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Scenario Planning Linking Scenarios to Strategy


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Scenario Building for Strategic Planning
Strategizing in Turbulent Environment Through Scenario Planning, Outside - In Strategy, Long Range Planning

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Scenario Planning Linking Scenarios to Strategy

  1. 1. Building Scenarios for Strategic Planning
  2. 2. Scenarios• Origin – World War II – US Air Force (RAND Corporation Herman Kahn – 1950’s) • “Scenarios describe hypothetically a succession of events with the objective of drawing attention to causal relationships and working towards decisions”. – Arab Israel War – 1967 – Yom Kippur War – 1973 –Oil Crises 2
  3. 3. What are Scenarios? • A descriptions of a Plausible future(s) – A set of future events or circumstances that would affect an organization’s performance • Perceptions about alternate future environments • Longer view in a world of great uncertainty Scenario Planning Dr. Awais e Siraj
  4. 4. Why Scenarios?Preparing for the UncertaintiesScan Monitor Forecast Assess Prepare for eventuality Uncertain Develop Review Scenarios Certainty Keep in Check Contingency Some Plan Probability Low High Impact on Firm Scenario Planning Dr. Awais e Siraj
  5. 5. Scenarios• Traditional Planning • Scenario Planning – Forecasts and Trends – Uncertainty – Most Likely Future – Multiple Plausible futures – Uses Factors in – Focuses on variables Organizational Control outside organization’s – Standard Forecast control Report – Utilizes Stories – By design, results in – Creates broad view from narrow view multiple futures Scenario Planning Dr. Awais e Siraj
  6. 6. Estimates Forecasts Scenarios Basis Data Data Intuition supplemented supplemented Supplemented by Intuition by Intuition by Data Statistical Trend Analysis Trend Analysis Environmental Tools Delphi – Analysis Delphi – Analysis Analysis Visioning Reliance Historical Data/ Historical Data/ Perceptions of Extrapolation Extrapolation FutureTime Period Short Term Short Term Long Term 1-2 Years 2-5 Years 20 – 50 years 6
  7. 7. The process• Dots on the Horizon – Signals • First tank crossing Soviet – Afghan Border • First Immigrant crossing Afghan Border into Pakistan in 1979 • Breakdown of Taliban/Unocal Negotiation on Oil Pipeline • Picture of Bilawal Bhutto Zardari with President of US • Bou Azizi 7
  8. 8. PESTEL – Identifying the Knowledge Gaps 2040 Political Economic Geopolitical Macroeconomics Governments Microeconomics Political Environment Social Technological Culture Savvy Demographics/Family Shy Faiths/Social Fabric Ecological Legal Green Environment Judicial Systems Natural Resources Laws Implementation
  9. 9. SWOT Analysis – The Connection to Contextual Environment 2040 Strengths Weaknesses Core Capabilities Inherent Strategic Advantages Identifiable Non-changeable Opportunities Threats Exploitable Imminent Sustainable Avoidable 9
  10. 10. Shift the Bullets on Post – its (or Cards) 10
  11. 11. Mapping, Clustering and Interlinking of Drivers,Trends and Uncertainties 11
  12. 12. Mapping, Clustering and Interlinking of Drivers,Trends and Uncertainties High proportion of Working Age Population Technological Development HUB of IT Demographic “Nascent” Super Transition Infrastructure Power with 250 Development Mio Pop/Tech/Peace High Disposable Income Focus on Peace and Quality of Life within International Boundaries of Diplomacy Pakistan Geostrategic Manouvering 12
  13. 13. The process• Trends: • Drivers – are those – “Driving forces are the underlying and elements that move the impacting factors plot of a scenario, that that set the pattern determine the stories of events and outcome” (Peter Schwartz) determine • Drivers help identify outcomes in the significant factors environment and time scales being • Quest for power, resources considered and security as primary drivers – Technology – Dependence on • Concerns of major players others also drives the 13 environment
  14. 14. Driving Forces Demography Economy Customers Regulat Suppliers Substitu Value & Beliefs Organization Politics ions tes Products Competitors Services Ecosystem Technology Scenario Planning Dr. Awais e Siraj
