Scenario planning is a strategic development method for
considering different situations that might happen in the future due to transformational
forces. The method enables flexibility so that organizations have deliberate options
for adapting and embracing anticipated change. Scenario planning helps consider
situations where little to no historical data exists, driving an organization
to consider various forces and circumstances that could impact future business.
Scenario planning includes developing multiple scenarios instead of converging
on a single solution to maximize possible options. Each scenario considers
forces from various transformational drivers such as competition, the marketplace,
products, staff members, and stakeholders (Wade, 2012).
Driving Innovation for Change
When change occurs unexpectedly, or a company is unprepared,
the transformation can significantly damage or end an organization. Modern corporations
that include scenario planning as a core business process prepare themselves
for change and are in a position to drive transformation through innovation. The
practice includes a different mental model, where the organization considers
hypothetical outcomes and devises a strategy for transformation if the prediction
comes to fruition. The intent of scenario planning is not to predict the future
but rather consider possibilities and options for responses. The practice
forces organizations to consider new possibilities, and in many circumstances,
yields new processes, methods, products, and even new market spaces due to strategic
analysis leading to innovation (Wade, 2012).
An example of an organization that maximizes the value of
scenario planning is technology giant Amazon. The success of the corporate mega-power
resides in the strategic plan and innovativeness to change the landscape of
electronic commerce. Amazon did not create a market, new product line, or even
disrupt a single market leader, but rather influenced an entire industry. In Rao (2011),
the strategy underpinning Amazon's success is a scenario planning method called
"The Game Mind." The game mind method does not focus on a product,
market, or sales strategy but instead develops scenarios as to which "game"
to play. Amazon's success at preparing for the future is so great the
organization how dominates a market (aka the "game") before it even
begins. Amazon Web Services (AWS) is a prime example of a scenario Amazon
envisioned that others would not have contemplated. The cloud computing
environment was not a core competency of the organization. However, through
scenario planning and envisioning the future of e-commerce, the idea matured
and elevated Amazon into an entirely new domain.
Understanding Forces
Scenario planning
involves understanding and addressing driving forces, which is a phenomenon
that can potentially bring change in the future. There are different driving
forces, some of which are well understood, such as a trend. Another type is a
variable that is unpredictable but affects other variables, such as the cost of
oil, a commodity that drives the costs of so many markets. A standard model for
identifying driving forces is the PEST model, which includes forces in four
primary categories, political, economic, societal, and technological (Wade, 2012).
While other models and forces exist, the PEST model is core to scenario
planning. Typically, a planning effort will surface dozens of forces, many of
which are interrelated, creating a cause-and-effect situation. Understanding
the forces and how they relate enable an organization to identify critical
uncertainties. Figure 1 illustrates how plotting forces against the combination
of potential impact and uncertainty creates a heatmap for visualizing impact
and clusters(Wade, 2012).
Figure 1
Heat map for driving forces
An Opportunity for Scenario Planning
As a result of the COVIC-19 pandemic, many organizations'
traditional workplace environment has drastically changed beyond what most
could imagine. The future of work in the "new normal" post-pandemic
world is unpredictable but certainly will be different from the past. The pace
of change in the workplace is unprecedented, and the digital workplace is
revolutionizing the environment where "work" is no longer somewhere
to go but something to do. Developing an effective digital workplace strategy
fits the definition of scenario planning. There is no historical data that
provides any forecasting, the future state is unknown, and there are multiple
driving forces at play (Mancl & Fraser, 2020).
The COVID-19 pandemic brought forth quarantines that
impacted individuals and organizations worldwide by limiting face-to-face collaboration.
The PEST model is evident, as all four forces are entirely at play when
considering the future of work. The political forces impact economic forces,
which have a direct influence on society. During the pandemic, technological
forces are driving innovation and change not only in business but the culture
of society (Mancl & Fraser, 2020; Wade, 2012).
At the Pacific Northwest National Laboratory (PNNL), a U.S. Department of Energy laboratory in Richland, Washington, researchers leverage scenario planning to drive innovative methods to complete work. An example is a case where PNNL staff need to test robotics equipment with a partner from Canada. Unable to travel onsite for the complex testing, the team developed a solution using multiple cameras where the testing activity occurs remotely. Understanding the forces at play, the team met project deliverables and created cost-savings through a reduction in travel while accelerating the process. While COVID-19 created an interesting situation for the national laboratory, the organization finds better and more effective methods to accomplish work. PNNL continues to examine technological forces to improve the future digital workplace, such as office set-ups, laboratory designs, meeting space, and innovative options necessary to perform work at a national laboratory (Knopik, 2020).
References
Knopik,
C. (2020). From "Remotely Possible"
to "Possible Remotely". Pacific Northwest National Laboratory. https://www.pnnl.gov/news-media/remotely-possible-possible-remotely
Mancl,
D., & Fraser, S. D. (2020). COVID-19's Influence on the Future of Agile. 309-316.
https://doi.org/10.1007/978-3-030-58858-8_32
Rao, V.
(2011). Why Amazon Is The Best Strategic Player In Tech. Forbes. https://www.forbes.com/sites/venkateshrao/2011/12/14/the-amazon-playbook/?sh=397c3ef23bcb
Wade,
W. (2012). Scenario Planning: A Field
Guide to the Future.
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