Presentation at the Audit Committee Conference

1. Matthew Jon Spaniol
Executive Advisor in Scenario Planning
Trends & Scenario Group

2. Auditing the Future
Twentieth Century Fox

3. Actor- Observer Bias
• We attribute our actions to
contextual forces, but
blame other people’s
personalities for their own
misfortunes.

4. Since 2000… Since 2006…
• Housing bubble
• Dot.com bubble
• Smart phones
• 9/11 • Liquidity crisis
• Rise of the Net • Global power shift
• Denmark at war • Arab Spring
• Sovereign debt crisis
• Female majority in • Female majority in
Universities workforce/PhD programs
• Mobile phones (US), outearning hourly (UK)
• Currency Wars & Bitcoin
• Wall Street Robots & Tobin
Tax

5. What is Scenario Planning?
• A structured process of developing plausible
paths of contextual development
• Interactive group-based conversation
• Fundamentals:
– long view on strategy
– outside-in approach
– safe space for deliberation

6. Working with Scenarios
Forecasting Scenarios
• Expected futures • Possible futures
• Quantitative • Qualitative
• Inside-out approach • Outside-in approach
• Short-term function • Long-term outlook
• Data extrapolation • Uncertainties

7. Who Uses Scenario Planning ?
•Boards & Directors
SP
•Executive Management
•Division Management
•Business Units
•Functional Areas
Source: Reynor, Michael. The Strategy Paradox. Deloitte:
2007.

8. Why in the Audit Committee?
“Given the uncertain outlook, audit committee
chairs should be challenging senior executives to
conduct scenario planning… [a]udit committee
involvement can help to make this planning
sufficiently comprehensive and realistic.”
-E&Y Current Issues for European Audit Committee Chairs , 2012

10. 1970’s
Egyptians Crossing the Suez Canal

11. 1980’s
Image credit: salon.com

12. 1990’s
Photo Graham Turner

13. 2000’s

14. Versatility of Scenario
Planning
• Supply chain disruptions
• Markets and demand
• Consumer behavior and branding
• Diversification strategies

15. Uses of Scenario Planning
•Turn-around efforts
•Continuity planning
•Portfolio analysis
•Graduate training programs
•Strategic option analysis
•Post-merger cohesion
•Stress testing
•Innovation
•Lean
•HR

16. Signs that you might need an
audit of the strategic plan:
• Risk taking does not reflect the risk appetite of
the board
• Opaque or exclusive decision-making processes
• Managerial or board level overconfidence
• R+D needs realignment
• Overwhelming uncertainty in the market
• You are operating a mature company in a mature
industry

17. Desk Audit of the Strategic Plan
• What are the time, material and positional
needs to win in each scenario?
• What are the strategic gaps in each scenario?
• What are the risks in each scenario?
• What can be done to mitigate the risks?

18. In preparing for battle, I have always found
that plans are useless, but planning is
indispensible.
-Dwight D. Eisenhower

19. Benefits of Scenario Planning
• Provides a method and process for
anticipating complex industries.
• Improves decision-making by enhancing the
planning process.
– What do we know?
– What are we uncertain about?
– How could the future develop?
– Game to win
• Invites possibility: Why? Why not?
What if?

20. Outputs from Scenario
Planning
• Improved quality in strategic conversations
• Insightful, clear and confident decisions
• Real strategic options; Robust, resilient and
adaptive strategies; Contingency plans; New
product/service innovations; lowering the costs
of surprise
• A stress-test frameworks to rethink strategy and
business models
• Input for the annual strategic cycle

21. Thank You
Matthew Spaniol
msp@trendscenario.com
+45 50126444

22. Scenario Planning on the Web
trendscenario.com