Capital Ethiopia Newspaper

Scenario planning

Last week we began to look into how we can design for the future, being the period between eighteen months and five years from now. This requires us to develop a new mind set and trying to find answers to the following questions in respect of our customers, the competition and our company:
Our customers:
Will we be serving the same customers in the future that we are serving now? If not, how will they be different?
How will we reach our future customers?
The Competition:
What will be the basis of competition? Innovation, cooperation?
What will the competition look like?
What must we do to ensure that the industry evolves in a way that is to our maximum advantage?
Our company:
What capacity must we have to be a market leader?
What strategic alliances do we need to develop?
What will be the profile of the employees?
In studying these questions and trying to find answers we will apply again the following three steps:
Envision: carefully articulate a clear vision about where you want to drive the industry you are in.
Prepare: Find the shortest route between where you are now and where you want to go.
Deliver: Determine on what basis you will compete, once you have arrived at your new destination.
Now, if you want your company to be a market leader and one of the best in your field, you will not only constantly be improving your current operations, but you will be committed to creating a new competitive position in the future. What exactly that vision is, only you will know. You must come up with your own vision, unique to the kind of business you are in. To develop this vision you will begin with scanning the horizon and environment of your industry. In doing so, you will identify opportunities. You will anticipate demand. To be able to do this you must develop insight in trends in technology, demographics, regulation and lifestyles, which will help in creating a realistic vision for the future.
Imagining how the future will unfold can be done by using a technique like scenario planning. This is a disciplined method for imagining and examining a company’s different possible futures or what the company’s future could look like. In doing so you must consider a number of “what if” scenario’s. Like when planning for an off the road journey into the countryside, you will ask yourself: “What if it rains and the road gets bad?”, “What if the rain damages that bridge?”, “What if the car breaks down?”, etc.
Scenario planning will help identify the opportunities and threats you may face and the process should consist of the following steps:
Develop a common understanding amongst those involved in the process. Each participant should be made to understand what the purpose of the process is. Why are we doing this?
Define the scope and decide which markets, customer groups, technologies, types of competitors will be included.
Identify major trends. Identify the political, economic, societal, technological, legal, industrial trends that are likely to affect your position. This step may take time as each trend should be examined in detail.
Identify key uncertainties. Some events and outcomes cannot be predicted. Accept uncertainty, try to understand it and make it part of the reasoning process. List key uncertainties and their possible outcomes. It may be difficult to deal with these uncertainties but ignoring them, hoping they will never develop is not a good idea.
Construct initial scenario themes. Each scenario is different and is part of an ongoing process. The purpose of this to try and gain a deeper understanding of the forces at work in your industry.
Initiate institutional learning. To eliminate inconsistencies and uncertainties in the initial scenario’s, it is important to involve others in the process. Share the initial scenario’s with key workers of your company and ask them to identify inconsistencies and how they would respond to them. This will help you to question the initial scenario’s and to make changes as necessary.
Construct final scenario’s. Final scenario’s are now described for decision making. Each scenario poses a different set of strategic challenges and core competencies, which must be identified and fully explored.
Make a decision. With different scenario’s available, management must now decide whether to go for one scenario, stay flexible enough to exploit different scenario’s and develop contingency plans or hedge the risk through strategic planning.
Now the foundation has been laid to ask yourself how real the need for change is. The next step is to prepare for change, which we will look into next week.