Accounting for Externalities in Strategic Planning [VIDEO]

The future is hard to predict however if you plan using scenario planning you can account for numerous scenarios.  In this short video, Daniel Carter will discuss externalities in strategic planning.  Watch as Daniel unpacks this topic.

Video Transcription:

I’m Daniel Carter and I want to talk today about dealing with some of the externalities in strategic planning. You know, when we work with clients in developing strategic plans, oftentimes, they find it much easier to deal with the internal analysis than the external analysis. After all, internal data is usually more readily accessible, we understand it better, maybe we know ourselves better than we know what’s going on in the world around us. And, for some of us, we feel like we can control more what’s going on inside the organization than outside.

And while certainly an internal perspective is important in developing a strategic plan, after all, we need to know what our capabilities are and what those key factors are that we might be missing in developing our strategy, that doesn’t mean we need to ignore what is going on outside the organization in an environmental analysis. I think sometimes it is because of the uncertainty around that external environment that we sometimes throw up our hands and say “we don’t know what’s going to happen?”. After all, there’s all these factors like healthcare transformation and reform and the economy and regulation and we throw up our hands, or maybe we bury our head in the sand and say, “We just hope everything stays the same.”

I like the quote from John F. Kennedy that says that, “While it may be risky to plan for the future, particularly when it’s unknown, it’s more risky not to plan for the future.” And so, it’s important to think about in developing your strategic plan that even though those externalities may be unknown, there are tools available to help us have a better understanding of how to develop strategy even in an unknown environment.

One of the tools that we like to use is scenario planning. Scenario planning doesn’t mean that we have a better crystal ball than anybody else, it doesn’t mean that we know the future with any more certainty. What it means is that when we have all of these strategic alternatives, that could be a direction that we take the organization, we focus on those strategic alternatives that we think are most likely to occur. It also helps us solidify what direction our organization is going in.

And while we don’t know in the end what the future will hold or what shape that future will take, it is helpful for us to use scenario planning to decide that we are going in the right direction as an organization, no matter what the specifics of the future hold. One example of how we use scenario planning is in planning for future reimbursement. Certainly, a lot of concern is out there about what that future model may look like and it may range from anything from bundle payments to capitation to any sorts of ways that reimbursement may change over the next few years.

While we don’t have any certainty over what that may look like, we generally know the direction that we’re going in and if we plan for the best case scenario and we plan for the worst case scenario and we plan for a scenario in between, we can directionally take the organization where we need to go, and we can understand that regardless of the specific way in which the future unfolds, we’re prepared for it no matter what.

So, I think the takeaway from this is, even though planning for the future can be sometimes difficult, and sometimes we don’t know what is going to happen, there is no reason to fear looking at the external factors because there are tools that we can use to address those factors and to be confident that the strategy we’ve developed is going to be effective in leading our organization into the future.