In an increasing uncertain world, with sudden and unexpected changes, doing strategic planning for the future may seem overwhelming.
At the heart of the traditional approach to strategy development and strategic planning lies the assumption that executives, by applying a set of powerful analytical tools, can predict the future accurately enough to choose a clear strategic direction for it. But when the future is truly uncertain, this approach is at best marginally helpful and at worst downright dangerous: underestimating uncertainty can lead to strategies that neither protect or defend an organization against threats nor take advantage of opportunities that higher levels of uncertainty provide. So, in the unprecedented time we currently live how do executive teams of foundations, trusts, charitable and impact enterprises plan for the future?
Generally, all executives are busy all the time, but we need to set time aside to think strategically. Considering the uncertainty and turbulence we have experienced over the past few years; we acknowledge that decision making amid uncertainty is not easy. We know that the humanitarian ecosystem has changed completely over the past two years and we must figure out:
- How we plan for an ongoing uncertain future, how we ensure greater effectiveness and efficiency, how we use technology to a greater extent, and how we operate in a context where we all face diminished funding and resources?
- We also must consider how we protect the core values and mandates of our work, protect the safety and health of our teams, how we adapt to include climate mitigation strategies, and how we serve our constituents better.
- In addition, we must be flexible enough to operate in a constant changing environment. If nothing else – the pandemic has shown that flexibility, adaptability, and pivoting are critical components of future strategies.
Succeeding in uncertain times
Working with our clients over the last few weeks in planning for an uncertain future we have made the following suggestions that we hope would be valuable to you as well.
Our strategic planning process can be identified by four layers essentially:
- Level one: A clear future – In this regard organizations determine a specific route or a single focus for their strategies. To help generate this prediction of the future, we use the standard strategy tool kit: market research, engagement, analyses of costs and capacity, value chain analysis, evaluation outcomes, Michael Porter’s five-forces framework, and so on.
- Level two: Alternative futures – In this regard we develop a range of scenarios based on extensive research to understand how key uncertainties might play out. And of course, each scenario requires a different development and investment model to consider. We also develop appropriate valuation models for—and determining the probability of—each possible outcome, the risks and returns of alternative strategies that can be evaluated.
- Level three: A range of futures – In this regard the analysis of level three is similar that in level two: a set of scenarios describing alternative future outcomes that can be identified. Developing a meaningful set of scenarios, however, is less straightforward in level three. First, we develop only a limited number of alternative scenarios. Second, we avoid developing redundant scenarios that have no unique implications for strategic decision making. Third, we develop a set of scenarios that collectively account for the probable range of future outcomes and not necessarily the entire possible range. By establishing a broad range of future scenarios, we allow our clients to decide how robust their strategies can be, to identify likely winners and losers, and to determine, at least roughly, the risk of following status quo strategies.
- Level four: True flexibility, adaptability and ambiguity – Situation analysis at level four is highly qualitative. In this regard we focus extensively on internal and external engagement and comparative/competitive research to inform our strategic recommendations. For example, we engage executives and managers to catalog systematically what they know and identify unknowns. This allows us to develop a meaningful set of probable, or even possible, outcomes, and managers gain valuable and sometimes competing strategic perspectives. By studying and determining key attributes of winners and losers, and by identifying the strategies they employed, we can also identify patterns that show how markets/sectors/portfolios may evolve. Finally, although it will be impossible to quantify the risks and returns of all the different proposed strategies, our clients find value when they are able to identify what additional information they require to justify the investments they are considering.
In conclusion, if your organization is entering a strategic planning phase, we recommend that you consider:
- Identify Flexible Strategies – Develop strategies that allow pivots or have built in flexibility. Rather than locking yourself into plans that would only work in one situation, think of things that can be adapted to different futures.
- Scenario Planning and Contingencies – Use available information to develop multiple scenarios and begin exploring those scenarios. Do some initial work that will allow you to quickly respond when the environment becomes clear.
- Strengthen your Core – If you cannot develop external strategies, use this time to focus on improving internal processes and systems. Things like accounting and finance, HR, communications, talent development and succession planning, fundraising and monitoring, evaluation and impact assessment are always important and are great candidates for improvement initiatives. Building a stronger, more efficient organization will always pay dividends.
- Develop your People – Work to develop a culture and workforce that is more adaptable to change. Focus on leadership skills, change management, innovation and continuous improvement practices that will strengthen your organization to be more adaptable and better equipped to handle uncertain times.
- Dynamically Manage your Plan – Instead of developing 3–5-year initiatives and locking yourself into them, develop short-term actions that are aligned with long-term goals. This requires:
- A leadership team that can and will continue to meet on an on-going basis
- Well-conceived long-term objectives and goals
- Discipline to know when to stay the course and when to make changes
- A more agile approach to developing actions and managing progress. This approach requires a little more work and some discipline, but it enables you to more quickly respond to external changes.
The future is always uncertain. But, by focusing on the things you can control, being mindful of the things you cannot, and maintaining a bias for action, will allow you to succeed even during the most turbulent times.
Reana Rossouw is the owner of Next Generation. Next Generation is an impact enterprise that provides strategic consulting and advisory, research and development, as well as capacity development services.
Our customized strategic insight workshop service offering is a brand-new service that was designed in response to organizations wanting to redesign their investment and development strategies for 2022.
Considering the impact of Covid-19 on the humanitarian ecosystem – this workshop is aimed boards and executive management and includes both sharing global trends and insights about new developments but also facilitating and guiding strategic discussions for how to be more resilient and sustainable in the future. Organizations that have gone through this process stated that it not only provided new insights, but also clear guidance about how to be more responsive, inclusive and impactful going forward.