Thought leadership

Scenario Based Planning Key to 2018 Success

Scenario Based Planning Key to 2018 Success

Scenario Based Planning Key to 2018 Success

Organizational success in 2018 will be more likely if health sector executives enhance joint strategy development with Board Members, physician leaders, middle managers and community leaders. Joint organizational and program planning, however, in large groups with diverse backgrounds, knowledge, and skills is not easy. Your “plan-to-plan” process will require you to think more creatively and carefully about these three issues:

  • Why joint planning is difficult
  • Why joint planning is necessary
  • How scenario based planning is key

Why Joint Planning is Difficult

Successful strategic planning (whether by a department, service, or system) is a group process that poses and answers four deceptively simple questions:

  1. Where are we today?
  2. Where should we be tomorrow?
  3. How shall we get there?
  4. Are we getting there?

It is not enough to answer these questions; the organization needs to actually take action and make investments to ensure the answers are successfully implemented. Execution is everything.

Execution is not easy, however, because too often our approach to joint planning is derailed by these common obstacles:

  • People with the needs, ideas, and experiences are not invited into the process;
  • If invited in, are not supported with information, orientation, or support to engage (digestible briefing papers, conveniently scheduled meetings, child support, and sincere listening by all players);
  • Health needs are complicated by entanglement with such persistent social determinants of health or poverty and poor nutrition, sanitation, housing, and lifestyles
  • Demographic differences of age, race, ethnicity, gender and life experiences generate different ways to look at and solve problems

Why Joint Planning is Necessary

Experienced executives and board leaders understand that (a) the quality of the answers, and (b) the quality of implementing the answers is a function of the diversity of perspectives, insights, experiences, and wisdom of the people that pose and answer the questions. You not only get better answers (true needs, realistic goals, better anticipated obstacles to success, and more practical actions and resources required), but the process of jointly posing and answering the questions builds a greater probability that the planning participants will own the process, own the plan, and therefore are more willing to help implement the plan.

Successful joint planning requires processes that embrace, enable, and empower diversity of insights, and diversity of backgrounds and experiences. Leveraging, focusing and harnessing such diversity can be enhanced with the use of strategic planning scenarios.

How Scenario Based Planning is Key

Industry executives and analysts often mistakenly talk about strategy as if it were some kind of chess match. But in chess, you have just two opponents, each with identical resources, and with luck playing a minimal role. The real world is much more like a poker game, with multiple players trying to make the best of whatever hand fortune has dealt them.

—David Moschella[1]

What are Scenarios?

Health sector executives are having more creative and probing conversations with their Board and Physician leadership about how to strengthen their strategic thinking and planning for greater organizational performance results. These conversations will increasingly rely more on provocative assumptions and scenarios about the environment in which their work is to occur.

Assumptions help us break down complexity and uncertainty. A fancier term for assumption is "scenario". Scenario implies a series of assumptions that are being considered to create a forecast. In the messy world of people and behavior, there can be no forecast without a scenario. The only question is whether to make your assumptions explicit (viewable, known) or implicit (buried, hidden, etc.). All things being equal, (big assumption!) the more your assumptions are known the better your ability to forecast with accuracy.

An organization that has been a leader in mastering the need for and nature of scenario based planning is the Institute for Alternative Futures.[2] which observes…

Given the multiple uncertainties facing public health, scenarios are needed to consider plausible alternative paths for the field in order to choose the best way forward. Scenarios are parallel stories describing how the future may unfold (in ways both good and bad). They help us view the dynamic systems around us in more complex terms that accept uncertainty, and then clarify and challenge the assumptions about what we can do. While the future is inherently uncertain, scenarios help us bound that uncertainty into a limited number of likely paths. Some paths may lead to futures we want to avoid while others point to surprisingly favorable outcomes. Once these alternatives have been articulated, we can more easily explore the inherent uncertainty to find opportunities and challenges we might otherwise miss. These insights can then inform strategic planning processes. Strategic planning should assume a future that is both most likely and best preferred. People and organizations that work with scenarios – rather than develop plans based only on the past and present – develop strategies that are not only actionable, but also future-independent and increase the likelihood of a more desirable future.

Joint planning at the intersection among board members, medical staff, executives and community leaders is increasingly seen as essential for successful business planning in an era of uncertainty and complexity.[3] Organizations facing the following conditions will especially benefit from scenario planning[4]:

  • Uncertainty is high relative to managers’ ability to predict or adjust.
  • Too many costly surprises have occurred in the past.
  • The company does not perceive or generate new opportunities.
  • The quality of strategic thinking is low (i.e., too routinized or bureaucratic).
  • The industry has experienced significant change or is about to.
  • The company wants a common language and framework, without stifling diversity.
  • There are strong differences of opinion, with multiple opinions having merit.
  • Your competitors are using scenario planning.

The benefits of scenario planning are quite intuitive and easily understood. They include the ability to:[5]

  • Understand and define the key drivers of the organization
  • Quantify the sensitivity to key drivers, creating important organizational knowledge
  • Become more expansive and imaginative in its thinking
  • Eliminate (at least in part) bias or aspirational thinking that is not grounded in reality
  • Test the strength and flexibility of a strategy under adverse or changing conditions
  • Manage risk and uncertainty more effectively by modeling scenarios that break with current trends
  • Treat financials primarily as outcomes rather than inputs in the planning process
  • Produce higher quality strategic plans, budgets, and forecasts that take less time to develop
  • Be better prepared if adverse circumstances should manifest
  • Consider possibilities that would otherwise have likely been ignored

All of these benefits are desirable, but perhaps the greatest being the organizational learning that can occur.

