A step-by-step Guide to Scenario Planning - Professional ...

Scenario planning attempts to eliminate the two most common errors made in any strategic analysis - Overprediction and Underprediction of the company's ... You’reoffline.Thisisareadonlyversionofthepage. ABOUTUS BOOKANADVICECALL BLOGS LOGIN All All WebPages Forums Cases KnowledgeArticles SearchFilter All WebPages Forums Cases KnowledgeArticles Search Signin Togglenavigation ProfessionalQualifications WhichQualificationIsRightForYou? CIMMarketingQualifications ISMSalesQualifications CMIManagement&LeadershipQualifications eLearningShortCourses StudyMethods 100%PassGuarantee OurPassRates Testimonials ProspectusDownload In-CompanyTraining Management&LeadershipTraining SalesTraining DigitalMarketingTraining Productivity&GrowthTraining Media&PRTraining DiplomasinBusinessExcellence AccreditedQualificationPathways DeliveryMethods Testimonials FrequentlyAskedQuestions MeasuringtheROIofTraining DownloadBrochure Apprenticeships ManagementApprenticeships MarketingApprenticeships DigitalMarketingApprenticeships SalesApprenticeships BenefitsofApprenticeships Contactus Astep-by-stepGuidetoScenarioPlanning WrittenbyProfessionalAcademyGuestBloggerAmandaAthuraliya Amongthemanytoolsamanagercanuseforstrategicanalysis,scenarioplanningcancaptureawiderangeofpossibilitieswithspecificdetailing.Byidentifyingsomefundamentaltrends,aleadercandefineaseriesofscenariosthatwillhelpyoureduceerrorsinyourdecisionmaking.Herewearegoingtotakealookathowwecanconductscenarioplanningstep-by-stepandbenefityourcompanyinthecomingyears. WhatisScenarioPlanning Scenarioplanningattemptstoeliminatethetwomostcommonerrorsmadeinanystrategicanalysis-OverpredictionandUnderpredictionofthecompany'sfuture.Mostoftheorganizationsmakethiserrorwhileanalyzingtheirstrategies.Eveniftherateofchangeinourlifeisacceleratedtoagreatextent,thefuturemightnotholdwhatweexpect. Imaginehowharditwas50or100yearsagoeventoimaginetheadvancementintechnologywehavenow.Butstill,therearesomelimitationstowhattechnologycando.Ourexpectationsfailedinsomeplaceswhenitcametopromotion.Forexample,wearestillunabletofindacureforcancer.Thepeoplewhopredictedthiswerescientistsandentrepreneurswhoweresuccessfulintheirfields.Butduetothatsuccess,theystartedoverpredictingthefuture. Scenarioplanningwillhelpusdrawalinebetweenoverandunderpredictions.Itwillexpandtherangeofopportunitiesyourseewhilekeepingyoufromdriftingintosomesciencefictionmovie.Scenarioplanningwilldothisbysegregationoftheknowledgewehaveintotwoareas. 1.Thingsweknowabout 2.Thingsweareuncertainabout Weknowthatdevelopmentinthefieldoftechnologyisgoingonataconstantrate.Andthefirstparameterconsistsofthethingsthatwearesurewillhappen.Likepoliticalvoting,pricehikeetc.Thesecondcategoryincludesthethingsthatwethinkmighthappeninthefuturebutwearenotsureaboutit. Scenariosgiveusaviewonwhatcanhappeninthefuture,butitdoesnotprovideuswiththestrategiestodealwiththem.Itmakessensetohaveexternalhelpwiththeprocess,suchascustomers,dealers,suppliers,politicians,publicists,journalistsetc. Orwecantakethehelpofexternalresourceswhichothershavedeveloped.Theobjectiveofthisprocessistodeterminefundamentalpatternsanduncertainties.Leaderswillbuildastrategyandthestaffwilllatergiveitadocumentedform;fillingthegap,findingnewdata,andsoforth.Theoverallpurposeistobuildstrategicthinkingthatencouragesvarietyandprovidesuswithasharperapproachabouttheavailableopportunities. ScenarioPlanningProcess Step1:BrainstormFutureScenarios Intheveryfirststepyouneedtodecideatimeframe.Whileyouaresettingthetimeframe,youshouldconsidervariousfactors: ●Thelifecycleofyourproduct ●Politicalconditionsofyourcountry ●Competitorsanalysis ●Technologicaladvancement Onceyouhaveanappropriatetimeframedecided,determinewhatknowledgewouldholdsubstantialvalueforyourorganizationforanextendedperiod.Let'ssayyouaredevelopingadecade'sscenario;youwilllookatthepasttenyearsforreference.Youneedtoconsiderthechangesthatoccurredinyourdepartment,organization,industry,region,country,andeventheworld.Youshouldforeseesimilarchangesinthenexttenyears. Step2:Identifytrendsanddrivingforces Youneedtofocusonthefollowingfactorswheneveryouaregoingfortheidentificationoftrendsanddrivingforces. ●Whohasaninterestinthesedecisions? ●Whowillbeaffectedbythem? ●Whocouldinfluencethem? Nowtheapparentdrivingforcesaresuppliers,customers,competitors,employees,shareholders,governmentandmanymore.Identificationofthefollowingfactorsaboutthemisalsoessential. ●Currentrolesofthedrivingforces ●Theirinterests ●Theirpositionsinthefield ●Theirprogressovertime Forexample,intechnicalareas,youneedtobeintouchwithjournalists,peoplewhocansupportyourproduct,productsuppliers,judges,lawyers,ministersandmanymore. Step3:CreateAScenarioPlanningTemplate Identifythedrivingforcesoftheenvironmentthatisthekey-factoryouhavelisted.Thesedrivingforcescanoriginateinthefollowingareas: ●Societyanditsstructure,includingdemographic,economicandpoliticalfactors,andpublicopinionsaswell. ●MarketsandCustomerBehaviour ●TechnologyandInnovation ●YourIndustrycompetitivestructure ●Yourorganisationalcapacitiesandcorecompetencies Separatethoseforceswhicharehighlypredictableandfocusontheeffectswhicharenotlikelytooccur. Step4:DevelopaScenario Theessentialtaskofscenarioplanningisdevelopingtheactualscenario.Youneedtobuildaconditionaccordingtoeachfactorwehaveevaluatedintheabovestepsandcreateasituationaccordingtothetraitsandtrendsofthemarket.Properscenariodevelopmentisequivalenttowritingamoviescene.Youneedtobuildaplot,andthenyouneedtodevelopyourstoryaroundit. Whilebuildingascenario,youneedtofindthestrengthandweaknessofyourplanandworkaccordingly.Youneedtodefinetouchpointsaroundwhichyourstorywillrevolve. Step5:EvaluateaScenario Byfollowingasystematicstep-by-stepprocedure,thescenarioteamcanachieveabalancebetweenwildcreativityandfreeformimagination.Andyoucangetasoundjudgementbasedonknowledgeandexperience.Ateamtriestothinkofeverythingthatcouldpotentiallyaffecttheissue. Thetypeofsegregationusedforfindingstrategiesisessentialtofindingfocalissuesanddegreeofuncertainty.Forexample, ●Whatwillbetheenergyprices? ●Willtheyriseorfall? ●Whatwillbetheviewsofcustomersaboutyourproduct? ●Willtheyinclinetowardsmodernizationorrationalization? ●Whatwillbetherateofadvancementoftechnology? ●Whatwillbetheapproachofgovernment?Etc. Step6:UpdateStrategiesandPoliciesAccordingly Amonthortwoafteryouimplementthescenarios,youneedtoevaluateyourstrategicplanandupdatethepoliciesaccordingtothenewmarkettrends.Thisevaluationandupdateshouldbedoneperiodically.Themarketsituationsareregularlychangingaccordingtothemacro-environmentalfactorswedefinedabove.So,youneedtheassessmentandupdateaccordinglyatacertainspecifiedperiod. Therefore,scenarioanalysisgivesyouamoreexplicitpictureofthefuture.Itwilldeterminewhatisgoingtohappeninthefuturebasedontheexperiencesinthepast. AbouttheAuthor: AmandaAthuraliyaisthecommunicationspecialist/contentwriteratCinergix,theteambehindthedevelopmentofCreately.Sheisanavidreader,anexperiencedwriterandapassionateresearcherwholovestowriteaboutallkindsoftopics. Ifyou'reamorevisuallearner,checkoutthis2-minuteanimatedvideooutliningScenarioPlanning. 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