“Applying Organization Development Tools in Scenario Planning” by T.Marshall

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Table of Contents

Organisational Development interventions
Overview of OD
Organizational Setting
Main Steps
OD in Practice
Conclusion
References

Scenario planning is one of the most effective system tools of strategic management in general and strategic analysis in particular. As it is implied from designation, scenario planning constructs alternative options of the future development of the external environment of the organization, which allows the managers and the heads of the organization to conduct an analysis and make strategic decisions in the conditions of uncertainty. In that regard, the article “Applying Organization Development Tools in Scenario Planning” by Gary N. McLean and Toby Marshall Egan is devoted to the methods of facilitating scenario planning as organizational development’s interventions. This paper critically reviews the aforementioned article in terms of its arguments and contributions for the theoretical framework of organizational development and strategic management.

The basic idea of the article is concerned with analyzing the basic concepts of scenario planning as an intersection with organizational development (OD) interventions. The intersection is based on the latest definition of OD and scenario planning, specifically the intuitive approach, and the particular conditions in which scenario planning can be the most beneficial. Accordingly, the intersection can be assessed from the perspective that OD’s definition mainly concerns a process or an activity to achieve particular goals such as enhanced knowledge, expertise, income, productivity and etc, while scenario planning can be seen as one of the processes, which according to OD definition are abstract terms.

Additionally, the article follows with specific steps which are implied in the process of scenario planning, although, as stated earlier, they are in the context of OD interventions. In that regard, the authors selected OD tools that are the most relevant to the case of scenario planning. The steps are also processes through which the organization must come up with certain outcomes, which in this case are the scenarios and their responses. Thus, the authors follow with guidelines on how to establish the priorities among the received feedbacks.

Assessing the article it should be noted that the authors attempted to put the perspective on how this should be done at the beginning of the article, quoting Schein, who stated that “the biggest impact on the evolution of OD as a field… was the result of the actual experiences that individuals had as consultants to managers in real organizations.” (McLean and Egan, 2008) Thus, the presented aspects should be view as merely guidelines, which they are, because of their abstractness. That is to say, scenario planning is not only intersecting with OD, but also with other aspects of organizational management. For example, system thinking, which is one of the five disciplines presented by Senge in his theory of the learning organization, which is now also a part of OD. Accordingly, many aspects such as group process and team building can be seen as parts of HR management, which was stated by the authors, as “OD has, for some time, been viewed as a subset of human resource development”(McLean and Egan, 2008)In that regard, the abstractness of the presentation can be explained by the similarity of many aspects in that field, whereas it does not explain the little attention paid for the scenario planning, which is a major part in the article.

Accordingly, one of the beneficial areas for strategic planning, which specifically should be considered at the time when technological advancements can be seen as a competitive advantage while operating in dynamic and unpredictable environment, is the promotion of innovation. The article might have referred to such area pointing to “internal challenges perceiving or creating new opportunities” and “anticipated or recently occurring organizational change.” (McLean and Egan, 2008) Nevertheless, the context in which scenario planning can be used to promote innovations might have a wider implementation, specifically with the possibility of exogenous shocks. Examples of exogenous shocks that might affect the organisation include, but not limited to “Unpredictable supply chain interruptions, abnormal weather events, major global economic disruptions, cyber security failures, and the risk of physical attacks on high profile company assets.” (Worthington et al.) In that regard, scenario planning can be seen as proactive measure to recognise and exploit new opportunities to find innovative ways to reposition the strategy of the company.

In other sections the authors succeeded in providing the core of any organizational interventions, which is learning. In that regard, the integration of learning in scenario planning is based on that “a core goal of any planning system is to re-perceive the organization and its environment”…as “[t]he ability to re-perceive requires that individuals and groups learn something new about the organization and its environment as well as to raise up the present and past perceptions of the organization”. (Chermack, 2005)

Accordingly, the definition of scenario planning implies some controversy regarding its methods, where it does not point to the way scenario planning should be implemented and the methods of its utilization. In that regard, the origins of modern scenario planning, the examples of which is the USA and France centres for scenario techniques development which emerged in 1960s(Bradfield et al., 2005), outlines the form of scenario planning that can be defined more as a simulation. Thus, taking the examples of the first scenario planning implementations, in addition to Chermack’s research, an important aspect should be mentioned which goes beyond predicting the possible future outcomes for the organization’s external environment., i.e. making a decision regarding which course to follow. Thus, the challenge is “providing the decision maker with an adequate amount of the right information at the right time.” (Chermack, 2005) In that regard, McLean and Egan’s article showed that the context of OD is not in the process of decision making, rather than the process of providing the right information so that the decision maker can choose the right course for the company’s further development.