Exhibit 1 shows the typical strategic plan elements and their relationships to one another.

High Priority Strategies from Scenario Guided Planning

Several health sector leaders engaged with the American Hospital Association[1] to define ten must-do strategies for the hospital field to implement; however, the first four were identified as major priorities.

  1. Aligning hospitals, physicians, and other providers across the continuum of care
  2. Utilizing evidenced-based practices to improve quality and patient safety
  3. Improving efficiency through productivity and financial management
  4. Developing integrated information systems
  5. Joining and growing integrated provider networks and care systems
  6. Educating and engaging employees and physicians to create leaders
  7. Strengthening finances to facilitate reinvestment and innovation
  8. Partnering with payers
  9. Advancing an organization through scenario-based strategic, financial, and operational planning
  10. Seeking population health improvement through pursuit of the “triple aim”

As you prepare your leadership for these type strategies in the uncharted waters of 2018, consider these three key actions to implement scenario based planning:

Action 1: Conduct a Leadership Academy for Scenario Based Planning

Identify an afternoon and evening for an interactive learning experiences. This session should be well in advance of your regular planning and budgeting cycle, and have these key characteristics:

  • Involve 15-30 key leaders from the board, executive team and medical staff that are known for their openness to bold thinking and creative business planning. Ask them in advance what they understand about “Scenario Based Planning”; its advantages and obstacles.
  • Schedule a venue with plenty of open space and high ceilings as you might use for a strategic planning retreat or Charrette process.[2] You might consider four hours from 4:30 to 8:30pm with a light meal and comfortable tables for 4-6 participants, with a mix of ages, genders, roles and races.
  • Develop a short collection of articles on the art and science of building and using scenarios, and invite all participants to come prepared to discuss the contents of the articles.(the citations in this article would be a good start)
  • Retain an advisor/facilitator to conduct the “Leadership Academy” as a provocative and stimulating learning experience about such topics as:
    • What are scenarios
    • How have scenarios been used in community health and hospital planning
    • How are they best constructed
    • Factors that frustrate or facilitate the development of scenarios in organizations like yours
    • Enablers and empowering ways to use scenarios in your next round of strategic planning and budgeting.
  • Conduct the Leadership Academy and publish the results of the session for a broader audience of future participants.

Action 2: Develop a Scenario Matrix

Small groups of participants from the “Leadership Academy on Scenario Based Planning” should be invited as soon as possible after the Academy to develop three related scenarios about three types of planning challenges for a future defined in the Summer of 2025 (about 5-7 years in the future) characterized as:  Best Case, Worst Case and Most Likely Case for these situations:

  • Health care needs/demands for the population segments served by your organization;
  • Payer contracting priorities for the three types of payers: Medicare, Medicaid, Commercial
  • Physician and provider supply and working relationships
  • Financial vitality (high, medium, low)

Variables that can be considered in assessing trends when building the scenarios are:

  • Technology change
  • Demographic trends
  • Psychographic buying patterns by segments of population
  • Trends in financing availability and terms
  • Political policy changes
  • Patterns of media in public advertising and education

All scenarios should require the small group to draft a set of implications for each scenario, with the requirement that at least one positive and one negative consequence is identified in at least such spheres of interest as:

  • Impact on service delivery sites and processes
  • Impact on service quality measures
  • Impact on price and contracting with purchasers
  • Impact on community relationships and image
  • Impact on staffing and talent development
  • Impact on costs for capital and operational budgeting
  • Impact on philanthropy

A larger network of stakeholders should then be invited by web based webinar and polling to react to these anticipated implications for each of the three priority scenarios.

Action 3: Embrace Scenarios in Strategic and Financial Planning Calendar

The results of the small group and web based scenario exercises should be distilled into an easy to read summary and infographic that could be shared in the local newspaper, on your website, and, very importantly, in your guidelines for staff, physicians, service line, and department managers to consider in your next cycle of business and program planning and budgeting.

The board should be engaged in this process, and supported to monitor progress to plan, to budget and to each scenario over the coming year. Contingency plans are of course always useful, and the scenarios will need to be refined as new experience and data become available over the next 2-3 years.

How prepared are your executives to engage with your Board in these three actions?

How can you find and share scenarios for your future from local hospital associations, community development organizations, and innovative consulting firms?

For a useful review of scenario based strategic planning, look here:



[2] For insights into the use of Charrettes, see:


[1] Moschella, David. “Ten Key IT Challenges for the Next 20 Years,” Computerworld, December 1999.

[2] See: Institute for Alternative Futures. Public Health 2030: A Scenario Exploration. Alexandria, VA. May 2014. Available from


James A. Rice

Jim Rice, PhD, FACHE is the Managing Director & Practice Leader with the Governance & Leadership service line of Gallagher’s Human Resources & Compensation Consulting practice. He focuses his consulting work on strategic governance structures and systems for high performing, tax-exempt nonprofit, credit union and health sector organizations and integrated care systems; visioning for large and small not-for-profit organizations; and leadership development for Boards and C-Suite Senior Leaders. 

Dr. Rice holds masters and doctoral degrees in ...

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