Scenario planning for dummies - Business Models Inc.

Scenario planning helps you identify plausible scenarios and then see what potential consequences these scenarios might have. It is not a prediction, ... Blog Scenarioplanningfordummies:Howyoucanlearntothinkabouttheunknown Scenarioplanning Scenarioplanningforcesyoutolookintothefutureandhelpsyoudealwithuncertainty.Thosewhotakeitseriouslycanmakequickandeffectiveadjustments.Aminicourse.  Everygoodchessplayerthinksanumberofstepsaheadinscenarios.Theycannotpredictwhattheiropponentwilldo,buttheycanimaginewhatoptionslieaheadanddevelopastrategy.Scenarioplanningworksexactlylikethis.Itoffersyouflexibilityofthinkingtoallowforaquickandaccurateinterventionwhenthestatusquochanges. Tomakeitwork,theruleistolookintothefuture.Thosewhoallowthemselvestobetakenbysurpriseusuallyarenotabletomakethebestdecisions.   GreatImpact Anychangecanhaveamajorimpactonyourorganization,whichiswhyit’simportanttofollowdevelopmentsclosely.Onlythroughunderstandingpotentialimpactscanyouavoidbeingrobbed. Scenarioplanninghelpsyouidentifyplausiblescenariosandthenseewhatpotentialconsequencesthesescenariosmighthave.Itisnotaprediction,butanexplorationofwhatmaytakeplaceinthefuture. “Managersthinkinsafety,whichisoftenastrengthbutisnowaweakness” Whilescenarioplanningisuseful,andoftenmuchneeded–especiallyintimesofcrisis–itisnotwidelyused.Lackoftimeisacommonlyarguedexcuse.Anotherislackofinformation.Whilethereisenoughinformationaboutthepast(compiledindaily,weekly,monthlyandannualreporting)informationaboutthefutureisnotalwaysavailable.That’swhymanycompaniesattemptscenarioplanningbyextrapolatingpastinformation,forgettingthatthefutureisrarelyalinearextrapolationofthepast.  Fearoftheunknownisalsoacause.Scenarioplanningrequirescreativityandawillingnesstothinkabouttheunknown. “Youdon’tknowwhatyoudon’tknow,”saidPatrickvanderPijl, “Andthatcreatesuncertainty.”   Thinkinginsafety AccordingtoPatrick,mostcompaniesareusedtothinkinginsafety.“Thatisnormallyastrength,butaweaknessintimesofcrisis.Inanexistingorganizationyouarebusyimplementingyourbusinessmodel,butifyouwanttochangeorinnovate,thatrequirescompletelydifferentbehavior.Innovationisfundamentallydifferent.Executionisonthesecurityside,innovationisontheuncertainside.“ Shellwasoneofthefirstcompaniestostartscenarioplanning.In1967,JimmyDavidson–theirHeadofEconomicsandPlanningatthetime–startedafuturesoperationwithinthecompanybypublishingareportspeculatingontheyear2000.Itwasthefirstofmany. Inthescenariosthemselves,employeestriedtoprovidewell-foundedanswersto‘whatif’questions.Thisprocessencouragedtheleadershipteamtobroadentheirthinking;inturnmakingmoreinformeddecisions.AsShellnotes,“Scenariosstretchourthinkingandhelpusmakecrucialchoicesintimesofuncertaintyandchange.”   Youcanseemoreoutside “Ifyoulookoutsidemoreoften,youseemore,”Patrick explains.“Trynottofocusontomorrow,butonthedayaftertomorrow.Trytomapoutpossiblefuturesandusesituationsasdrivers.” “AnexampleofwhatImeanistolookatCOVID-19asanewtrendthatarises,thereforethereisuncertainty.COVID-19isadriverforscenarioplanning,butitisnotascenario.Forus,COVID-19isanacceleratorforadigitalenvironment.Wemovedfromhavingdailyworkshopsintheofficetonowhavingbuiltanaccelerateddigitalenvironmentwherewecandoourworkshopscompletelydigitallyandremotely.Thiswouldhavetakenyearswithoutthecurrentcontext.” WithourScenarioModelCanvas,weofferashortandsimplemethodforlookingatchangeandinnovation.AsPatrickelaborates,“Wedon’twanttobefocusingonjustonefuturevision.Weneedtotakeastepbackandlookatwhatwouldbepossibleforacompanyinavarietyofscenarios;whichbusinessmodelispartofthat,andhowyoucanachievecontinuedorganisationalstrength.”  