What leads to uncertainty for non-profits and how scenario planning can help:
Uncertainty is a reality for organizations of all sizes and sectors, but non-profit organizations often face a unique set of challenges from external forces. These external forces may include: political, economic, societal, technological, legal and environmental trends and shifts.
For example, policy decisions may impact government funding allocated to sectors or specific organizations, economic volatility may increase the demand and need for services, societal views may result in shifting donor priorities, technology changes may lead to data security concerns, legal adaptations may increase the regulations and scrutiny placed on charitable organizations, and environmental disasters could lead to disruptions in services.
Scenario planning is especially valuable for non-profits because it helps to anticipate, prepare for, and RESPOND to uncertainty, rather than simply REACTING when it hits.
Because we can’t know for certain what will occur in the future, it’s critical that organizations balance their need to function operationally and move forward strategically. Scenario planning is one critical thinking exercise that can help teams think critically and strategically about potential trends and risks they may face, the most likely scenarios that could result from these, and multiple paths forward in these different “worlds.”
Through shifting trends, non-profit organizations may face specific risks and uncertainties that may or may not come to fruition, which can result in several potential realities one, three, or five years into the future.
Some of these resulting challenges may include (but are not limited to):
- Shifting funding sources and funder priorities
- Increasing operational and regulatory burdens
- Requiring adaptation to new technologies
- Heightening the need for agility during times of crises or conflict
How scenario planning can be used on its own or in combination with a strategic plan/strategy review cycle:
Scenario planning can be used on its own, or as a complimentary activity alongside, before, or after strategic planning.
Organizations can use scenario planning as a standalone process to break down critical trends and risks that may impact their organization’s mission and operations. When used before strategic planning, looking at scenarios can help organizations gain a stronger understanding of potential paths forward. When used after strategic planning, organizations can use scenario planning to adapt their action plans towards their vision while analyzing new shifts and trends they are faced with along the way.
When organizations have an existing strategic plan with a clear 3 or 5 year vision/destination, strategic priorities, and measurable objectives and goals, a scenario plan doesn’t replace this, but can enhance it. Oftentimes, organizations still want to reach the same destination but understand that shifting trends and risks will impact their ability to reach that future if they don’t respond strategically.
Therefore, if an organization has an existing strategic plan and is midway through implementing it, scenario planning is a fantastic strategic thinking exercise to discuss new trends and risks that have arisen, to unpack various scenarios, and to adapt their action plans for various paths forward towards their vision.
Scenario planning process overview:
Whether you do or do not have an existing strategic plan, the steps of scenario planning are the same:
- Discuss and align around your current state
If you already have a strategic plan, this step was likely completed through a SWOT (strengths, weaknesses, opportunities, threats) or similar activity. It will be important to reiterate what you identified in your currency state analysis to ensure your team is fully aligned around it entering into scenario planning.
If you do not yet have a strategic plan, consider discussing your current state so you have a shared understanding of where you are now in relation to where you want to be.
- Align around a future state
If you already have a strategic plan, this step has been completed when developing your 3 or 5 year strategic vision or One Destination. Again, it will be vital to reiterate for alignment what your future state entails, to ensure everyone is seeing the same strategic vision as you venture into scenario planning.
In addition to encouraging long-term planning, strategic thinking, and risk mitigation, there are several other benefits and outcomes your non-profit may experience as a result of scenario planning:
No organization is immune from uncertainty; however, non-profit organizations can equip themselves to effectively navigate uncertainty by utilizing scenario planning. When facilitated by an expert, scenario planning will align your team on what’s coming at your organization and what you need to do to survive and thrive.
SME Strategy has conducted scenario planning and strategic planning exercises with non-profit organizations of all shapes, sizes, and industries. We offer in-person and virtual sessions that span from short workshops to 1.5 days in length – contact us today to inquire about how to bring this vital practice to your organization:
