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Using
Futures Research Techniques in Strategic Planning: A Simulation
James L. Morrison and Robert G. Cope (reprinted from
Morrison, J. L. , & Cope, R. G. (1985). Using futures research techniques in
strategic planning: A simulation. Planning for Higher Education, 13(2),
5-9. ) Strategic
planning is now recognized as an improved form of college and university
planning (Keller, 1983; Mason, 1984). In comparison to long range planning,
strategic planning places more emphasis on the environment, the openness of
boundaries, and the interplay with other organizations. Strategic planning also
has given more emphasis to the gestalt and the concurrent pulling together of
soft and hard data to arrive at major directional decisions that contain
elements of timing, tone, texture, emphasis, rhythm, and contrast. Strategic
planning is usually characterized as outside-in planning. What could happen
"out there" in the future is a key element in strategic formulations. The concept of
strategic planning is relatively simple (see Figure
1). An organization has a mission or purpose. It resides in an
"environment" which presents opportunities and threats. It has
distinctive strengths and some weaknesses. Strategic choices are made
continually to adjust how the organization, given its mission, strengths and
weaknesses, responds to anticipated changes in its environment. And that is
where the simplicity ends. For example,
doing a systematic environmental analysis requires a "technology."
Mission analysis and organizational analysis are complex (Cope, 1981), as is
integrating mission review with environmental scanning (Cope, 1984). However,
there are several relatively simple
techniques developed in the futures research community that may be used to
enhance our ability to conduct an elementary environment analysis as part of the
strategic planning process. The purpose of this paper is to describe how 33
participants attending a six hour futures and strategic planning preconference
workshop at SCUP-19 did an environmental scan to identify a number of issues
facing higher education and then proceeded through several exercises designed to
rank and evaluate these issues. The
Hyatt Regency College: A Simulation We
formed the participants of our workshop into working groups, each representing
the planning committee of Hyatt Regency College (HRC). Each member of the group
was assigned a role on this committee, e. g. , Provost, Dean of the School of
Arts and Sciences, Dean of the School of Education, Dean of the School of
Business, Dean of Student Affairs, Director of Institutional Research, Chair of
the HRC Faculty Senate and the Director/Assistant to the President for Planning.
For
the purpose of the simulation, HRC was assumed to be a co-educational,
independent institution of 2500 students in Cambridge, Massachusetts. It
consisted of three bacculaureate degree granting schools (liberal arts,
business, and education), with one school (education) also granting a master's
degree.
We
explained that during the next three to four hours we would simulate an
environmental scan to identify trends or issues facing American higher
education in general, and then proceed through an exercise where we would
evaluate and rank these issues, and explore their implications for strategic
planning in HRC. The
Environmental Scan As
described by Renfro and Morrison (1983), one method of establishing an
environmental scanning activity is to have either the chair/coordinator of the
planning committee or an outside consultant interview each member of the
planning committee anonymously as to their perception of the most salient issues
facing the institution. These issues would be presented to the group as a whole,
and ensuing discussion would identify additional issues.
Given
that we did not have time to interview each member of the HRC planning
committee, we began our exercise by asking each work group to brainstorm a list
of issues and/or trends which could affect higher education in general and HRC
in particular. Among the economic issues and trends identified in this initial
scan were increased inflation and concomitant increases in the cost of
education, loss of federal support, a rapidly changing occupational structure,
increased unionization of faculty, increased competition from corporate and
proprietary schools, and increased competition of public and independent schools
for public support. This latter trend, of course, was viewed as resulting in
part, at least, from a projected decrease in the 18-24 year old age cohort by
1990.
Other
social/demographic trends identified were the aging society (and college
faculties), an increase of the proportion of minorities in the American
population and concomitant change in the age/sex/ minority composition of
student bodies, a continuing decrease in the quality of high school graduates, a
national concern for accountability, a decrease in public support for education,
particularly liberal arts education, increasing affirmative action pressures, an
increasingly litigious society, and increasing rifts between faculty and
administration. Technological trends noted included the increasing reliance on
telecommunications and computers for instruction and administration. Political/legislative/regulatory trends noted included increased regulatory
control from legislatures and from accrediting associations.
Before
proceeding to the issues evaluation/ ranking stage, we noted that the list of
issues developed by the work groups could constitute the basis for establishing
a scanning taxonomy for HRC. That is, each member of the committee would be
assigned certain information resources to scan in order to provide documentation
of the direction and intensity of issues or trends identified in the taxonomy.
