Assumption–based planning helps firms prepare for change in the environment by identifying possible disruptions to their plans. It explores interrelationships, boundaries and perspective at a systems level. ABP was developed by RAND Corporation to assist planning for the US Army through uncertain political environments.
ABP works on the basis that most plans hang off a number of key assumptions, and that plans often fail due to lack of due consideration around these assumptions. ABP therefore identifies key assumptions in strategies and business planning, and monitors these closely over time – in other words, it protects the plan from assumption failure.
The key steps in the toolkit are:
Identify the underlying assumptions
Identify business vulnerabilities (this assumes a long-range view on elements of change from today, over a long-term time horizon)
Define signposts (these are mechanisms for monitoring the vulnerability to change of an assumption)
Define shaping actions that take control of the uncertainty, either by maintaining the assumed environment, or preventing a modified negative environment to eventuate.
Define hedging actions to prepare businesses as a contingency against an assumption failure. This differs from shaping actions as it may require re-planning.