Managing Change: Scenario Planning and Other Tools

1. Managing Change: Scenario Planning and Other Tools Author: Steve Fitzgerald, Vice President -- HR, Fairlane Credit, Ford Motor Company

2. Building a Change-Ready Organization • Pace and scope of change • Predicting change increasingly difficult • Smart organizations focus on being good at changing

3. Building a Change-Ready Organization • Managing Change • Microsoft example • Other examples?

4. Building a Change-Ready Organization • Sustainable competitive advantage is no longer possible for firms that lack the ability to manage change.

5. Building a Change-Ready Organization

6. Building a Change-Ready Organization • When asked about future roles for H.R., operating managers rarely mentioned strategic thinking, strategist, or change agent. (Human Resources Institute) • “There's a reason that more and more new H.R. executives come to the post with backgrounds in line management or consulting rather than from H.R.'s own ranks...(M)any people doing the work now can't cut it in the H.R. of the future. Clearly, companies need a place to think about the skills they need and will need, about executive development, about a way to focus on human capital. This is precisely why they should ask the do-or-die question of their human resource departments. The prospect of hanging, as Dr. Johnson said, is a sure way of concentrating the mind.” (Stewart 1996)

7. Building a Change-Ready Organization • The barriers to achieving the HR partnership model include: • H.R. professionals who can differentiate the strategic from the more operational and reactive aspects of H.R. jobs. • An understanding for, and role in, planning the growth of the business. The competencies that enable one to excel at contract negotiations or compensation and benefits administration do not necessarily prepare an H.R. professional to solve business problems. • A shift in focus from reacting to problems to improving operational effectiveness in the business (H.R.I. 1998).

8. Building a Change-Ready Organization • Everyone’s calling for HR to be “more strategic” • What does that mean? • How can it be achieved?

9. H.R.’s Role in the Execution of Strategy • Many well-conceived strategies are poorly executed • Southwest Airlines Vs. Western Pacific, ValueJet, People’s Express

11. H.R.’s Role in the Execution of Strategy • A large part of reason why organizations struggle to effectively execute their strategies is because of the failure to align their people processes with strategic intent. • Too often, H.R. leaders don’t know the “why”, just the “what.” • This is a systemic "disconnect" that causes many firms to struggle to implement their strategies.

12. H.R.’s Role in the Execution of Strategy • In order to align H.R. tools and processes with organizational objectives, H.R. professionals need to understand the strategic intent of the organization. • Accomplishing this objective will require greater involvement in the process of strategic planning.

13. H.R.’s Role in the Execution of Strategy • In order to align H.R. tools and processes with organizational objectives, H.R. professionals need to understand the strategic intent of the organization. • Accomplishing this objective will require greater involvement in the process of strategic planning.

14. H.R.’s Role in the Execution of Strategy • “First, H.R. should become a partner with senior and line managers in strategy execution, helping to move planning from the conference room to the marketplace. • “Second, it should become an expert in the way work is organized and executed, delivering administrative efficiency to ensure that costs are reduced while quality is maintained. • “Third, it should become a champion for employees.… • “And finally, H.R. should become an agent of continuous transformation, shaping processes and a culture that together improve an organization's capacity for change.” (Ulrich 1998)

15. Making Better Strategies • The discipline of scenario planning

16. Making Better Strategies • The discipline of scenario planning • “Those who pretend to know the future lie, even if they accidentally speak truth.” (Arabian proverb)

17. Making Better Strategies • The discipline of scenario planning • “Those who pretend to know the future lie, even if they accidentally speak truth.” (Arabian proverb) • Planning for change

18. Making Better Strategies • The discipline of scenario planning • “Those who pretend to know the future lie, even if they accidentally speak truth.” (Arabian proverb) • Planning for change • Building the organizational capability to change

19. To prepare for the future,imagine it.

20. SCENARIOS ARE... • Stories about the future that are never completely right or wrong. • A way to learn what we should do if a given future occurs. • Intended to challenge paradigms (mental models) and prepare us for action -- not predict the future. • Challenge the conventional wisdom

21. For Example... • Royal Dutch/Shell in early 1970’s. • Price of oil steady since WWII, however: • U.S. oil reserves almost gone • Western demand steadily increasing • OPEC maturing politically • Mostly Islamic states • Western support of Israel during Six-Day War (1967)

22. Where Scenarios Come in... • RD/S: “Even though we don’t really think it will happen, what if the price of oil exploded?” • What would our world look like? • What would we do? • What things would we do regardless of the price of oil?

23. Did RD/Shell avoid the punch delivered by OPEC? • No -- But RD/Shell was prepared for it. • Responded swiftly • Improved competitive position in a sustainable way

24. Scenarios: A Context for Exploring Combinations of Trends & Issues Trend/Issue Forecast Implication Action SOURCE: The Futures Group

25. Scenarios: A Context for Exploring Combinations of Trends & Issues Trend/Issue Forecast Implication Action Trend Implication Action Issue Implication Scenarios Trend Implication Action Issue Implication Implication Trend Action Implication Issue SOURCE: The Futures Group

26. WHY DO IT? • Develop Change-Readiness • Develop and re-assess business strategies • Lead into the future

27. Scenarios: “Not a tool for helping managers predict what will happen, but a means to explore what we should do if it happens.”-- Brian Marsh, RD/Shell

28. SCENARIOS WILL IDENTIFY: • Risks • Consider solutions before need arises • Opportunities • Move to take advantage • Shape the future

29. INTANGIBLE PRODUCTS • “Change-Readiness” • Broader mental models • Daily decisions reflect • Strategic direction • Awareness of future possibilities

30. “The last buffalo to the pond has to drink muddy water.” -- Vietnamese proverb

31. Bottom Line: • Be first to the pond • Increase Change-readiness • To meet business objectives • Anticipate/respond to change • Shape the future • Generate desirable change

32. Class Project • This is not a research project, it’s an “imagination project” • Read the scenario -- carefully • Imagine living in that world • Brainstorm implications • Best if done collectively

33. Class Project • Analyze people-management implications of the scenario. • What should the HR function do about them? • What are the threats and opportunities? • What should the strategy be?

34. Class Project • Bring groups together. What strategies make sense in most or all of the scenarios? • These are the robust strategies we want to pursue. • These are the strategies that “transcend” scenarios.