Of course, if such a scan identified new issues or trends, the committee could
include the new issues in the taxonomy. The utility, of course, in having major
decision makers on the planning/scanning committee is that the members of the
committee begin to view each item of information with the question, "What
does this mean for my institution?"
Ranking
Issues. In "real life," an
environmental scanning activity would produce somewhere between 70-120 issues or
trends which offer threats or opportunities to the institution. This is too
large a number to handle within a short time frame. There are several techniques
which may be used to rank and prioritize
the issues. In our workshop we used two techniques. First, we arbitrarily
selected five issues or trends identified by each work group. We then asked that
they independently and anonymously evaluate the importance of each issue or
trend on a scale of 1 to 10. The group recorder then added the resulting scores
for each issue. This technique led to an initial group assessment of ranking the
selected issues vis-a-vis each other. It also identified variance in individual
opinion with respect to the importance of each issue, i. e., some individuals
evaluated an issue low in importance and others evaluated it high. This led to a
discussion of the reasoning undergirding the variance in scores. It was stressed
that the analysis of discrepancies should begin with the question, "Can
anyone on the committee explain why issue 'x' would receive a '2'?" The
importance of this protocol was to focus attention on the issue, and not connect
this attention with any one personality.
Such
discussions led to redefinition/clarification of the issue, for as often
happens, some committee members may not initially have the same interpretation
of the definition of the issue. Or there could be genuine disagreement over the
importance of the issue. In any event, the data presented serve to stimulate
important discussion vis-a-vis the issues.
When the discussion ran its course, another evaluation of the issues occurred. In some cases, the rank ordering of perceived importance changed, or a bimodal distribution of responses became more apparent. In any event, the two-round Delphi of evaluating issues served to highlight the most important issues facing Hyatt Regency College. The Probability-Impact Chart Another technique to evaluate
and rank issues is the probability-impact chart. This chart requires that the
committee first estimates the probability that an issue emerges, or that a trend
will reach a certain level during some future time period, say within five or
ten years. Next, assuming that the issue emerges, or that a trend reaches a
certain level, the committee must assess the degree of positive and the degree
of negative impact on the institution. This requires that each individual ask
the question, "What is the degree of positive impact of this event on my
institution?" and "What is the degree of negative impact of this event
on my institution?"
Estimating
the probability that an event will emerge may be relatively straightforward. If
the scanning process has identified a particular event (that is, something that
will happen or not happen in such a way that it can easily be verified). For
example, the United States replaces the current income tax system with a flat
tax. This sharp, clearly defined, verifiable event is one in which, while
opinions may differ, the question being asked is clear. If, on the other hand,
the scanning process identifies a broader issue that does not have this specific
event focus, it may be difficult to define
when an issue has emerged and when it has yet to emerge. In essence, an issue
emerges when it is recognized by a broader and broader spectrum of the society
and, in particular, by those whom it will affect.
The
next questions concern evaluating the positive and negative impacts of the
emerging issue or event on the assumption that it actually does occur. Morrison,
Renfro, and Boucher (1984) advocate using a scale such as zero to ten to provide
a range for the answers to this question where zero is no impact, five is
moderate impact, and ten is severe impact. This question and the probability
impact question can be combined in a single chart that displays a probability
impact space with positive and negative impacts on the vertical axis and
probability from zero to one hundred on the horizontal axis. This chart can be
used as a questionnaire in which the respondents record their answer to the
probability and impact questions by placing a mark on the chart with the
coordinates of their opinion about the probability and impact of the issue. When
all of the participants have expressed their opinions, all of the votes can be
transferred to a single chart to show group opinion. A sample chart with group
opinions is shown in Figure
2. Note that respondents differ in their degree of consensus vis-a-vis their
perception of the positive and the negative prospects of this event. That is,
there is relatively good consensus about the positive impact, whereas there
appears to be no consensus about the negative impact. In this case it may be
useful to return the group opinion to the individual participants for further
discussion and reevaluation of the issue. This process of anonymous voting with
structured feedback is known as Delphi. Anonymity can be extremely useful. For
example, in one study, all of the participants in the project publicly supported
the need to adopt a particular policy for the organization. But when asked to
evaluate this policy on the probability-impact chart anonymously, the
respondents indicated that though they believe the policy was likely to be
adopted, they did not When
repeated reevaluations and discussions do not produce sufficient consensus, it
may be necessary to redefine the question to evaluate the impact on particular
subcategories of the institution, such as impact on personnel, or finance, or
curriculum, or faculty, etc. As with all of today's judgmental forecasting
techniques, the purpose here is both to produce useful substantive information
about the future and to arrive at a greater understanding of the context,
setting, and framework of the evolving future.
