We very often hear that engaging with scenario work while being simultaneously tasked with delivering the company’s present strategy is a particularly hard undertaking for executives. A good set of scenarios casts new light on many of the assumptions the strategy is built on, and perhaps calls for reconsideration of the present strategy, making life for the executive more difficult. The easy solution is to stick to the strategy and hope that the future will fit the chosen strategy.
The executive dilemma comes from mixing two different conceptual worlds. Richard Normann, who was one of the leading thinkers in management and strategy, distinguished between two conceptual worlds: The World of Management and the World of Business. In the former, executives are focused on making the existing strategy a success, working with the total repertoire of managerial tools. Budgets are set, and they are to be met. Rewards are linked to the agreed goals. As an executive, you tend to limit yourself to the transactional environment while making sure the whole organization is progressing in the same, agreed direction. Thus, no ambiguity about goals and direction exists when you start work in the morning.
The mental model in the World of Business is a different one. You focus on the context of your present business and try to get your head around how that context might change, and how those potential changes might impact and change the transactional environment in which you are executing on your present strategy. This includes a multitude of issues that you cannot control, but the outcomes of which will certainly impact the conditions for your business. Trends and uncertainties occupy your mind. Somebody might even look for a black swan or spot a pink elephant. All in all, this is where scenarios can be helpful. A proper engagement with scenario thinking can help to perceive futures coming at you, carrying with them new opportunities, but also threats. Having spent time in the future, you make the journey back to the present, but with scenarios, the stories of plausible futures, you have the potential to institutionalize memories of the future.
The World of Business meets the World of Management when trying to understand the fit or misfit between future conditions, as described by the scenarios, and the dominating ideas manifest in present strategy. Sometimes you can sleep well, when the future, as understood by you, appears as your current strategy should expect, but more often the need for rethinking the strategy is apparent. The fit/misfit analysis between your strategy and scenarios is not only to be taken as a burden making your life harder, since it may also disclose new opportunities to be exploited or reveal risks that are mounting up. All these impactful steps are taken in the World of Management.
The strategic conversation that brings success to the organization should include a proper, well-structured interplay between the dominating ideas underlined in the present strategy, and the memories of the future, manifest in scenarios. The ability to handle both worlds, Business and Management, as separate logics, and staging the interaction between the two is the key to success.