Additionally, it should be stated that there are many cases of low predictability, which can be caused by inappropriate framing, cognitive and motivational biases, and inappropriate motivation of causality. In that regard, the process of making decisions in the conditions of low predictability requires that the methods should have characteristics among which avoiding overconfidence in a single scenario and identifying the uncertain characteristics that have the greatest potential impact. (Wright and Goodwin) The latter can be of great importance especially in the context presented in McLean and Egan’s article, i.e. value voting as a part of priority development. (McLean and Egan, 2008)

Dialogue, as a method of developing scenarios also has vital importance that might be underestimated in the context of OD. Dialogue, in that regard, can be considered as an informal strategic conversation, the perception of which was outlined by Chermack as an important factor in scenario planning efforts. In defining the dialogue, as a tool for explaining and justifying one’s position, other aspects should be considered such as the requirement of the effective strategic conversation. Van der Hejden outlined four of the requirements for the strategic conversation, such as: 1) a common language, 2) alignment of ideas, 3) willingness to engage in rational argumentation, and finally 4) the evolutions of ideas inside the organization.”(Chermack et al., 2007) Additionally, a research conducted by Chermack also pointed out to that participating in scenario planning might positively change the perception of own communicative skills.

Finally, one of the weaknesses of the article can be seen in limiting the challenges of scenario planning to those mutual with OD. In that regard, considering the nature of the article in presenting general guidelines, an expansive overview would have been beneficial to the flow of author’s arguments. Although other challenges that might be additionally stated are also related to the aspect of uncertainty, which were mentioned by the authors, the expansion of their analysis might point out to the common pitfall’s that might arise when assessing scenario planning. For example O’Brien, the author of “Scenario planning – lessons for practice from teaching and learning “, identified five pitfalls for teaching /learning scenario planning, which are: “(1)predictability of factor choices, (2) predictability of theme selections (3) focus on current/high profile issues, (4) typical implicit assumptions, and (5) unimaginative presentation.” (Wright et al., 2009)

In conclusion, it can be state that the article discussed in this paper presented a comprehensive insight on the way scenario planning and organisational development can interact. In that regard, the comprehensiveness of the narration can be seen in presenting the material with an abstract approach, and thus omitting various points. The importance of such points might be argued, especially considering the different approaches presented in the literature regarding scenario planning, but nevertheless other points lies in the essence of scenario planning. In that sense, the presented guidelines might serve as an introduction for understanding OD interventions for scenario planning, whereas further investigation in that subject will require reviewing the literature related to both scenario planning and organisational development. Additionally, one of the finest points quoted in the article is the contribution of the experience in developing a theoretical framework. It could be said, that in the light of the dynamic changes in the business environment, there might be different individual factors which are individual to each organisation. In that regard, each company, assuming the availability of a solid theoretical background can derive their own contribution to the field organisational development and scenario planning, and in such way creating case studies for practical study.

Organisational Development interventions

Addressing the aspect of the organisation development, a particular question might contribute to understanding the essence of that notion. Why different companies with approximately equal conditions achieve completely different results: some companies prosper, some have average success, and other companies fail. In order to understand the answer to such question, the role of the organisation development should be examined. In that regard, this paper analyzes organisation development and its role in terms of its interventions, addressing the contextual issues that should be considered during planning, conducting and evaluating these interventions.

Overview of OD

The essence of organization development, its role, means and tools can be understood through one of its many definitions, where organisation development (OD) is an effort that is planned, organization-wide, and managed from the top, “to increase organization effectiveness and health through planned interventions in the organization’s “processes,” using behavioral-science knowledge.” (Beckhard, 2006) From the definition it can be implied that OD represents a long-term work to raise the organisation’s capability to innovate and resolve occurring internal and external changes. In that sense, behavioural-science knowledge can be implemented through established groups during planned arrangements in which these ‘efforts’ will be managed. Additionally, it should be noted that organisation development can be sometimes used synonymously with the term organisation change. (Cooperrider and Sekerka, 2006)

