Scenario Planning That Actually Works
We have all sat in that workshop. We plot critical uncertainties on a 2x2 matrix, create four clever narrative scenarios, and feel strategic for an afternoon. Then, six months later, a crisis hits that fits none of the quadrants, and the binder stays on the shelf.
Higher education has never lacked for strategic plans. What we’ve lacked—too often—is strategic readiness: the ability to absorb a shock, make decisions fast, and protect the mission without improvising our way through a crisis.
The standard approach to scenario planning centers on that 2x2 matrix. The method has respectable origins—Royal Dutch Shell pioneered it in the 1970s—and I understand the appeal. The exercise can surface blind spots and force leadership teams to confront futures they would prefer not to contemplate.
But here’s my practitioner’s take: the value of scenario planning isn’t the elegance of the narratives. It’s whether you can execute the plan when reality hits.
The Causality Trap
I’ve seen institutions invest real time in producing compelling scenarios that never translate into operating decisions, budget levers, or governance triggers. The problem is that many of the most painful shocks don't arrive with clean causality.
Consider a common scenario: a tuition-dependent institution sees MBA enrollment drop 60 percent over three years. Leadership cannot isolate a single cause. Is it price sensitivity? Online competitors? A strong job market? Doubts about the degree's value? National data confirms this ambiguity; there is rarely consensus on the relative weight of these factors.
Meanwhile, the financial impact doesn't wait for a root cause analysis. The subsidy disappears, and the operating model buckles.
In a crisis, debating the why is an intellectual trap; the magnitude of the impact is existential. Solvency doesn't care if enrollment dropped because of the economy, a PR scandal, or demographic shifts; the cash impact is identical. If you anchor your scenario plans to finding one "root cause," you’ll miss the moment when the outcomes show up with messy causality.
That’s why I prefer a practical approach that lives inside the institution’s long-range financial model and produces contingency playbooks you can actually run.
From Scenarios to Playbooks
The approach I favor starts with one disciplined baseline rather than four stories. Build the best integrated view of what is most likely given known information. Then, layer in standardized sensitivities—typically plus or minus 10 percent and 25 percent—on the drivers that matter most: enrollment headcount and mix, net tuition rate, discounting, and compensation trends. The point is not precision; it’s preparedness.
The critical step is what comes next: pre-built contingency plans tied to each scenario band.
This distinction matters because it separates scenario planning from contingency planning. Traditional 2x2 work asks "what might happen and why." This approach asks "what will we do when revenues hit these thresholds, regardless of why." The first is intellectually satisfying. The second keeps you solvent.
The data suggest this practical approach remains uncommon. A Syntellis survey found that 60 percent of higher education finance professionals believe their institutions lag other industries in modern financial planning tools. Perhaps most telling, a Forvis Mazars survey found that almost half of institutions reported they do not have a change management system in place—meaning even when scenarios are developed, the execution infrastructure doesn't exist.
Pre-Negotiating the Crisis
Higher ed change is constrained by shared governance and long decision cycles. Furthermore, compensation, facilities, and debt service don't flex quickly. That makes reaction time expensive. The only responsible move is to pre-negotiate the decisions before the crisis forces them.
When I say contingency plan, I don't mean a vague list of ideas. I mean a board-and-cabinet-ready operating plan with four components:
1. Defined Triggers: Leading and lagging indicators that activate the playbook. Examples include enrollment deposits down a specified percentage by a certain date, or cash on hand projected below policy minimums.
2. Tiered Action Packages: Pre-vetted actions grouped by speed and disruption, ensuring leadership isn't designing responses under duress.
Tier 1 (0–30 Days): Immediate Brakes. Spending controls, hiring pause rules, discretionary approval gates, and travel restrictions.
Tier 2 (30–120 Days): Operational Adjustments. Vendor rebids if possible, benefit plan tweaks, adjunct and section management, and targeted retention investments.
Tier 3 (1 Semester–1 Year+): Structural Shifts. Program portfolio reviews, organizational redesign, facility footprint decisions, and revenue diversification.
3. Clear Decision Rights: The playbook must specify what requires cabinet approval, what needs the president’s decision, and what must go to the board. This is where good governance becomes fast governance.
4. A Baked-In Communications Plan: If you wait until the shock to decide how to communicate, you’ve already lost trust.
To be clear, I’m not arguing against the 2x2 matrix entirely. It remains useful for surfacing blind spots and testing whether your contingency levers are robust across different futures. The 2x2 informs what capabilities you must build. The multi-year model and contingency plan define how you will act when those capabilities are tested.
Getting Started
If an institution asked me to build scenario readiness in 90 days, I’d work through these steps:
Rebuild the model: Create transparent driver-based 5-year and/or 10-year models.
Identify the drivers: Focus on the six to ten assumptions that actually move the needle (e.g., discount rate, net tuition per FTE, compensation trends).
Run standardized shocks: Test +/- 10% and 25% to create organizational "muscle memory" for different levels of stress.
Build contingency packages: Assign specific owners and deadlines to tiered actions.
Operationalize governance: Connect quarterly forecasting dashboards directly to the contingency triggers.
Uncertainty is not a phase; it’s the operating environment. My argument is simple: scenario planning should reduce decision latency. It should let an institution respond to a shock with speed and integrity—because you already agreed on the playbook when you weren't panicked.
The institutions that treat scenario planning as a creativity exercise will get interesting conversations. The institutions that treat it as an operating discipline will get resilience.
