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Matthew Jon Spaniol
Executive Advisor in Scenario Planning
Trends & Scenario Group
Auditing the Future




                Twentieth Century Fox
Actor- Observer Bias

• We attribute our actions to
  contextual forces, but
  blame other people’s
  personalities for their own
  misfortunes.
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
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
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
Who Uses Scenario Planning ?

                             •Boards & Directors
               SP
                             •Executive Management

                             •Division Management

                             •Business Units

                             •Functional Areas


  Source: Reynor, Michael. The Strategy Paradox. Deloitte:
  2007.
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
1970’s




Egyptians Crossing the Suez Canal
1980’s




Image credit:   salon.com
1990’s




Photo Graham Turner
2000’s
Versatility of Scenario
      Planning

•   Supply chain disruptions
•   Markets and demand
•   Consumer behavior and branding
•   Diversification strategies
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
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
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?
In preparing for battle, I have always found
    that plans are useless, but planning is
                indispensible.

          -Dwight D. Eisenhower
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?
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
Thank You


   Matthew Spaniol
msp@trendscenario.com
    +45 50126444
Scenario Planning on the Web
     trendscenario.com

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Auditing the Future

  • 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
  • 9.
  • 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