The
most popular method of interpreting the result of a probability impact chart is
to calculate the weighted importance-both positive and negative for each event.
This is the product of the average probability and the average importance. The
events, issues, and trends are then ranked according to this product, i. e. ,
their weight importance. Thus, the event ranked as number one is that with the
highest combined probability and impact. The other events are listed in
descending priority according to their weighted importance.
Ranking
the issues according to weights calculated in this manner implicitly assumes
that the item identified in the scanning is indeed an emerging issue -that is,
one which has an element of surprise. If all of the items identified in scanning
are new and emerging and portend this element of surprise (that is, they are
unknown to the educational community or, at least, to the community of the
institution now and will remain that way until they emerge with surprise and the
potential for upset), then the strategic planning process would do well to focus
on those that are most likely to do this and to have the greatest impact.
If,
however, the issues are not surprises, then another system of evaluating,
ranking, and prioritizing the events and issues will be necessary. For example,
if the entire community knows of a particular event and expects that it will not
happen, then this low event probability will produce a low event priority. Yet, if
the event would in fact occur, then it would be of great importance. The
surprise then is in the occurrence of the unexpected. The key here is the upset
expectation. It may be just as much of an upset if an item that everyone expects
to occur does not in fact happen. Thus, the evaluation of a probability-impact
chart depends on another dimension-that is, one of expectation and awareness.
The probability impact chart is used with a series of events that are known to
the community. The most important might be those of high impact and high
uncertainty, that is, those centered around the 50% line. These are the events
that are as likely as not to occur and portend an element of surprise for some
portion of the community when they happen or do not happen. Morrison, Renfro,
and Boucher (1984) note that emerging issues, events, and trends that are ranked
according to their weighted importance have a built-in assumption that should
usually be challenged -that is, the ranking assumes that the administrators and
the institution will be equally effective in addressing all of these issues.
This assumption is almost certainly false, and, at the same time, seldom of
great importance. Suppose that the top priority issue is one on which the
institution could have little influence and, then, only at great cost. If a
lower level item, one on which the institution could have a significant impact
with a small investment of its resources, it would clearly be foolish to
squander great resources for little advantage, when great advantage could be
obtained for a much smaller investment of these resources. Thus, in addition to
the estimation of the weighted importance, an evaluation needs to be made of the
extent to which ' the event might respond to institutional actions of various
costs and difficulty. The cost-effectiveness ratio measures the relative
efficiency of alternative institutional actions; actions which are expressions
of strategy. This is especially evident where the ratio differences are small.
However, if the emerging issues are competing for the same resources, the
effectiveness response ratios will be essential in guiding the effective use of
the institution's limited resources.
Using
the techniques described above, each HRC planning committee ranked five issues
identified by the workshop directors, again using the two round Delphi method.
The specific issue events which were identified as first priority were that by l
990: 1) HRC would have a 700 SAT average; 2) the percent of 18-year-olds in
Massachusetts would decline by 40%; 3) that 40% of all business school graduates
will be accountants; 4) that there will be a 30% decline in liberal arts majors;
and 5) that 80% of all information sources will be electronic.
Impact Network The next step in our workshop
was an issues analysis using the impact network techniques. The impact network
method was derived from the concept of "relevance trees," which are
essentially a graphical presentation of an outline of a complete analysis of an
issue. An impact network is a brain-storming technique designed to identify
potential impacts of key events on future developments. An
impact network is generated by identifying the possible effects of a given
specific event. Such an event might be "tenure is abolished" or
"Federally-sponsored Student Financial Aid is cut in half," or
"all professors must be certified to teach in colleges and universities.
" When the candidate issue has been selected and sharpened into a brief,
clear statement, the group concerned with the issue is ready to begin to form
the impact network. The procedure is quite simple.
Any impact that is likely to result
from the event, whether negative or positive, is an "acceptable impact.
" The question is not probability, but possibility. With the initial event written in the middle of the page, each
first-order impact is linked to the initial event by a single line.
When five or six first-order impacts have been identified or when the
space around the initial event is occupied, the process is repeated for each of
the first-order impacts. Again, the
question is what are the possible impacts if this effect were to occur.
These second-order impacts are linked to their first-order impacts, or as
far as the group would like to get. Typically,
third- and fourth-order impacts are sufficient to explore all of the significant
impacts in the environment of the initial event.
