Course Meeting 15, July 8, 2009Management 2600C. Howell-Vischer : Course Meeting 15, July 8, 2009Management 2600C. Howell-Vischer
Scenario Planning : 2 Scenario Planning
Slide 3 : “This present moment used to be
The unimaginable future” Stewart Brand
The Clock of the Long Now
Thinking About the Future : 4 Thinking About the Future “Futurism is an art of re-perception. It means recognizing that life will change, must change, and has changed, and it suggests how and why. It shows that old perceptions have lost their validity, while new ones are possible.”
---------------Bruce Sterling, science fiction writer
Why think about the future? : Why think about the future? What we don’t know we don’t know What we know we don’t know What we know All our knowledge is about the past, but all our decisions are about the future Most of what we need to know to make good decisions today is outside our comprehension: we don’t even know it’s there
Types of Futures : Possible - “might” happen (future knowledge)
Plausible – “could” happen (current knowledge)
Probable - “likely to” happen (current trends)
Preferable - “want to” happen (value judgements) Types of Futures
Types of Futures : Types of Futures Time Today
Relationship between possible, probable and desired future : 8 Relationship between possible, probable and desired future
Scenario Thinking/Planning : 9 Scenario Thinking/Planning A powerful process for organizations to plan for the future in an uncertain world
Assumes that the future is unpredictable, that change will happen, and that organizations benefit by thinking about alternative futures through potential scenarios
Scenarios : 10 Scenarios Are hypotheses, not predictions, created and used in sets of multiple stories, usually three or four, that capture a range of possibilities, good and bad, expected and surprising
Are designed to stretch our thinking about the opportunities and threats the future might hold, and to weigh those opportunities and threats when making both short- and long-term strategic decisions
Dr. Paul Schoemaker : Dr. Paul Schoemaker Videos
Why Scenario Planning?
http://www.youtube.com/watch?v=YuqN9wWYm5E&feature=related
What a Scenario Planning Session Involves
http://www.youtube.com/watch?v=ZPd8ZbZIbR8&feature=related 11
Scenario planning is the combination of scenario analysis for strategic purposes and strategic planning based on the outcome of the scenario phase : 12 Scenario planning is the combination of scenario analysis for strategic purposes and strategic planning based on the outcome of the scenario phase
Scenario in Business : Scenario in Business 22% of “Fortune 1000”, were using scenario analysis in the 1970s
75% of these firms adopted the approach after the oil embargo in 1973
It is essential to keep the number of factors that are considered to a minimum
History : History
Time Horizon for Scenarios : Time Horizon for Scenarios Scenario analysis has been used primarily in long-term forecasting
Most firms that used scenario analysis employed 5-year horizon
Exceptions:
Xerox 15-year
Shell, 15-year at least
The content of scenario becomes progressively more vague as the time horizon lengthens
The ideal time horizon of scenario analysis is specific to the industry, product or market under consideration
What a Scenario is not….. : What a Scenario is not….. A scenario is not a forecast or a vision
It does not seek numerical precision
It usually provides a more qualitative and contextual description of how the present will evolve in to the future
It is not assured
Scenario analysis usually tries to identify a set of possible future, each of whose occurrence is plausible
Differences between scenarios, forecasts and visions : 17 Differences between scenarios, forecasts and visions
Scenarios versus Forecasts : Scenarios versus Forecasts
How many scenarios do we need? : How many scenarios do we need? Consensus says that three scenario are best
The use of only two tend to lead to “good-and-bad” classifications
More than three become unmanageable in the hands of users
Scenario Thinking : 20 Scenario Thinking Begins by
identifying forces of change in the world that may have impact on the people served by the organization as well as the strategic direction of the organization itself
These forces are combined in different ways to create a set of diverse stories about how the future could unfold
Identifying Driving Forces and Uncertainties : 21 Identifying Driving Forces and Uncertainties Potential categories to think about:
Society
Economics
Politics
Environment
Uncertainties
Identifying Major Factors in the Environment : 22 Identifying Major Factors in the Environment Scientific innovation & technology
Signs that public perception is changing
What you see at the fringe of things
Listen to music
Opinions of the people you respect
What surprises you?
