I want to join the scenario planning descussion.....

A simply great article to remind all about the importance of anticipation, planning and executing.

Great article for all to start scenario planning if has not done so. For those scenario planning already in-place, might be good to start reviewing to cater for the global changes.

I agree most scenario plannings are not very intelligent exercises. They tend to factor in the knowns- past performance of the industry, demographic growth factors, immediate political and investment climate. But esoteric factors that could come in way of planning are usually not thought of. Example, not many food companies had foreseen diversion of grains into biofuels. While attributing the exact impact of (mostly unforseen) factors is indeed difficult, I think the process of making projections should necessarily include at the very least the factors that could undermine them. This requires a creative exercise by minds that are sensitive to subtle cultural, geopolitical and demographic shifts, beyond one's area of operation or industry, as many seemingly unrelated possible factors could be linked in a complex chain.

Two of the major factors that seem to be upsetting the calculations of corporates across the world are
1. Rising crude oil prices (and therefore the retail fuel prices)&
2. Environmental imbalance (global warming)led havocs.

The rise in crude oil price is not only impacting the obvious industries like airlines but also seems to be having cascading impact across every industry that relies on transporation. Example,a third manufacturing unit for the much acclaimed sub $3000 Tata Nano car is likely to be set up in India as the transporation cost per vehicle in this low margin car could be as high as $125 per car. The scenario, however, may not be bleak for every industry. A company engaged in high end video conferencing equipments could actually benefit out of rise in crude oil as business executives reduce travel.

Global warming on the other hand is having a complex impact on food & beverages (water dependent)output, crop growing pattern and consumption pattern, insurance related to disasters, climatic refugees leading to social and political insurgencies, tourism etc.
Example, how the current drought in wheat growing areas of Australia could lead to a change in food habits of consumers in say Asia.

I would like to join the discussion on scenario planning.I have been a student of scenario planning for the past four years and attempted a few scenario building exercises in Indian Business Scenario.The result of my attempts can be seen at http://scenarioplanning-raghav.blogspot.com

Dear Paul J. H. Schoemaker,

Greetings;

Thanks for the sharing your thoughts on a subject and actually inviting the business planners and runners to think and submit solutions to the situations you have alluded to in your write up. Let me submit my reflections on the subject.

Actually I don’t agree with term global turmoil. There is a situation that has risen and carries a likelihood of generating subsequent situations that might have not been thought of or heard off. The situation has positive and negative side to it. For example higher oil prices mean more profits for the oil producing economies and more money for spending on economic development. A similarly higher food price means more money for the producing societies, hence more funds for their living conditions.

But using the term global turmoil, only the non beneficiaries has been taken as stake holders for the solutions where as the beneficiaries of the situation have more and must be invoked for their appropriate participation for the non beneficiaries to come out. May be the beneficiaries have cultivated the hike in oil prices and strategy for them is working. May be the non beneficiaries were not ready for this kind of move and initiatives. Future oil reserves are in central Asian and Caspian Sea where the production justifies this recent hike and has given a new impetus to the future explorers and marketers to implement their drill plans as they know that they can get the product priced covering their cost.

SASTI:

Situation is that there are beneficiaries and more non beneficiary entities. Solution is to replace the market forces driven mechanics by global body of price control mechanism to bring the balance in the sense the interest or ulterior interests of the price hikers don’t transgresses the interest zone of the non beneficiaries. If required market forces can retain its spiritual essence but must get enacted by global regulatory body when transgressing the global business conduct codes. This formula needs to captive products like oil and food which has a direct and deep impact on world’s major human beings.

Your solution of scenario exercising is missing this solution of global price regulators.

With warm regards,

Farooq Ahmed
fa_wll@hotmail.com

Four years ago I designed an MBA course in Scenario Planning. I have taught it for 12 trimesters, and it is now required for the management concentration. The course focuses on the affects of changing global forces on countries and businesses. Required reading includes Shell's Global Scenarios to 2025 and the US National Intelligence Committee's 2020 scenarios, Mapping the Global Future, and its Global Trends 2015: A Dialogue About the Future With Nongovernment Experts. To help students answer the What if? question systemically, I use a brain mapping tool. In 2006 this produced a scenario about corn-based ethanol that is now reality. The key to using scenarios successfully is to establish the indicators that must be tracked. The trend of the indicators shows whether the probability of a scenario becoming reality is increasing or decreasing. This allows for proactive intervention and change. The students in the course are also adding to a web page of online sources for information about countries and forces at http://libr.stedwards.edu/research_tools/research_guides/global_res.htm It is a work in progress. Five of my students have been asked to join scenario planning teams at their companies. I am delighted to see an interest from people like Shoemaker and the folks at Harvard Business in scenario planning as a tool.
Kathleen

Several years ago when living in Zagreb I was invited to participate in Croatian Futures, a project conducted by the Foundation 2020 with the support of Nextwork from Sweden. Based on that experience, which was quite valuable for the country, I have incorporated this method into my strategic planning work with organizations around Latin America (I teach at the INCAE Business School in Costa Rica). I am interested in learning of other experiences, particulary in emerging nations.

I would like to join the discussion.

Pierre El-Hnoud
Corporate Strategist
Head of Business Performance Services at KPMG Kuwait.

