Contract - June 2011 - (Page 60)
A tactical approach to planning for tomorrow and beyond
By Kay Sargent, IIDA, CID, LEED® AP, principal, IA Interior Architects
Before the economy spiraled downward in 2008, most companies exclusively focused on a strategic planning process to determine real estate goals. But strategic, goal-focused planning is by nature a linear thought process that can lead to a dead end. The ﬁnancial crisis and ensuing Great Recession caused forward-looking decision-makers to transition from strategic planning to scenario planning, which provides a more non-linear, tactical approach to doing business. Scenario planning provides multiple options for avoiding dead-ends and enables ﬁrms to achieve a new equilibrium when thrown oﬀ track, exercise ﬂexibility to handle changing circumstances, maximize return-on-investments, and minimize risk. The process also permits companies to allow for adjustments to employment options, expand paradigms about how to work, enable quicker decision-making, and increase organizational options. Also a structured process of thinking that anticipates the unknown future, scenario planning’s objective is to examine possible future developments that could aﬀect organizations, societies, or individuals, and provide direction that is proactive and optimistic, yet also defensive and even preemptive. This methodological approach deﬁnes salient possibilities and permits the assignment of probability to those possibilities with the objective of identifying and exploring useful plans of action (strategies) under various circumstances. Scenario planning takes into account the many forces driving change in the current business environment: politics, economic volatility, changing demographics, the integration of technology, sustainability, and the evolution of work. It also deals with the key challenges facing decision-makers at most organizations today: reducing costs, providing eﬀective environments, consolidating facilities, managing risk, maintaining and building brand, optimizing real estate portfolios, leveraging services and service providers, and demonstrating corporate responsibility. Such planning also helps ﬁrms respond to current trends and anticipate future trends. As a tactical methodology, scenario planning also prompts an organization to know itself in terms of corporate culture, survival needs, and stakeholders’ demands and expectations. An organization that wants to plan for the future will do more than “guesstimate.” Using scenario planning, it will prepare for and take advantage of opportunities for beneﬁcial change.
out the second scenario as the most appropriate for the ﬁrm’s situation and thinks it could work out like this: The ﬁrm’s lease will expire in four years. The CEO will exercise an option to lease an adjacent suite at a favorable rental rate. In the new suite, tenant improvement money and some cash reserves will be used to build out a new workplace that reﬂects employee responses to a series of surveys and workshops about how staﬀ works and would like to work in the future. The new suite design incorporates hoteling, ﬂexibility, mobile technology, and direct daylight views for all employees. If this design works (for example, productivity and service quality improve along with morale), the ﬁrm may expect an increase in the value produced, which will lead to higher revenues. The key is that there are deﬁned goals: improve productivity, improve morale, and enhance revenues. Each of these can be more tightly deﬁned through the application of metrics. For example, improve productivity by 5 percent, improve morale measured by fewer employees leaving within a year, and improve revenue by 7 percent. The CEO will also need to evaluate and measure the costs associated with the scenario against the goals that deﬁne success. Wise leaders must assume some risk and choose a scenario that appears to oﬀer the greatest likelihood of success. Reducing risk and increasing rewards are always the rational goal of any business plan. Scenario planning helps decison-makers to avoid the irrational by looking at future possibilities and avoiding decisions that could lead to the most negative consequences.
A Short Hypothetical Case Study Using Scenario Planning:
A services ﬁrm needs to improve productivity and employee morale and retention. In the current economy, with its existing staﬀ and work processes, the ﬁrm is just breaking even. The CEO recognizes that staﬀ morale is low and that customers are not satisﬁed with what appears to be a diminishing quality of services. The CEO must act within one ﬁscal year, otherwise, shareholders of this closely held ﬁrm may become dissatisﬁed with the ﬁrm’s ﬁnancial performance. With these simple facts, the CEO uses scenario planning to project and evaluate four scenarios:
• Scenario 1: Do more with fewer
• Scenario 2: Maintain current staﬀ levels but manipulate the tools and environment to enhance productivity. • Scenario 3: Reorganize and add staﬀ to create more productive service processes.
• Scenario 4: Do nothing and allow macro-economic improvements to trickle down through the organization. In the case study above, all of the scenarios will be treated seriously, but the CEO singles
This article is an excerpt from Kay Sargent’s White Paper “Scenario Planning: A Tactical Approach to Planning for Tomorrow and Beyond.” To read it in its entirety, please visit www.contractdesign.com/IAScenarioPlan.
contract june 2011
Table of Contents for the Digital Edition of Contract - June 2011
Contract - June 2011
Table of Contents
Exhibition: Neocon® Preview
Focus: Right in Tune
Focus: Formed to Function
Materials: Carbon Connexion
Practice: Scenario Planning
Blazing a Trail
Leap of Faith
Dollars and Sense
Trees & Terminals
Designers Rate: Milan Furniture Fair
Essay: Building Blocks of a Design Career
Process: Designing the Multigenerational Workplace
Contract - June 2011