliers can adapt more quickly than those who have to first get used to developing trust in place of close supervision.”

A fundamental insight about digital transformation is that context matters. But below hard technical decisions lie a host of assumptions about markets and operating environments that are either based on current conditions or essentially static projections about the future. This is where digital transformation efforts run into trouble – because these assumptions are often flawed. For example: Product mixes may change. New customer segments will arrive (or disappear). Employees may return to offices, or not. Tech standards and offerings will evolve. New supply or processing centers will have to be reliably and securely integrated into data architectures. In extreme cases, wholly new business models not evident today may be operative. 

None of these future conditions can be reliably predicted; the pace of change is too rapid, the complexity too great, now more than ever in the response to COVID-19.  This is why prudent firms embrace alternative futures (scenario) frameworks. If done rigorously, scenarios effectively stress-test digital planning assumptions by surfacing all important considerations underlying digital options and choices – and not just the more familiar and immediate technical factors. 

In fact, as in any strategy or design exercise, it’s probably worth some time wrestling with the root question, “Who is my future customer?” And then from there to probe: “What organization and digital infrastructure will be required to successfully serve tomorrow’s customers and the associated operating model?” It’s not enough to manage successfully in today’s new normal.  It’s about anticipating and dress rehearsing a range of plausible different contexts for the next normal. We think this is the essence of strategic agility and true resilience in the digital age.

Scenario approaches have the added benefit of bringing a larger number of digital stakeholders into the transformation conversation. Scenario workshops are powerful platforms for collaboration that invariably surface critical design insights that might otherwise not emerge. Scenario collaborations also facilitate change management. Digital projects challenge existing data silos and authorities, and there’s no better place to get these issues on the table then a scenario workshop, where ideas and beliefs about strategy and operating models are subject to rigorous challenge and debate. 

These are stressful and confusing times. There’s heightened urgency to develop robust and enduring solutions to current and emerging digital challenges. FSG recognizes that many CIOs do not have the luxury of committing to a full-up strategic design project before – or smack in the middle of – a digital transformation effort. But short of that there are abbreviated scenario options (such as FSG's COVID-19 Scenarios) that, at the very least, can identify problems or issues before digital decisions and investments are committed. 

 

Special thanks to Trevor Jones, CEO of Thorogood, for his insights and comments on the text. 

 

Comments  | 

Charles Perrottet
Too often planners try to deal with uncertainty by indirectly assuming it away with probability. Peter Kennedy’s article describes how to better prepare by rehearsing various aspects of uncertainty.
pkennedy
Agree, Charles. Probability is the enemy of foresight, beyond the very near term. No more so than in today's complex and highly uncertain environment.
Charles Thomas
Your article, Peter, highlights effectively an all to human planning problem. In chaotic times when an organization is thinking about its own transformations, it tends to (without realizing it) put out a sheet anchor to offer their own thinking some stability. In this case, as you note, it can be to assume that their larger operating context (partners, consumers, regulators) remain "known" and relatively static. It makes planning easier - and probably dead wrong. In such an uncertain context, it is hard to think of any other tool, beyond scenario planning, that can support both internal transformations AND an understanding of how the marketplace is shifting.
pkennedy
Agree with that conclusion. By widening the foresight aperture, scenario planning delivers unique "domain awareness" with potential insight and benefits beyond the immediate function (whether data, marketing, human capital, finance, R&D, etc.) Which is why multi-disciplinary scenario planning participation delivers superior insights leading to broader strategy ownership and ultimately more successful execution. Thanks for the comment!

Thoughts?