Dear Paul,
Greetings.Your article is timed rightly.Scenario planning is an important activity of top management apart from managing the business. Normally the top managements are busy in introducing new products or extension of product lines,mergers & acquisitions.Once products are established they focus on growth,market share, profitability,operational efficiencies and stock market ratings. The annual business plans focus on how much better than previous year. During this period they pay scant regards to what is happening in the other parts of the globe.Sometimes a small and insignificant development can actually shake the business. Some of the new developments in technologies were ignored by the bigwigs of the industry and ultimately lead to their down fall.
Some of the examples are
1) Photgraphy film when digital cameras were introduced
2) FM radio stations development in India lead to down fall in music cassettes industry as well as the cassette film industry
3)Internet booking busted the airline agents ticketing business

Prof.Shiba always advises the top management to find out those invisibles before they become visible.

N.SushilKumar

its a very good topic, scenario planning is a very important concept in every phases of business organization and even those non-profit organization, its how they survive specially in the midst of vulnerable economy.

Scenario planning is such a critical aspect of successful business operational model.

Only when the business is built upon a solid but resilient, flexible, and adaptable ground and deep ingrained culture to respond to the future demand, then the business can deal the unexpected and still comes out profitable. It is much easier said than done. This process is not only require the company culture to be pro of costumer’s interest but also require exceptional and visionary leaders on every front to ensure that their specific areas are built to anticipated the unpredictable but most importantly to have the know-how ability to work with it once it is a reality.

The sad fact is that this aspect of business operation is too often being overlooked due to the short term goals driven the general managers who normally have P&L responsibility to be very short-sighted. I could not agree more with “but scenario planning often takes a backseat to more immediate concerns: developing new products, fighting an aggressive competitor, meeting earnings targets. So when large-scale external events hit, their impact is seismic.” In fact, we are about to see this effect in the imminent future but unfortunately companies by large is very ill prepared for such an event to put it in the best terms.
Therefore, the critical aspect of scenario planning should be on every chairman of board and CEO’s radar and if feasible, to have dual reporting structure to ensure that this part of business operation is not overlooked. Scenario planning is getting more important every day. This is the future that everyone should be ready to position, protect, and grow businesses to successful businesses for years to come.

Not following steps suggested by Paul, will be 'not following common sense'.

The topic, impact and scope is so huge that all of us (at various levels) will have to contribute.

I am happy to share that I and my organisation have started doing our "bit". I contribute through the following channels:

a) personal capacity - I practice what I preach on Sustainability (e.g. replacing old equipment with new energy efficient equipment, using solar energy, efficient use of power/ water, saying no to palstic bags etc.)
b) almost same activities at my organisation level also
c) spreading the same activities across through CII (Confederation of Indian Indsutry) where I am Convener of the CSR (Corporate Social Responsibility) Tas Panel of Western UP Zonal Council
d) helping NDMA (National Disaster Management Authority) Government of India in developing various guidelines e.f. Tsunami Management Guidelines
e) helping Government of India in developing Green Purchasing and Procurement Guidelines
f) spreading awareness around this topic amongst the student community through Literacy Mission of IMA EDB (Indian Madical Association's East Delhi Branch) as the Project Coordinator

Thanks
Daman Dev Sood

Vice President - Business Continuity Management (UK, India)

Steria
T: +91 (0) 120 4306054
M: +91 9958091880

The sub-prime crisis is a culmination of negligent business management and illicit connivance between the Federal Reserve and Wall Street. The Basel II norms are reliable guides to prevent such gross errors. Greenspan is an authority on housing: he has become a consultant for a trader who has made billions from the sub-prime meltdown. It is misleading to suggest that scenario planning can ameliorate corruption. Similarly, Baxter has defaulted on well-established Quality Assurance procedures in toll manufacture. Corporations should accept unequivocal responsibilities for their brands. Chinese should be responsible solely for heparin and toys sold under their own brands-as in the case of Lenovo. Scenario planning will not help if executives are not made accountable. Scenario planning should take leaves from manufacturing best practices such as Hazard and Interoperability Studies, Hazard and Critical Control Points, and ISO 14001 procedures.

Ignoring the behavioral movement of economic down turn ruduces the incieventiveness of motivational engery of thought and the stress of inequality is a double wammy of individual maslos's theory of needs. Will the intrinsic reward needs will out weigh the exrinsict reward need. Or does the other play off on each pattern of development. Undersirable behavior has connsquences of varible directions of ignoring behavoir or not reinforcing to the hell with them, less wieght meeans duration to happier selfish out come. The supply side of resorce demad will be there of self management.Performance and productiveity restructured from wide spread repercussions lead to alternatives of thounght credibility.

Clearifing saritical attitudes of irresponsiblility because of greed in the tricckle down theorey of economics is worth th examination of those in the miscalculation game of the missing rung in the ladder. Accountablility transpancerncy infiltration into the economic system will lead to a legitimate trickle up economic sytem of the localization of city state charter verticle infrstructural scenarios to be prepaired for the proliferation of demand of engery

We as a company,have developed certain sectors in the area of human resources management.The main sector that we have manage is that we have concentrate in the fullfilling in the wishes of our clients.