Organizational Setting

The organizational setting will be given through the example of a company “X” working in the working in the sphere of logistics with many affiliations in the major cities in the country. The company “X” is a fast growing company which natural development resulted in an increase in staff resulted in opening new departments. In that regard, the planning process is concerned with problems rather than opportunities. In that case the old management system, where all the business processes were handled by the top management started to malfunction due to the increase in the operational tasks. The results might be reflected in the quality of the products, complaints of the service quality, and employees’ dissatisfaction. In that regard, in addition to establishing the goals of the changes, the efforts directed toward these changes have to include the whole organisation, rather than the HR department, and they should be “related to the organization’s mission.” (Beckhard, 2006)

Main Steps

The first main step in OD is planning, i.e. “a systematic diagnosis of the organization, the development of a strategic plan for improvement, and the mobilization of resources to carry out the effort.” (Beckhard, 2006) In that regard, one of the issues to consider is “the recognition of a performance problem or opportunity” (Joan Ernst van, 2007), according to which a corresponding direction of development will taken.

The process of assessment is also important, as it is the process where information is being collected and feedback is given regarding the possible domains. Assuming that OD is performed by an external consultant, an important issue to consider is building a good relation with the internal change agent.

Following the planning process, another issue to consider is selecting an appropriate model for change. Paralleling models with conducting the change, a model for change can be considered as a “simplified representation of the general steps in initiating and carrying out a change process.” (Rothwell et al., 2005)

Additionally, it should be noted that the cornerstone of any organisational changes is the initiatives of the top management. As it was stated in the definition of OD, “managed from the top”, it should be said that based on the congruence, clearness, and the regularity of the top management’s guidelines, it depends to what degree the changing process will be purposeful.

Finally, the evaluation of the intervention is one of the most important steps occurring in all process models, as it serves as a justification of the investments in OD interventions. “Evaluation provides the evidence on which to base decisions about maintaining, institutionalizing, and expanding successful programs, and modifying or abandoning unsuccessful ones” (Thomas and Peter, 2005)

OD in Practice

Organizational Issues

The first issue relevant to OD interventions that might affect the change process is centralization. Whether the company is high or low on centralization can be seen as an influential factor on the process of implementing OD interventions. The centralization might affect the interventions in terms the autonomy of each department in the company, i.e. planning, warehouse, communication and etc. The provided setting imply high centralization where each department is dependable on headquarter. Thus the directions of the interventions should be managed from top to bottom. Accordingly, an organization with high centralization will be dependable on the hierarchy of the management and accordingly on the type of interventions applied, i.e. strategic or operational interventions.

The second issue relevant to OD interventions that might affect the change process is formalization. Whether the company is high or low on formalization accordingly might imply the company’s growth level and its stage of development. The formalization can be seen through the process of following specific rules and procedures through it working process. In the provided setting of the company “X” the formalization is low, where each department is rather flexible with each manager of department being responsible for managing employees. Accordingly, the centralization of the company and its low formalization, is apparent through the influence of powerful figure, i.e. the head of the company, where coordination is informal, dictating the flow and the goals, leaving managers to utilize their own rules in their departments. In that regard, such approaches imply that the company is still relying on the model that was utilized at the company’s foundation. Thus, OD interventions can be affected by such factor, where there will be difficulty in implementing formal interventions, in informal environment.

The third issue relevant to OD interventions that might affect the change process is communication. The setting of the company implies that the communication between the companies various departments being performed through electronic means. In that regard, the company utilizes a corporate portal, where all documentation exchange is occurring through a computer interface, forming a network without attachment to geographical location. In that regard, the lack of personal interaction affects the ability for the change agent to control the changing process. Accordingly, such factor will subsequently lead to that the evaluation of the change implementation will also be general relying mostly on financial statements and statistical data. In that regard, changes related to HR satisfaction and control will be difficult to assess.

The fourth issue which is derived from the previous one is the information system. The setting of the company “X” provides an efficient information system which not only serves as a portal for customers and partners, but also stores all the information regarding the document exchange in the company, forming a knowledge base. The information system can be related to OD interventions in terms of its provision of a necessary data to assess the problem, assess its urgency, and accordingly select proper model for change. In that regard, this factor will facilitate the diagnosis process, where high-level view of the company’s problem will be obtained. Additionally, the availability of the knowledge base right from the company’s foundation will help monitoring the performance of the company in chronological order for the past period, along with real-time monitoring during the process on implementing the interventions. In that regard, a higher level of flexibility will be added to the transformation process, allowing for the intervention to be corrected and adapted accordingly.