  15. 15. The Process • Assumptions – Best Educated Guess – Relative certainties are often thought of as assumptions. – Those statements about the future that are very likely to occur and hence they can be written in any scenario. – They also do not represent variables or unknowns about the future so they are not typically adjusted to one extreme or the other to enrich a set of strategic planning scenarios. 15
  16. 16. The Process• Uncertainties • Factors over which there are major question marks • Create a context for contingencies • What ‘might’ work at the end of Horizon Year? – What may not work? • Defuse bias and disarm personal agendas – Geopolitical and social world – Pace of innovation and adoption – Population and wealth 16
  17. 17. s is of Impact and Uncertainty ba n the lo itica t Cr s mo c t is e pa Ax High Predictability t th f Im /Y lec mpac tainty n X t o Se I cer a• – U n on m – t the Plo •Low Impact High Impact High Unpredictability Scenario Planning Dr. Awais e Siraj
  18. 18. Demographic Dividend Demographic TransitionGeostrategic Geostrategic Maneuvering GeostrategicNonsense Sensemaking Demographic Threat 18
  19. 19. SCENARIOS FOR PAKISTAN - HORIZON YEAR 2040 Demographic Dividend The Riyasats The SuPakistan Welcome to Pakistan. Please allow me to give you a brief history of the developments in the last Welcome to Riyasat Hai Muttahidda Islami. What you see today on the map as a syndicate of 25 years: small countries used to be a big country called Pakistan till 2020 which was part of an even In the year 2012, Bilawal Bhutto Zardari sworn in as theyoungest Prime Minister of Pakistan. He bigger United India till 1947. The arrival of US in Afghanistan in 2001 marked the beginning of was just 24 years old at that time. This was a landmark in the history of Pakistan as he was the this era. For a decade, there were hardly any successes recorded by US and NATO troops youngest head of state ever. He brought with him the energy of a 24 year old and political wisdom of his forefathers. This was also the beginning of death of orthodox political culture while in Afghanistan. By the year 2012 the tables started turning. On one end, growing driven by nepotism, family traditions and corruption. He brought a new wave of young people all terrorism continued to remain an excuse for super powers to stay in the region and kept over. The average age of the parliament dropped down to 35 years with very few veteran Geostrategic Sensemaking tension between Pakistan, India, US, Iran and Afghanistan, China and Russia escalated. A politicians. His focus was on two fronts: Technological development, for which he encouraged very interesting development took its shape on the other end. Population dynamics began to and forcefully motivated the vibrant youth that now formed more than 70 percent of Pakistan’s show their muscle. 70% percent of the Pakistani population which were below the age of 35 population, to divert all their energies in the development of the country. His second focus was on years, bustling with energy and eager to live a life of their own, began working on a destiny of the diplomatic front. On one end, he and strengthened the tarnishing relationships with China by their own. Through mutual consensus and a lot of deliberation among mounting resistance, establishing the rail road link between Gawader and Urumchi which gave access to ChineseGeostrategic Nonsense goods to warm waters and on to rest of the world. On the other end, he played a key role in they decided to divide the country into smaller units on the model of Middle East, each establishing peace in Afghanistan and brought the influence of US to its minimum. By developing sharing the border yet sustaining on their own resource be that trade or agriculture. They close ties with Iran, (Which officially declared itself a nuclear power in 2015) major challenges of made a decision based on the fact that all the giants of the region are never going to come to energy in Pakistan were sorted out and a 20 year No war pact with India brought military their senses. They focused on technology and infrastructure development, thus strengthening escalation to a halt. So, the Pakistan that you see today is the result of 20 years of tireless efforts their roots and ensuring long term stability and competitiveness. Therefore, while all the big of the youth of Pakistan who came to its rescue when it was about to collapse after 60 years of its powers were still struggling to establish their supremacy, this part went on its road to