Download - SCENARIO-BASED PLANNING
© 2015 MERIDIAN ASSOCIATES INC. All Rights Reserved
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SCENARIO-BASED PLANNING: AN ESSENTIAL STRATEGIC APPROACH IN TODAY’S ENVIRONMENT
DIANE M. MEISTER FOUNDER AND MANAGING DIRECTOR
MERIDIAN ASSOCIATES INC.
HERB RUBENSTEIN PRINCIPAL, MERIDIAN ASSOCIATES INC.
LECTURER, UNIVERSITY OF COLORADO DENVER
Association for Strategic Planning 2015 National Conference
Washington, D.C.
May 7, 2015
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Agenda
5 Discussion / Q & A
2 Case Examples
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4
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Where It Can Go Wrong
Scenario-Based Strategic Planning AN INTRODUCTION
Incorporating into Your Existing Strategic Plan
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Every Organization Faces Future Threats: Which Might be Yours?
Self-Driving Car
“70 Billion Connected
Devices by 2020”
Smart Fabrics
The ACA: A potential unraveling?
3D + 4D Printing
High-Speed Rail
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A Range of Those Likely to be Disrupted
Cable TV
Health Insurers
Auto Insurers
Auto Parts Makers ++
Apparel Designers / Retailers
Manufacturing / Construction / Education / Health Care / ++
Industries Likely Disrupted:
Self-Driving Car
“70 Billion Connected
Devices by 2020”
Smart Fabrics
The ACA: A potential unraveling?
3D + 4D Printing
Aviation
High-Speed Rail
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Problems with Traditional Strategic Planning
o
Future forecasts are too
often merely extrapolations
from the past
(“A remnant of the Industrial era”)
Insufficient attention to early signs of industry
disruption (“It won’t happen to us!”)
No adequate
accounting for
“Strategic Risk”
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“We’ve looked at global companies that have destroyed the most
value, the world’s biggest losers – and discovered that 80% of value destruction has come from bad strategy decisions – not from environmental shocks or poor operational
performance – from bad strategy decisions. When we interview top executives in their ‘truth rooms,’ i.e., away from the analysts, we hear that the majority have no confidence in their
strategy. 60% of 4000 top executives have no
confidence in their strategy. That’s an indictment of the way strategy has been done for a long, long time!”
Cesare Mainardi, CEO Strategy&
March 2015
An Indictment!
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A Better Approach:
Scenario-Based Strategy
o
Creates active awareness of “possible” futures
Permits deeper assessment of – and the
ability to manage – strategic risk
― Economic
― Political
― Customer Demand
― Competitive
Drives response preparation
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Value of Scenario-Based Strategy (Cont’d)
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Alternative to Unreliable Forecasts: Recognizes
the future cannot be predicted with any accuracy
Embraces Future Uncertainty:
— Seeks out, rather than stifling, diverse views
— Encourages engagement and discussion,
allowing new choices to emerge
Allows Organizational Adaptability – a valuable sense of calm when pressure is on to react
“It’s not the strongest … who survive.
It’s those who best adapt to change.”
Charles Darwin
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Our Goal Today: Promote Scenario-Based Strategic Planning
Encourage Newcomers
to consider its use
Provide Reasons for
Reconsideration Among
Triers Who Abandoned
Help Successful Scenario
Users Up Their Game:
Provide ways to further
enhance the value Scenarios
provide to your organizations
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Meridian Goal: Part II
CREATE A COMMUNITY DEDICATED TO THE WILDLY SUCCESSFUL USE OF A
SCENARIO-BASED, “PORTFOLIO OF OPTIONS” APPROACH
TO PURSUING ORGANIZATIONAL GROWTH IN MID-SIZED ORGANIZATIONS
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Scenario-Based Planning for Mid-Sized Organizations
The Meridian Approach
Mid-Market Scenario Planning should focus on:
A 3 - 10 year time frame (not 40!)
High-impact “STRATEGIC” RISKS –
even if currently LOW likelihood
TWO Scenarios per high-impact risk
Clear scenario names
Less effort on detailed scenario “stories”
More on:
— Identifying real “drivers” of change
— Your response Plans
— Defining and making the SMALL BETS
— Tracking PREDICTIVE INDICATORS
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Meridian Process:
Four Critical Components
#3: Make EARLY BETS that… a) Anticipate opportunities b) Mitigate risk
#1: The Starting Point:
Strategic Risk Assessment
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#2: Define Alternative Scenarios
#4: Define / Track Predictive Indicators
“Mountains”
“Oceans”
Indicator 1
Indicator 1
Indicator 2
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Case #1
• 2014 Oil Price Collapse
• “EARLY BETS” by two oilfield service companies
Case #2
• 2015 Supreme Court challenge to
Affordable Care Act
• SCENARIOS & PREDICTIVE INDICATORS for health care service providers
Case #3
• #1 Global Metallurgical Engineering Firm facing revitalized competitor
• Strategic RISKS, SCENARIOS, PREDICTIVE INDICATORS, EARLY BETS
CASE EXAMPLES