Across diverse business sectors, many of FSG’s clients have effectively adopted scenario-based strategic planning as a tool to spur creative and innovative thinking. But equally impressive are the firms, often in mature sectors, which have embraced scenario planning primarily as a means of strategic prioritization and alignment, with break-out thinking a secondary priority. This was the case of a $10 billion packaged foods producer, which was struggling to adapt to changes in consumer tastes, retail relationships, government regulations, supply chain dynamics, media consumption, and weakening brand hegemony.
The senior leadership of the company saw the inherent value in a scenario-based approach for setting strategic direction. The firm, for decades an unchallenged industry leader, had been experiencing significant challenges to its market position. Emerging consumer preference for “natural” (and local, responsibly-sourced, etc.) products was one reason. But there were other impactful discontinuities as well, including the shift away from traditional media and advertising and the coincident rise of social media. Gradually, the firm was adapting to this new operating environment. But what were the next big waves or shifts that the firm could not afford to miss – and in fact wanted to be out in front of?
First Order of Business: Forming a Core Team
With FSG’s guidance, the project sponsor assembled a core project team comprised of 12 individuals from across the organization. Among the departments represented were brands, marketing, sales, manufacturing, R&D, human capital, market research, finance and IT. As in other FSG scenario planning engagements, the core team was a strong and, in fact, critical partner. The core team would go on to contribute significantly to all phases of the project: trend analysis, driver identification, scenario scoping, scenario development, scenario workshop facilitation and synthesis of workshop results. Less tangibly but no less importantly, the core team helped build enthusiasm and credibility for the project around the organization. Their dedication and the long hours they committed sent a clear signal that the project was important and that the results would have enduring value.
Constructing Complex and Challenging Scenarios
Considerable work goes into scoping what’s called “the scenario space.” It’s critical to get this right, and FSG has strong opinions on the topic. Some scenario consultants default to simple two-by-two scenario matrices, which essentially represent all variations (four) of two variables deemed most important to defining the range of future operating conditions. The problem with 2×2 matrices is that they tend to dummy down the scenario space. Moreover, the 2×2 approach constrains choice – you must do only the four scenarios identified, and there is no option for a fifth future operating-environment, even if the four seem confining. The resulting scenario worlds are easy to characterize—in fact, too easy—and seldom capture more complex and nuanced aspect of future business settings. In contrast, FSG uses three or four major drivers (what we call “dimensions”). This opens up the field of scenario vision, and helps the core team imagine more nuanced and counter-intuitive business environments. They also tend to be messier, a bit more challenging to understand, with contradictory elements, just like real life.
After considerable analysis and discussion, FSG and the client core team identified a set of four unique scenario themes. As a set, the scenarios captured the range of market, competitive and operational challenges (as well as opportunities) that had surfaced in preliminary research and interviews with senior management and leadership. Leadership accepted the core team’s recommended set of four scenario worlds, but requested that select characteristics of other potential scenario worlds not chosen be integrated into the final set of four worlds. This is a useful and common option in scenario-selection tasks.
With leadership’s nod, the project team developed full 18-20 page scenario documents to render the worlds as vividly as possible, each one containing a fictional “day-in-the-life” narrative and more detailed descriptions of future operating conditions, everything from lifestyle to politics to business conditions to retail structure to the role of food in society.
Scenario Workshop to Identify Strategic Needs
Some 60 senior-level personnel participated in the two-and-a-quarter day scenario-planning workshop facilitated by FSG and the client core team. Critically, all department heads plus all but the top two officers of the company participated in the workshop. Participants were divided into four groups. Each participant was assigned one of the four scenario worlds to explore. A workbook containing a common set of questions bounded the discussions and set up the key, final question for each group: Given the characteristics of your scenario world, what strategic needs must the company address to be prepared for the future?
