Overview Assumption-Based Planning (ABP) is a strategic planning tool developed by James A. Dewar at the Rand Corporation. Originally created to assist the U.S. Army in mid- to long-range planning, ABP has proven effective in situations with significant uncertainties. Now widely used in business, ABP helps organizations identify underlying assumptions in their plans and prepare for potential changes, reducing the risk of surprises.
Core Objective of ABP The primary goal of ABP is to ensure that an organizationās plans are aware of and responsive to the uncertainties embedded within their assumptions. Dewar emphasizes that every plan, from a simple birthday party to a complex business strategy, involves assumptions about the future.
The Five Steps of Assumption-Based Planning (ABP)
Step 1: Examine the Plan for Assumptions
- Identify all assumptions inherent in a plan. An assumption is any future expectation that the plan depends on.
- Example: Planning a birthday party on the patio of a new restaurant for 10 friends assumes the following:
- Friends are available on that date.
- The restaurant can accommodate a table of 11 on the patio.
- Weather conditions will permit an outdoor event.
- Guests can afford the outing.
Step 2: Identify Load-Bearing Assumptions
- Pinpoint assumptions that are critical to the planās successāknown as āload-bearing assumptions.ā
- Key Point: Vulnerable load-bearing assumptions are those most likely to disrupt the plan.
- Example: In the birthday party scenario, the availability of key friends or specific dates may be particularly vulnerable assumptions.
Step 3: Establish Signposts
- Set up indicators, or āsignposts,ā to monitor load-bearing assumptions that could produce surprises.
- Signposts act as early warning signals, allowing planners to watch for changes and respond accordingly.
Step 4: Implement Shaping Actions
- Take proactive steps to secure uncertain assumptions and mitigate potential disruptions.
- Example: Call the restaurant in advance to confirm availability, addressing a key assumption under your control.
Step 5: Design Hedging Actions
- Prepare fallback options to handle scenarios where critical assumptions fail despite efforts to secure them.
- Example: In case of poor weather, consider having an indoor venue reserved.
Conclusion ABP systematically builds resilience by anticipating and preparing for the uncertainties inherent in assumptions. This approach enables organizations to manage risk proactively and adjust strategies as needed, making it invaluable for environments prone to rapid change.
Illustrative Model of ABP: Below is a simple flow diagram outlining the five steps of Assumption-Based Planning, from examining assumptions to implementing hedging actions.