renewed existence in 2010. $ and peaceful life. A lot of people may have their own analysis of what lead to the third world I was born in 2010. My father and mother keep telling me about the “war on war in 2025 but I would build my theses on the bullish attitudes of powers terror” that started in 2001, almost 10 years before my birth. As a child, I also like US, China, Iran, India, North Korea and Russia and the population remember listening to a lot of stories about this and its manifestation through demographics of sub - continent. While all super powers provided the every day chaos, inflation, corruption, terrorism, kidnapping and military technological equipment for the war, India and Pakistan fueled the fire in actions. My fellow country men always used to lay blames on countries like the shape of its young manpower in addition to its nuclear arsenal. United States, UK, Russia, Afghanistan, India, Iran and China and it was According to statistics, population of both countries grew at about 3% per easy for me to relate these stories to my geography lesson. Some called it annum in second half of 20th Century. However, through series of ‘war for oil’ while others called it ‘war for water’. I had no idea what is aggressive steps they were able to bring down the growth at less than 2% happening. I had my own dreams and desires about the kind of life I wanted per annum but this lead to another interesting phenomenon. From 1990’s to spend. to 2040, subcontinent went through a phenomenon called demographic However for the last ten years, there is no discussion on war. My elders say transition meaning thereby that 70% of the population of both countries that ever since United States has taken away its forces from Afghanistan, remained below the age of 35 years. Without any planning for education, peace has returned. But I don’t see much change. India, China, Afghanistan, technology and development, this provided an ideal resource for Russia and UK are still the same but why my country is in ruins? We don’t warlordism, terrorism, infighting, chaos, distrust, insecurity and collapse of have electricity, education, water, agriculture, business. There are no social system. So, the Pakistan and India that you see today on the map opportunities for decent jobs. Millions of youth like me are either dead or are mere war grounds and the remains of the aftermath of 3rd world war have migrated from the country for good. We don’t know what to do. We wish that ended in 2030. They are yet to recover from Nuclear destruction. to live a peaceful, happy life with luxuries of the world but it is difficult for us to even make a decent living. Some of our wiser friends tell us that we are now more like our neighbor Afghanistan of the last decades of 20th Century 19 Hiroshima Revisited Demographic Threat or like Sub Saharan Africa. Moenjodaro
  20. 20. Stakeholder analysis• To test our understanding of the business problem• To test the internal logic of our story lines – Who is key to decision making at this time? – What really matters to him? – Who are the customers with a high interest? – Who are the predatory stakeholders? Scenario Planning Dr. Awais e Siraj
  21. 21. Considering the relative position of different stakeholders High Context Setters Players Unaffected Involved Actors Degree of Power Crowd Subjects Low Unaffected Bystanders Involved Bystanders Low Level of Interest HighScenario Planning Awais e Siraj Dr.
  22. 22. Scenario - Option Matrix 1 2 io 4 ar rio o3 io ce n en a na ri ar S Sc e en Sc Sc Withdraw Continue as is Short-term investments Long-term investment Scenario Planning Dr. Awais e Siraj
  23. 23. STRATEGIC CHOICES FOR PAKISTAN - HORIZON YEAR 2040 Demographic Dividend The Riyasats The SuPakistan • Youth Engagement • International Diplomacy • Technological • Demographic Dividend Development Geostrategic Sensemaking • Youth EngagementGeostrategic Nonsense • Technological Development • Entrepreneurship • Political Wisdom • Rethinking Military • Get out of proxy wars Strategy • Nuclear De – Escalation Moenjodaro Hiroshima Revisited 23 Demographic Threat
  24. 24. Scenarios - Nutshell • Decisions pre-tested against a range of what fate may offer are more likely to: – Stand the test of time – Produce robust and resilient strategies – Create distinct competitive advantage The Ultimate Goals of a Strategist! Scenario Planning Dr. Awais e Siraj