Puttingthisintoaction,BMI•hasworkedwithAmericanfurniturecompanyHermanMiller.Together,theyhaveexploredscenariosaroundthefuturesofworktodevelopstoriesthatextrapolateemergingcustomersegmentsalestargets.“Thescenariowasthatwearemoreoftenworkingathome.Leadingustoneeddifferent,orless,furnitureathome,andthattheneedsofanofficehavealsochanged.”   ScenarioModelCanvas TheScenarioModelCanvashasfourquadrants,whichdrawfromtwoscenarios.Forexample,imagineyouareintheeventsindustryasCOVID-19emerges.Startbymakinganinventoryofthemostimportantuncertainvariables.“Thinkthroughitcarefully,”advisesPatrick,“Ioftenhearthatturnoverisanuncertainty,butthisisoftenbehindcustomerbehaviour.Apparentlytheyspendless.So,customerbehaviourisanuncertainty,notturnover.” Potentialscenarioscouldbe:  Fromnowonweprefertostayathomebehindthelaptop. Wearegoingtoliveeventsagain. Thelockdownremains“high”,thecountryremainslocked. Thelockdownisquicklyweakened. “Ifyouputthosetwoscenariosonaxes,yougetfourworldsthatyoucandescribeandfillin,”saysPatrick.“Foreachvariant,describewhichcompanieshavedisappearedandwhichhavegrown.Explorecustomerneeds,colouringthemincompletely.Thenaskyourselfwhatdoesourbusinessmodellooklikeinthatworld?Canweremainorwillwehavetoadjust?“   PESTanalysis Todeterminewhichscenariostoexplore,aPESTanalysisisatooltodetailexternalfactorsand‘seewhatyoudon’tsee’.ItasksyoutoconsiderthePolitical(politicalstability,lawsandregulationsandgovernmentsubsidyandtaxpolicy),Economic(economicgrowth,purchasingpowerdevelopment,inflation,currencystability,interestdevelopment),Social(demographicaspects,educationlevel,welfare–andhealthaspects,culturalaspects,theincreasingimportanceofsocialmedia)andTechnological(artificialintelligence,internet,socialmedia)influencesimpactingyourcompanyandcontext.  Onceyouhavemadeaninventoryusingthisanalysis,youcanpinpointanumberoftrendsquiteeasily.Next,rankthesetrendsaccordingtotwocriteria:uncertaintyandimpact.Thetwotrendswiththehighestimpactandhighestuncertaintydeserveascenario.    Planningteam Assemblingtherightteamisanessentialsteptosetyouupforsuccess.Scenarioplanningshouldbedonewitharangeofpeople,preferablyfrommultiplelayersofyourorganisation.Additionally,supportfrommanagementiscrucialsomakesureatleastonehighermanagerorboardmemberispresent.Lookforpeoplewithanopenmindwhocanworkwellinateam.  AccordingtoPatrick,BMWisanothercompanythatdoesjustthat;havingacarefullyselectedteamintheirRadhubprogramdevelopscenariosforthefutureofthebrand.“Notconceptcars,butfuturemobiles.Thesafetytrendhasbeentranslatedintoamotorcyclethatcannottipoverandforwhichyounolongerneedahelmet.Ithinkthatisastrikingexampleofhowyoucanworkwithyourteamstothinkaboutthefuture.“ AsPatrickconcludes,whatpeoplestrugglewithiswhatultimatelydeliversthemostinterestinganswers.“Askthem,‘yesand?’Becausewhenweusetoolstolooktothefuture,weseemore;wecantalkbetteraboutit;weseethingswedidn’tseebefore;andweareallbetterprepared.” “Throughscenarioplanningwecananticipateratherthanjustreact.Andthathasalwaysproventobeabetterstrategy.”   DownloadScenarioplanningcanvas   ThisarticlewaswrittenbyEwaldSmitsandpreviouslyappearedonmt.nl. ClientStoryHermanMiller:3Futurescenariosthatchangethewayweworktoday BusinessModelInnovation,DesignThinking,StrategicVisioning Readmore Post4simplestepstore-createyourfuture BusinessModelInnovation Readmore Ourblog Seeallofourblogpostsandmore Blog Comments Stayposted. Keepuptodateonwhatourclientshavetotell,newtools,training andcoolcontent. Newsletter Youwanttokeepuptodateonwhatwedo?Orbeinspiredbycoolcontentwejustwanttosharewithyou?Signupforournewslettertoreceiveregularinformation. Signup Weusecookiestoensurethatwegiveyouthebestexperienceonourwebsite.Ifyoucontinuetousethissitewewillassumethatyouarehappywithit.YoucanreadmoreinourprivacypolicyhereOk