Introduction
Planning is a very important element for the success of an organization. Many organizations are not able to plan effectively as evidenced by a large number of failed organizations. Planning is a challenging task since planners are expected to oversee future situations in order to prepare their organizations to cope with the situations.
Role of Scenario planning
Although planning has always been challenging, frequent change in a business environment has made it even more difficult to attain (Fiol, 1994, p. 137). According to De Geus, the success of an organization is highly influenced by the ability of an organization to learn. He asserts that the faster an organization learns, the more it is able to cope with the changing business environment and thus gain a competitive advantage over other organizations (De Geus, 1988, 70). De Geus advises that the secret to success in the frequently changing business environment is increasing the pace of institutional learning.
According to De Geus, senior managers must be able to understand what is happening in the business environment of their organizations and take appropriate steps at the appropriate time. He associates the failure of many organizations to failure of decision-makers to make appropriate decisions in good time or failure to understand the trend of the business environment of their organizations. This shows the need for organizations to learn. Institutional learning is challenging as De Geus warns. Unlike individual learning, institutional learning is slow as it involves many individuals (De Geus, 1988, 72).
De Geus advocates for scenario planning in order to help an organization adapt to changing business environment. This, unlike teaching, enables decision-makers to learn easily and apply their knowledge to make timely moves. He cites effective scenario planning as the reason for Shell’s success in otherwise tricky business. Appropriate scenarios helped the organization’s management to be prepared for the future business environment. The scenarios were able to capture the future business environment thus enabling the decision-makers to make timely decisions. De Geus warns that institutional learning is slow. This implies that for a good decision, an institution should have adequate time for preparation (Mintzberg, 1994, par 5). Since business environment change frequently requires the fast decision, scenario planning enables the management to be prepared. Although institutional learning is important to all individuals in an organization, it has more effect when it takes place in top management.
Facilitating institutional planning is the most important role of planners. Planners should ensure that an organization is prepared for any adversity (Ringland, 2006, p. 58). De Geus asserts that planners fall into various traps in their quest for institutional learning. One of the major traps is where planners start with mental models that are not easily recognized by their audience. The second trap is where planners take several steps at the same time thus not allowing each step to bear fruits. The trap that De Geus finds as most serious is the tendency to use teaching to communicate information required for learning. He explains that planners lack the necessary authority to use teaching effectively.
Shell was among the first organization to use strategic planning. According to De Geus, strategic planning in the first half of the year enabled the organization to learn and respond effectively to changing business environment in the oil industry (De Geus,1988, 70). To facilitate strategic planning, models are necessary. Using a case study, Shell was able to be prepared for a fall in oil prices. De Geus advocates for use of various models to facilitate institutional learning. He explains that models are easy ways of passing information and preparing decision-makers for real-life scenarios. With the advancement in technology, computer models can be used to facilitate easier institutional learning. Playing with a model enables individuals to acquire new and effective ways of communicating acquired knowledge.
Conclusion
It is becoming increasingly difficult to achieve success in the fast-changing business environment is challenging. Many planners are not able to prepare their organizations to embrace future challenges, thus making it hard for them to cope with changing business environments. Scenario planning makes use of models to facilitate planning. It is the responsibility of planners to facilitate institutional learning through creative methods such as models.
Reference List
De Geus, A. (1988). Planning as learning. Harvard Business Review, 66( 2): 70-74.
Fiol, M. (1994). Consensus, Diversity, and Learning in organizations. Organization Science, 5(3).
Mintzberg, H. (1994). The Fall and Rise of Strategic Planning. Web.
Ringland, G. (2006). Scenario planning: managing for the future. New York: Wiley.