In decades of evolving scenario-planning best practices, FSG has found that a scenario workshop endgame of identifying “strategic needs” is often preferable to trying to craft actual strategies. There are a number of reasons for this; a couple of main ones are the shortage of time in a typical workshop to forge meaningful strategy statements and the fact that the right subject matter experts are rarely present to shape credible strategy statements. Far better to identify the broad strategic needs in the workshop setting and leave the actual formation of corresponding strategies and actions to post-workshop implementation teams (made up of both core team members and subject matter experts).
By the close of the scenario workshop, each team had refined a list of strategic needs. Representatives of each scenario team presented the strategic needs to each of the other groups for consideration and evaluation (in the context of the other groups’ assigned scenarios). Facilitators collected evaluation “scores” and recorded detailed notes for offline synthesis.
Zeroing in on “Robust” Strategic Needs
FSG and the Core Team worked intensely in the weeks following the workshop. The chief tasks were to review (and normalize) evaluation scores, score any strategic needs raised in the workshop but not as yet, evaluated; create a master spreadsheet containing the full list, sorted by score; and set a cut-off point to qualify high (and therefore potentially “robust”) strategic needs. Approximately two-thirds of the strategic needs made the cut.
The next step was to cluster the strategic needs by theme and affinity. This is an iterative process requiring intense and focused core team participation and insights. The project team wrestled with the wording of the strategic needs to ensure the descriptions and intent of each were clear.
Finally, the project team bulked up the strategic needs statements with context descriptions (i.e., the future world characteristics giving rise to this need) and preliminary implementation considerations, some of which came directly out of the workshop and others from post-workshop core team deliberations. When this task was completed, the 22 strategic needs packages were ready to be briefed to senior management and firm leadership.
Final Evaluations and Action Steps
Final evaluation took pace in two phases. In the first, client-side project team representatives presented the 22 robust strategic needs to management, nearly all of whom had participated in the workshop and therefore had a context for understanding where the needs came from. Following questions and review, the group voted on which ones were most critical for the firm to initiate action on. Other project team members took detailed notes on the discussions. Ultimately, a group of eight strategic needs received significantly higher votes than the rest and were deemed high priority.
In the second and final round of evaluation, the strategic needs were presented to senior leadership. All 22 were discussed in at least cursory fashion, but the greatest amount of time was spent on the eight deemed high priority by the management group in the previous evaluation. With the backdrop of current company challenges and initiatives already underway, the senior leadership team debated the merits of the top vote getters. Ultimately, leadership decided on a subset of six strategic needs and formed teams to commence work on implementation.
The six action areas were:
- Brand portfolio
- Retail relationships
- Ingredient sourcing
- External affairs
- Knowledge management
- Consumer messaging and influence networks
The strategic needs that did not make the final high-priority cut fell into a few different categories. Importantly, a subset were considered, in effect, very important for the company to address, but in process already. For example, an entire set of high-scoring strategic needs in the human capital domain were handed over to human resources. The scenario-planning process helped validate HR’s strategic direction, while concretizing specific actions for consideration. Other strategic needs in the list of 22 were deemed relevant, but not urgent. Some were more tactical (e.g., cyber-security risk-management). The scenario process initiated discussions about emerging risks, challenges and issues that some scenario-planning participants believed the company was not addressing sufficiently.
As of this writing, teams are developing implementation plans for the high-priority strategic needs approved by leadership. There is energy and, in the client’s words, “excitement” driving progress.
The strategic needs that ended up being robust but not urgent do not disappear. They become part of the scenario-planning record and a source of ongoing consideration as internal priorities change and external market conditions evolve.
Scenario consultants always look for innovative solutions to arise from scenario-planning engagements, and this was the case with this packaged foods producer. A number of innovative ideas and approaches rose to the top and are being acted upon. But as valuable as the innovation outcomes were in this case, the company benefited as much from simply getting management and executives aligned and energized around core priorities and actions that were not particularly novel, some of which were already under consideration, but needed a spark to effectively ignite them. The scenario process was, in effect, a rallying point – a way to get executives on board and energized around a manageable set of strategic actions that promise to serve the company well, no matter how the future turns out.