Auditing the Future


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Presentation at the Audit Committee Conference

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Auditing the Future

  1. 1. Matthew Jon SpaniolExecutive Advisor in Scenario PlanningTrends & Scenario Group
  2. 2. Auditing the Future Twentieth Century Fox
  3. 3. Actor- Observer Bias• We attribute our actions to contextual forces, but blame other people’s personalities for their own misfortunes.
  4. 4. Since 2000… Since 2006… • Housing bubble• 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. 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. 6. Working with ScenariosForecasting Scenarios• Expected futures • Possible futures• Quantitative • Qualitative• Inside-out approach • Outside-in approach• Short-term function • Long-term outlook• Data extrapolation • Uncertainties
  7. 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. 8. Why in the Audit Committee?“Given the uncertain outlook, audit committeechairs should be challenging senior executives toconduct scenario planning… [a]udit committeeinvolvement can help to make this planningsufficiently comprehensive and realistic.” -E&Y Current Issues for European Audit Committee Chairs , 2012
  9. 9. 1970’sEgyptians Crossing the Suez Canal
  10. 10. 1980’sImage credit:
  11. 11. 1990’sPhoto Graham Turner
  12. 12. 2000’s
  13. 13. Versatility of Scenario Planning• Supply chain disruptions• Markets and demand• Consumer behavior and branding• Diversification strategies
  14. 14. 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
  15. 15. 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
  16. 16. 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?
  17. 17. In preparing for battle, I have always found that plans are useless, but planning is indispensible. -Dwight D. Eisenhower
  18. 18. 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?
  19. 19. 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
  20. 20. Thank You Matthew +45 50126444
  21. 21. Scenario Planning on the Web