How Scenario Planning Can Support Non-Profits with Navigating Uncertainty

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.
  
  If you do not yet have a strategic plan, it’s important your team takes the time to align around what your desired future state looks like in 3 to 5 years ahead of starting scenario planning.
  
  And, whether you do or do not yet have a strategic plan, a key step in initiating scenario planning is to align on a focal question you will use in the process. Your focal question should provide a clear objective for scenario planning, ensuring everyone is working towards the same goal, and should help focus discussions and prevent wandering into irrelevant areas. Examples of focal questions include: "How can our organization thrive in the face of significant climate change impacts?" or "What are the potential future scenarios for our industry in the next decade?” or "What are the implications of widespread adoption of AI on our workforce in the next 5 years?"

Then work through this 4-step Scenario Planning process: 

• Step 1: Identify Driving Forces
  • Brainstorm a list of macro level PESTLE (Political, Economic, Social, Technological, Legal, and Environmental) trends that may impact the globe, your country, your region, your industry, and your stakeholders.
  • And/or develop a list of critical risks or external factors that could impact your organization's strategic direction or core operations. 
  • And/or identify specific instances, the implications of which your organization might need to explore together (i.e. “do/do not get awarded large grant.”)
• Step 2: Identify Critical Uncertainties
  • From the list of potential driving forces, reflect on which ones will have the greatest potential impact on your industry and/or organization. 
  • Select two of these as critical uncertainties and align around both extreme possibilities on the high vs low (or positive vs negative) ends of the spectrum.
• Step 3: Develop Plausible Scenarios
  • Now plot each of these on an X-Y axis to juxtapose two different critical uncertainties, leading to four quadrants with distinct scenarios. 
  • Discuss what the world external to your organization would look like in each of these potential scenarios (before discussing what your internal/organizational world would look like). 
  • Then, once you’ve discussed the external world, you can turn your focus inwards to reflect on how it would be to operate within this world (but don’t shift your discussions to actions just yet!)
  • Then shift your discussion towards the potential implications and challenges that your organization and stakeholders may face in each scenario, and discuss what actions you might take if you entered each quadrant. 
  • Discuss key success factors that exist across all quadrants as well as the ones that are unique to distinct quadrants.
• Step 4: Discuss Implications and paths
  • Then shift your discussion towards the potential implications and challenges that your organization and stakeholders may face in each scenario, and discuss what actions you might take if you entered each quadrant.
  • Discuss key success factors that exist across all quadrants as well as the ones that are unique to distinct quadrants.
    

• Consider discussing where you think you are right now within the quadrant, and then identify your most plausible scenario(s) that you might move towards.
  
  Then develop a Plan A and Plan B (and potentially C and D) courses of action that considers success factors across scenarios and individually within each scenario. 
• Consider identifying and aligning around critical warning signs or trigger points that will guide your team to shift from Plan A to Plan B (or even C or D). This will help you to ensure that you don’t just monitor risks, but also respond to them as needed.
  
  This offers a framework to adapt action plans to address commonalities between worlds and develop A/B options with clear warning signs and trigger points to customize and proactively adapt and respond based on the scenario they find themselves operating within (rather than urgently reacting without a plan). 

View examples and images, and learn more about

The 4-step Scenario Planning process 

Outcomes to expect from scenario planning & how this helps strategic thinking 

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: 

• It can support your leadership team with thinking outside the box and moving past previous situations or getting stuck in the current/past state to reflect on multiple possible future states by supporting your discussions around best and worst case scenarios and the worlds that fall between them. 
• The process helps remove rose-coloured glasses and may increase willingness to discuss risks, while also encouraging participants to remain forward-looking and solution-oriented. 
• This exercise and follow up steps can improve internal trust and buy-in toward your strategic direction from stakeholders such as your board and people, as well as external trust and buy-in from outward facing stakeholders such as government(s) or donors. 

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: