Rafael Ramirez - Strategic reframing:The Oxford Scenario Planning Approach

Why is this book important?

This is a book about strategic planning. Strategic planning is an approach to business planning aiming to be explicit about the value-creating principles that bring groups of people together in organisations to jointly pursue financial or other goals. The basis of the existence of organisations is the principle of economies of scale applied to production and transactions. This drives people together in order as a group to become more efficient in pursuing their shared aims. It leads to the need to organize things, driven by general management principles, which define goals and tasks to be performed to achieve the shared objectives. Under the influence of such driving forces emanating from general management things start to happen.

The organising and management activity becomes future oriented through an activity known as planning. Tasks are defined in advance and then allocated to people for execution. They become more articulate about achieving future goals, and so the future becomes important.

Management and planning have always been key ingredients of organisational life. The way planning was done, however, has changed significantly over the years in response to societal change in the business environment. For example, half a century ago planners based their activity on predicting the future and making forecasts. Of course one knew that making predictions is difficult and things could turn out quite differently from the plans. Even if over time, with increasing turbulence in the business environment the discrepancy between forecasts and reality increased. This was not seen as a reason to drop forecasting altogether, as long as it was perceived as assisting management to maintain some control over affairs. But as time passed by and uncertainty increased planners became concerned about how much of the future can really be known. We assume that something about the future must be knowable. Why otherwise educate the young? Or reward leaders disproportionately? But this knowledge is limited; and over the years planners became concerned about where this knowledge about the future stops.

A watershed was reached around the mid-1970s, following the first global oil/energy crisis. Here was a major event that was not on the radar screen of most people, including many of the planners. The reaction to this was the rapid and decisive development of what became known as strategic planning, in response to the growing awareness of the impossibility of forecasting this type of event. The reasoning of the strategic planners was as follows: if direct drivers such as demand and supply could not be predicted, but at the same time a total inability to predict anything would also not be a reasonable or useful assumption, then how might one engage the deeper driving forces underneath an apparently chaotic world of supply and demand at the macro-level? The answer of the strategic planners pointed to attending to these underlying value creation mechanisms.

Organisations were in the business of value creation driving demand. This was the traditional territory of economics which was now linked up with strategic planning. For example, Michael Porters framework was based on the principle of competitive advantage: if an organisation had competitive advantage demand would be attracted to it, and it would be successful, never mind what the rest of the market was doing.

Strategic planners became increasingly involved in refocusing their main attention from global demand statistics towards value creation. Attempts to articulate the principle of how any organisation (business or purpose driven) remains viable gave rise to notions such as the Business Idea as part of strategic planning (developed by R. Normann). Notions of this type proved helpful in describing the underlying success factors that lead to understanding successful performance. Strategic planning (and the strategic management that grew out of it) became based on understanding these principles.

Strategic management has been, and still is, in a state of flux. It is important to realize that its main focus of attention has been individual organisations and their competitive advantage considered from an economics perspective. Over time though, the field has expanded to bring into focus a much wider spectrum of stakeholders, moving the field towards an interest in the human perspective. The interest by many strategic planners in the socio-ecology field may be an outcome of that.

Strategic planning as it is practiced now would be unrecognisable to the planner of a half-century ago, involved in statistical aggregate demand at the macro-view. The last half-century has presented massive unprecedented change in the business environment, population has doubled, income quadrupled, and the Western world has seen no wars on its territories. So why is it that instead of making us feel increasingly confident that we are starting to understand organisations we actually feel less secure, change seems accelerating, control seems slipping out of our hands?

Some trends are obvious. For example, in global terms we are living closer and closer together, physically and informationally, highlighting cultural discrepancies with all the problems that come with it. Our ecological footprint now significantly exceeds available space and resource constraints are becoming evident. Beyond that there still are the great threats of our time. We are approaching the greatest discontinuity in history, Ian Morris suggests, driven by nuclear proliferation, population growth, global epidemics and climate change.

This is the contextual environment in which we need to develop our approach to planning. It is all new and unprecedented. The old way of strategic planning will not deliver on this massive task. This is turbulence territory. As explained later in this book this means that while the environment will be driven by these new global issues we will all increasingly experience the turbulent planning repercussions at our own individual level.