Guidelines : 23 Guidelines Long View
Day-to-day work is usually driven by near-term concerns and urgent needs – scenario thinking requires looking beyond immediate demands and peering far enough into the future to see new possibilities – asking “what if……”
Guidelines : 24 Guidelines Outside-In Thinking –
Most of us think from the inside out and about the things we would like to control or shape
Outside-In Thinking or “thinking conversely” from the outside-in begins with pondering external changes that might, over time, profoundly affect your work
Guidelines : 25 Guidelines Multiple Perspectives
The introduction of multiple perspectives
Looking from the view of the various stakeholders
Multiple perspectives is based on diverse voices that shed new light on strategic challenges, helps to better understand one’s own assumptions, and exposes new ideas that inform
It gives us a new perspective which can help us to see the big picture of an issue or idea
Scenario Building : 26 Scenario Building Scenarios are memories of the future
Scenario Process : 27 Scenario Process Determine the key question
Identify major factors in the environment
Identify driving forces
Rank by importance & uncertainty
Develop scenarios
Determine implications
Identify leading indicators
Links to Scenario Planning : Links to Scenario Planning Videos by Dr. Paul Schoemaker (very good resource)
http://www.youtube.com/watch?v=YuqN9wWYm5E&feature=related
http://www.youtube.com/watch?v=ZPd8ZbZIbR8&feature=related
Shell Oil
http://www.shell.com/home/content/aboutshell/our_strategy/shell_global_scenarios/dir_global_scenarios_07112006.html
A good example of Scenario Planning in Practice (PowerPoint)
http://www.slideshare.net/whatidiscover/planning-for-the-futures 28
Slide 29 : 29 Success is 99% Failure
- Soichiro Honda
Why Do Strategies Fail? : 30 Why Do Strategies Fail? There are many reasons why strategic plans fail, especially:
Failure to understand the customer
Why do they buy ?
Is there a real need for the product ?
Inadequate or incorrect marketing research
Why Do Strategies Fail? : 31 Why Do Strategies Fail? Inability to predict environmental reaction
What will the competition do?
brand warfare
price wars
What if the Government intervenes?
Why Do Strategies Fail? : 32 Why Do Strategies Fail? Over-estimation of resource competence
Can the staff, equipment, and processes handle the new strategy?
Failure to develop new employee and management skills
Why Do Strategies Fail? : 33 Why Do Strategies Fail? Failure to coordinate
Reporting and control relationships not adequate
Organizational structure not flexible enough
Why Do Strategies Fail? : 34 Why Do Strategies Fail? A horse without a rider……
Failure to obtain senior management commitment
Failure to get management involved right from the start
Failure to obtain sufficient company resources to accomplish task
Why Do Strategies Fail? : 35 Why Do Strategies Fail? Under-estimation of time requirements
Why Do Strategies Fail? : 36 Why Do Strategies Fail? Failure to follow the set plan
No follow through after initial planning
No tracking of progress against plan
No consequences for above
Why Do Strategies Fail? : 37 Why Do Strategies Fail? Poor communications
Insufficient information sharing among stakeholders
Exclusion of stakeholders and delegates
Why Do Strategies Fail? : 38 Why Do Strategies Fail? Failure to manage change
Inadequate understanding of the internal resistance to change
Lack of vision on the relationships between processes, technology and organization
JAMIE’S SCHOOL DINNERS : 39 JAMIE’S SCHOOL DINNERS
Jaime’s Plan : 40 Jaime’s Plan Vision: To help Britain’s children lead healthier and happier lives through the consumption of healthier food.
Timeframe: 6 months
Number of children: 20,000
Budget per child: 37p = 56 Euro Cents
Transformation Design : 41 Transformation Design Identify how the organization will move forward
Establish infrastructure to support the transformation
Leadership Team
Design and Development Team
All-Hands Information Sharing : 42 All-Hands Information Sharing Inform everyone in the organization about near future plans
Paint a picture of the transformation journey
Articulation of top management’s commitment, expectations, and benefits
See what you missed by being a part of this class! : See what you missed by being a part of this class! 43
Thank you for taking the journey! : Thank you for taking the journey! 44