Read time: 5 mins
How To Think About Strategic Projects
Digital transformation, business innovation, and new customer needs have made it vital for professionals to adapt their project strategies to accommodate the complexity and uncertainty associated with constant change. Trudi Lang, Senior Fellow in Management Practice at Saïd Business School, University of Oxford, speaks about the shift towards crafting robust strategies that can withstand emerging market forces.
Transcript
Every strategic project has a set of assumptions about the future context underpinning it. This is what we might call a scenario, for example, but a set of parameters of thinking about the future that makes sense for the strategic project. Some of these may be some of the reasons why the project got the green light in the first place. The project is actually addressing these sorts of future changes. And so, it’s really important for us to understand that there is a scenario and there is a set of assumptions sitting under every strategic project.
But as we know, the world changes and it can change quite dramatically. So, if you were a taxi company, for example, about say 15 years ago and you were thinking of merging with another taxi company, you’d be making a judgment about, “Well, what’s the future of the taxi industry?” to see whether that particular merger was a good idea or not. And so, whether you considered things like changes in social values, in technologies, deregulation – the sorts of things that led to Uber and similar sorts of companies coming into the whole taxi space and disrupting it – would have been some key questions you would have been thinking about that would underpin that decision as to whether you are going to merge with the taxi company or not. So, your view of the future is consequential in thinking, really, about these big strategic projects.
So, this brings me to my second point, and it becomes very difficult dealing with the sort of novelty and the uncertainty in this sort of emergent complexities, to really, to try and predict them. It’s not useful in that sort of context.
So, if you feel the data that you have is going to be relevant for the future, then perhaps you can forecast and model. But that, I think, is very hard in these sorts of emerging complexity situations. I mean, climate change is a classic example of this: What will be the impact of climate change? I mean, we don’t have data really from the past that helps us be able to predict or forecast exactly the impact of that. In those contexts, then, prediction doesn’t become very helpful. And so, we’re much better off focusing then on how do we build in a robustness to our strategic projects that they actually can deal with a whole range of different things that may happen in the future. So, what we’re doing with these emergent complexities in strategic projects is shifting from trying to predict or forecast the uncertainty to focusing on making the projects as adaptable and building in a robustness with them.
And so, what scenario planning is about is you have a set of assumptions, about the future sitting under your current strategic project, and then we think, “Well, what are a couple of other scenarios about how the future context could unfold? How could the future unfold that’s equally plausible to what we currently understand?” And that gives us some contrast then to really think about, “Well, how is that different from what we are assuming?” And that helps us learn about what we need, might need to do in terms of changing the project to be more robust. And so, what we’re doing then is taking the strategic project and looking at it in the context of each scenario and seeing what we learnt from that.
And a really good analogy of this is the aircraft manufacturers, and they have a thing called wind tunnel. And what they do is they put the model of the plane in front of a wind tunnel and the wind tunnel is simulating all sorts of weather conditions because what they’re wanting to do is to test the plane, to make sure it’s robust, that it can fly through every weather condition that it might come across.
So, this is a really good analogy for scenarios. What we use is the scenarios become the wind tunnel for us to actually then put our strategic project in each of the scenarios, and to ask the questions about what do these conditions mean for our particular project: Are there learnings here for us that we need to adapt the project in a certain way to be much more robust, to deal with some sort of change that we’re starting to see?
But also, the scenarios are different frames of the future. So, they can also open up all sorts of new opportunities and new options because they give you a new way of seeing the world and seeing the future. And that can often bring innovation into a strategic project as well.