Here is this month’s piece on the changing world of work from furniture maker Herman Miller, a company for which Peter Drucker long consulted and that continues to exemplify his principles of innovation and effectiveness.
Every organization engages in strategic planning, but it can take you only so far.
“Strategic planning does not deal with future decisions,” Peter Drucker wrote in Management: Tasks, Responsibilities, Practices. “It deals with the futurity of present decisions. What we have to do today is to be ready for an uncertain tomorrow.”
Scenario planning is an effective way of preparing for that uncertain tomorrow. It’s the process of visualizing probable futures and considering what each would mean to your business, if it came to pass.
Two strategists at Royal Dutch Shell developed the method in the 1960s. After considering world events and what they knew about their industry and their company, they wrote a series of plausible narratives about the future that is credited with helping prepare Shell for the 1973-74 OPEC oil embargo.
Why does writing stories about the future work? Because it’s a systematic approach that requires picking a specific year in the future and then thinking “outside in”—that is, thinking about how the world economy might shift by then, what impact it would then have on a company’s industry, and ways the company could respond.
At Herman Miller, the way we’ve used scenario planning has evolved. Twenty years ago, we used the process to determine product strategy and corporate strategy. We created a faux BusinessWeek for each imagined future as a way of expanding executives’ thinking into the future. Over time, we started using scenario planning in facilitated discussions with customers to help them envision and prepare for their own uncertain tomorrows. We recently completed scenarios for 2018, which address the question of how the world of work will change so that both we and our customers can be better positioned to respond.
Scenario planning can also benefit a company in other surprising ways. It builds empathy, which Drucker called “the number one practical competency for success in life and work.” Reading good scenarios puts the reader into a future they could not have imagined on their own. As they look around the future, they are seeing the world as the creators of the scenario see it. That helps hone empathic skills. Seeing the future through others’ eyes can also help you see the present through others’ eyes.
Perhaps most intriguingly, if done regularly, scenarios can provide insight into the collective mind of a company. For example, our 2018 scenarios consider not what will be mainstream in 2018 but what will be pushing the boundaries in 2018. The ones we create don’t have to have that bias—scenarios are make-believe, after all—but they do. That gives us insight into how we see ourselves: We always give emphasis to those things that will be driving change, even when we place ourselves in some future world.
Whether your company is large or small, it can probably benefit from scenario planning. “The most common source of mistakes in management decisions is the emphasis on finding the right answer rather than the right question,” Drucker wrote. Scenarios help identify the right questions.
—Jim Long, Director of Research & Development