The fifth issue relevant to OD interventions that might affect the change process is the resistance to change. Mostly a factor associated with the employees, including top management, the resistance to change might be caused by several factors such as the following: 1) the attachment of the employees to the existent organizational design and culture, 2) Skepticism regarding the reasonability of the change, 3) the fear of not fitting into the new organizational design (e.g. staff reduction, position replacement, salary and etc) In that regard, during the pre-transformational change the issues of resistance should be addressed. In the setting presented through the example of the company “X”, despite the fact that the company has been in the market only for two years, the company has already established a certain culture for the employees and thus there is a possibility for facing mostly cognitive resistance at the first stages of implementing OD interventions.

The last issue relevant to OD interventions that might affect the change process is the leadership of the transformation leader. Such factors affecting the leadership of the transformation leader is the fact that that the leader was promoted from outside of the company and replaced an existent executive manager. Additionally, a factor influencing the leadership is the skills of the transformation leader reflected through the experience and the success of previous OD efforts with other companies. In the presented setting of the company ”X”, the transformation leader was promoted from outside of the company, while his credentials include working in such companies as “Y” and “Z”, in which in addition to successfully implementing OD interventions, the aforementioned companies, belong to the same sector of the industry, which imply his understanding of the specifics of the business. In that regard, the replacement of a manager from within the company with an “outsider”, resulted in short-term resistance, but nevertheless, during the pre-transformation period it was possible for him to motivate and mobilize the company behind the transformation effort by gathering a supportive group around him.

Conclusion

In conclusion, it can be said that OD interventions are an essential part of any organisation. In that regard, answering the question asked in the introduction of this paper, it might be said that companies with equal starts differ in the achievement level due to various small details that should be considered during the company’s development. In that regard, companies might be similar in the finances, industry, and entry to the market. Nevertheless, different factors, as the ones indicated in the paper positively and negatively affect further development of the company, and accordingly affect the OD practice and its intervention. Finally, it should be stated that in current conditions, there are no company that is capable to successfully function without organisationally developing.

References

BECKHARD, R. (2006) What is Organization Development. IN GALLOS, J. V. (Ed.) Organization development. John Wiley and Sons.

BRADFIELD, R., WRIGHT, G., BURT, G., CAIRNS, G. & VAN DER HEIJDEN, K. (2005) The origins and evolution of scenario techniques in long range business planning. Futures, 37, 795-812.

CHERMACK, T. J. (2005) Studying scenario planning: Theory, research suggestions, and hypotheses. Technological Forecasting and Social Change, 72, 59-73.

CHERMACK, T. J., VAN DER MERWE, L. & LYNHAM, S. A. (2007) Exploring the relationship between scenario planning and perceptions of strategic conversation quality. Technological Forecasting and Social Change, 74, 379-390.

COOPERRIDER, D. L. & SEKERKA, L. E. (2006) Toward a theory of Positive Organizational Change. IN GALLOS, J. V. (Ed.) Organization development. John Wiley and Sons.

JOAN ERNST VAN, A. (2007) Design Science and Organization Development Interventions: Aligning Business and Humanistic Values.

MCLEAN, G. N. & EGAN, T. M. (2008) Applying Organization Development Tools in Scenario Planning. Advances in Developing Human Resources, 10, 240-257.

ROTHWELL, W. J., SULLIVAN, R. & MCLEAN, G. N. (2005) Practicing organization development: a guide for consultants, John Wiley and Sons.

THOMAS, C. H. & PETER, F. S., JR. (2005) The Evaluation of Organization Development Interventions: An Empirical Study.

WORTHINGTON, W. J., COLLINS, J. D. & HITT, M. A. Beyond risk mitigation: Enhancing corporate innovation with scenario planning. Business Horizons, In Press, Corrected Proof.

WRIGHT, G., CAIRNS, G. & GOODWIN, P. (2009) Teaching scenario planning: Lessons from practice in academe and business. European Journal of Operational Research, 194, 323-335.

WRIGHT, G. & GOODWIN, P. Decision making and planning under low levels of predictability: Enhancing the scenario method. International Journal of Forecasting, In Press, Corrected Proof.

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