Wharton Chapter 10

Scenario Planning for Disruptive technologies is the title for chapter 10 and again we are trying to prognosticate what the future will bring. Some of the questions chapter 10 will attempt to help us answer are: How will a given technology develop? Will customers accept it? What if regulators or competitors change the environment?If you don't invest in the technology, will you be left behind? The scenario planning described in chapter 10 these questions and more by giving us a framework to reveal and organize underlying complexities.

The book asks 'What future should you prepare for?' but then goes on to say that this is not the right question. What you should be asking is 'what set of multiple futures might be likely and how can you best prepare for all of them? Understanding technology is not enough, as examples in the book demonstrate. It is easy to miss weak signals or to understand how seemingly unrelated changes to the environment can cause big changes. Throughout the chapter the authors use the example of printed newspapers and the challenge they face with the onset of the Internet.

Scenario planning (SP from here on) is designed to help companies address the uncertainty that the newspaper companies face because of the Internet. Scenario planning address three challenges inherent in emerging technologies; first is uncertainty. SP is designed to deal with uncertainties and these should be distinguished from risks that can be quantified using probabilities. Next is the challenge of complexity. SP focuses on how different forces influence each other over time. The last challenge is paradigm shift. SP challenges the prevailing mindset and core assumptions by amplifying weak signals that would be missed under normal circumstances.

The book outlines 10 steps in the SP process. Those 10 steps are:
1. Define the issues – in terms of time frame, scope and decision variables that you wish to understand better. Make your scope broad and review the past for instances of volatility and to get a better idea of time frame and scope.
2. Identify major stakeholders and actors – those who would have interest in or could be affected by the issues or those who can influence matters. Internal and external.
3. Identify and study main forces – those within the scope in step 1. Cover social, technological, economic, environmental and political forces. Gather relevant information that may change or shape the future. New issues may emerge. Use internal and external sources.
4. Indentify trends – those that will affect the main forces. The example given is the aging population in the US.
5. Identify key uncertainties – These are the forces whose outcome can not be known with any degree of certainty. Examples given are election outcomes, patents or the impact of the Internet on society.
6. Select the 2 most important key uncertainties – load these into a 2 by 2 matrix. Each cell will be a scenario. Add suitable outcomes from other key uncertainties to get the master scenario. Add trends and predetermined elements.
7. Asses consistency and plausibility of the initial scenarios – Are the main future trends all mutually consistent with each other? Can the outcome for the various key uncertainties all co-exist? Are the presumed actions of stakeholders compatible with their interests?
8. Asses revised scenarios in terms of how the key stakeholders might behave. Role play and share with outsiders if needed.
9. Reexamine the internal consistencies of the scenarios – to asses if the more complex interactions should be formalized via a quantitative model. Use influence diagrams or techniques from system dynamic modeling.
10. Reassess uncertainty ranges of the main variables – express how each variable looks under different scenarios.

I am not going to go into the examples given in the book. Instead I am going to move on to some SP traps to avoid. First is failing to gain management support early on. Without their support and willingness to participate SP is worthless. Next is lack of diverse inputs. Outside inputs should be sought or even put outsiders on the team. This will give a broad range of ideas. The third SP trap to avoid is failure to stimulate new strategic options. Sometimes the alternatives might not be attractive or even feasible to those not involved in SP. This is one reason why management support is needed. The last trap is not tracking scenarios via signposts. I think of this as, is the scenario actually planning out.

This chapter was hard to get my head around. I can see the theoretical advantages of scenario planning but it all still seems very much like guesswork to me. The main advantage seems to be actually taking some of the guessing out of the decision making process. However the future, no matter how hard you try, is always going to be unknown to a certain degree. I think you should taking a step back now and again to see if your scenarios are playing out like you thought would be good and should be done often. I just don’t know how much stock I would put in this. Is it working out for the newspapers?