The Dynamics Behind Using Scenario Planning Enabling Innovation and Organizational Learning

Abstract

Organizations face challenges in volatile, uncertain, complex and ambiguous (VUCA) environments. It is vital to manage the change's rate and magnitude in new and different ways to stay competitive. Potential or existing VUCA environments are expected to create a context that requires more innovation and organizational learning. This thesis focuses on the phenomenon of scenario planning that can help organizations proactively plan for, react and adapt to VUCA forces if and when they occur. Scenario planning is a structured process for businesses to explore and think about the future. This research addresses how organizations can leverage scenario planning to innovate and learn more effectively. The first integrative essay proposes a novel typology of scenario planning benefits based on an extensive literature review. In addition, two qualitative case-based empirical studies were conducted. One focuses on the mechanisms between scenario planning and innovation within four organizations. The other focuses on the mechanisms between scenario planning and organizational learning within two organizations. Both case studies involved extensive interviews, coding, inductive analysis and cross-case comparisons. The novel typology adorned several benefits of scenario planning in an integrated model explained using systems theory. These benefits included risk, uncertainty, options analysis, strategic flexibility, complex decision-making, strategy testing and validation, innovation and organizational learning. The relationship between input, process and output benefits was explained. The research itself demonstrated how scenario planning supports the generation of innovative ideas. Idea generation is enabled by the proper structure, governance, people, process, integration, culture and engagement. External market context can also facilitate more innovative ideas to emerge from scenario planning, mainly when more change and disruption occur. However, a direct connection between scenario planning and the actual commercialization of innovative ideas was not found. Scenario planning also helps an organization emphasize organizational learning more. The findings uncover how continuous learning using scenario planning is enabled by executive leadership, systems thinking and connection, a culture conducive to learning, insight from action and collection, analysis, storage and usage of information. The enablers operate in a continuous and reinforcing learning cycle. These qualitative studies contribute a significant perspective on ‘how’ scenario planning influences aspects of both innovation and organizational learning, including related mechanisms, practical considerations, cross-case comparisons and a novel maturity assessment model. This new knowledge helps fill a gap in past academic research, paves the way for future research, and has the potential to shape managerial practice.