How Ghost Scenarios Haunt Strategy Execution

Weekly Business Insights from Top Ten Business Magazines | Week 318 | Strategy & Business Model Section | 2

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How Ghost Scenarios Haunt Strategy Execution

By Trudi Lang and Rafael Ramírez | MIT Sloan Management Review | October 11, 2023 

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Business leaders are inclined, and their organizations configured, to work with only a single implicit view of the future.  That view is typically deeply embedded within their strategies as a set of unquestioned assumptions about the future socioeconomic and environmental context. We call these sets of unexamined assumptions ghost scenarios because they are invisible — and because they may come back to haunt executives and companies in unanticipated and unwelcome ways.  Underpinning every ghost scenario is a small set of implicit trends that leaders project into the future without questioning whether they might change.

Research on human perception has demonstrated that people differentiate the object of their visual focus from its background by bringing that object to the forefront of their attention while everything else recedes. Humans can focus on either the figure or the background but never both at the same time.  It’s important that executives are able to recognize how people’s ability to focus can also blind them to important contextual information, since leaders often fail to see the background upon which their strategies will play out — and on which their strategies depend. They may consider hard infrastructure to be a relatively static background issue and focus their attention on trends that seem more salient to business planning, such as changes in customer preferences and habits. But that can lead executives to implement a strategy that may be unexpectedly disrupted by the unexamined assumptions about its context that are woven through its background issues.

The following suggestions for executives who want to bring their ghost scenarios into view and make the figure-ground reversal a key part of their strategy practice.

1. Use scenario planning to acknowledge implicit assumptions. Recognize that every organization’s strategy presumes a future scenario that often remains unquestioned. That is, every executive engages in a form of implicit scenario planning, whether they are conscious of it or not. Making scenario planning a regular part of the strategy-making process achieves two important goals: It alerts leaders to how turbulent conditions could change the context within which they work and compete, and it acknowledges the reality that current conditions themselves present a hypothetical future scenario, not a fixed reality.
2. Recognize the figure-ground dilemma. Acknowledge that the figure that is attended to (most often, the organization’s strategy) and the background that is so often ignored (the unexamined ghost scenario) cannot successfully be the focus of attention at the same time. Instead, executives need to flexibly and sequentially shift between the two to investigate each fully and avoid the trap of making implicit assumptions about the other.
3. Dedicate executive time and resources to the problem. Organizations must intentionally create a time and space for leaders to explore how relevant economic, political, technological, social, and environmental factors might be changing. Contrast a small set of future scenarios with the ghost scenario to pinpoint where current strategy might need to be adapted to be well positioned for the range of ways the context might develop. 

3 key takeaways from the article

1. Business leaders are inclined, and their organizations configured, to work with only a single implicit view of the future.  That view is typically deeply embedded within their strategies as a set of unquestioned assumptions about the future socioeconomic and environmental context. These sets of unexamined assumptions are ghost scenarios because they are invisible — and because they may come back to haunt executives and companies in unanticipated and unwelcome ways.
2. Underpinning every ghost scenario is a small set of implicit trends that leaders project into the future without questioning whether they might change.
3. The following suggestions are for executives who want to bring their ghost scenarios into view and make the figure-ground reversal a key part of their strategy practice:  use scenario planning to acknowledge implicit assumptions, recognize the figure-ground dilemma, and dedicate executive time and resources to the problem.

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Topics: Strategy, Business Model, Scenario Planning