Usually a group will identify several feedback loops in which a
fourth-order impact tends to increase or decrease a third- or a second-order
impact, etc. The value of impact
networks lies in their simplicity and in their potential to identify a wide
range of impacts very quickly. If
more impacts or higher-order impacts need to be considered, the process is
repeated.
An
example of an impact network developed in the SCUP-19 workshop is depicted in Figure
3, the impact of having an average SAT score of 700 in the entering HRC
freshman class. The initial impact
of the event will be a restructured curriculum, a change in the placement of
graduates, a new institutional image and increased or maintained enrollment.
Restructuring the curriculum would imply increased remedial/developmental
offerings and a change in faculty assignments, which in turn would lead to
faculty disenchantment (an event which might also follow the news of the average
SAT score!). A new institutional
image would lead to the loss of alumni support (and, thereby, loss of revenue
from that source), to a geographic constriction of the market, and to a further
change in the composition of the student body.
The third-order impact from the latter event would be increased need for
financial aid, more counseling and other support services, all of which imply
increased costs for HRC.
A completed impact network is often a very revealing document. In one sense, it serves as a Rorschach test of the organization because the members of the group are most likely to identify impacts highlighting current areas of concern. In another sense, by trying to specify the range of second, third, and fourth-order impacts, new insights into the total impact of a potential development can be identified. For example, while an event may stimulate a majority of small, positive impacts in its first-order impacts, these first-order impacts may stimulate a wide range of predominantly negative second-order impacts that in total would substantially reduce if not eliminate the positive value of the first-order impacts. Feedback loops may promote the growth of an impact that would far outweigh the original estimate of its importance. Discussion The concept of strategic planning is rather straightforward, and differs from conventional long range planning by focusing on detecting signals of change in the organization's environment and then using this information in conjunction with analyses of the organization's mission, strengths, and weaknesses in determining strategic choices. Although the technology of environmental analysis can be complex (see Morrison, Renfro, and Boucher, 1984), some of the methods used in this technology are relatively easy to learn and use. Specifically, it was possible within several hours to establish a simple environmental scanning taxonomy and identify a number of issues facing colleges and universities today. Of course, a more elaborate taxonomy and concomitant scanning system would take substantial time to establish and operate (Renfro and Morrison, 1983), but our experience in the SCUP-19 workshop indicates that it is possible to learn the principles quickly. So, too, our experience in the workshop indicates that it is possible in a relatively short period of time to learn how to 1) use probability impact charts in ranking and evaluating issues and 2) use impact networks to aid us in thinking through the implications of those events or issues identified in the environmental scan and evaluated in the probability impact charts. Such analyses are necessary in order for decision makers to make informed strategic choices. James
L. Morrison is professor of education at the University of North Carolina at
Chapel Hill. Robert G. Cope is
associate professor of education at the University of Washington. References Cope, R. G. Strategic
Planning, Management and Decision Making. Washington,
D. C. : American Association for Higher Education, 1981. Cope,
R. G. "A Contextual Model to Encompass the Strategic Planning Concept:
Introducing a Newer Paradigm. " Paper presented at the 19th Annual Meeting
of the Society for College and University Planning, Cambridge, Massachusetts,
July 1984. Keller,
G. Academic Strategy: The Management Revolution in Higher Education.
Baltimore: Johns Hopkins University Press, Mason,
T. R. "The Search for Quality in the Face of Retrenchment. " Paper
presented at the 19th Annual meeting of the Society for College and University
Planning, Cambridge, Massachusetts, July 1984. Morrison,
J. L. , Renfro, W. L. and Boucher, W. 1. Futures Research and the Strategic
Planning Process: Implications for Higher Education (ASHE/ERIC research
report number 7). Washington, D. C. : Associations for the Study of Higher Education,
1984. Morrison, J. L. (In press).
"Environmental Scanning as a Tool in Institutional Renewal. "
In R. M. Davis (Ed. ) Leadership and Institutional Renewal (New Directions in
Higher Education Number 49). San
Francisco: Jossey-Bass. Renfro,
W. L. & Morrison, J. L. "The Scanning Process: Getting Started. "
In J. L. Morrison, W. L. Renfro, W. 1. Boucher (Eds. ). Applying Methods and
Techniques of Futures Research (New Directions in Institutional Research Number
39), (pp. 5 - 20). San
Francisco: Jossey-Bass, 1983. | |||
