Friday, June 27, 2014

Scenario planning and the future ...

Scenario planning in business is not simple, it's complex ... very complex and it takes skill. However, there's a lot of things that you can plan for and rehearse along with many patterns that you can use to determine likely points of change. There's a lot you can do to prepare yourself, a host of tactical plays you can exploit to your advantage but that's all about manipulation of a scenario. The first thing to do is understand the likely scenarios.

So, what does that take? Well, I've summarised the basics in the following figure.

1) Understand your landscape. If you don't have a map of the landscape then you're going to be shooting in the dark. Not a good position.

2) Understand your competitors and potential competitors. This means you have to analyse your map and compare not only direct competitors but possible new entrants caused by evolution of underlying components. No, you can't predict opponents actions or whoever new entrant is but you can certainly do a lot to limit the surprises.

3) Understand common economic patterns and cycles. The economy isn't quite as random as people make out. Some effects (such as competition between all actors driving the evolution of an act) are predictable in terms of what will happen but not necessarily when. The when is often unpredictable because it depends upon individual actors actions but you can still prepare for the what. There's a host of repeatable economic patterns you can use to determine likely points of change.

4) Understand constraints. Critical in gameplay is knowing your constraints (including inertia, resources etc) and those of your competitors. You can often exploit this to your advantage and many tactical plays use the constraints of others.

5) Understand weak signals. There's many techniques and methods for weak signal detection e.g. for the evolution of an act from product to utility then you look for the existence of concept, suitability, technology and attitude. Weak signals don't tell you when something will happen but instead you can use them to determine whether a change is ready to occur.

6) Understand the limits of prediction. Various aspects of change can be predicted in terms of what is going to happen but not when or vice versa. Other aspects are unknowable but there are many ways to cheat the system e.g. use of ecosystems as future sensing engines.

If you have the above then you can make a pretty decent stab at scenario planning and look at how to manipulate the environment to your favour. If you know the landscape, know your enemy and know yourself then you need not fear the result of a hundred battles. Better situational awareness and exploitation of force multipliers is a route to sustaining competitive advantage.

99.1% to 99.5% reduction in costs, outwitting opponents that have vastly more resourcing and funding, stealing the future from others - all of this is possible. Key to this is learning about the environment through the use of maps or equivalent frameworks for organisational learning. Without this ... well, I suppose you could just 'copy everyone else'.

Repeat after everyone else, our strategy is ... agile, digital first, cloud, social media, big data, insight from data, collaborative, ecosystem, efficiency, innovation, open, disruptive, internet of things ... with a few other words scattered in between.  If this is the case then you have no strategy because you have no scenario planning because you have no maps. Pray you don't come up against someone who does.