Modern business is changing so fast that the traditional route maps for defining corporate strategy have been made obsolete. As a result, businesses are searching for a new kind of compass to chart the course ahead. For blue-chip organisations keen to get ahead in the e-lane, scenario planning is emerging as the best way to prepare a company for virtually anthing that may happen.
As Colin Campbell, US futurist and president of Scenarioplanning.com, puts it: "In a complex, interdependent world, events often rapidly take on a life of their own that defy our best efforts to shape their outcomes - for example, the Asian flu. It is necessary to contemplate downside as well as upside scenarios potentially emerging in the future."
One of the most enthusiastic converts to scenario planning is the Post Office, which uses it as a technique to anticipate how the future may look and to ensure the business is ready to deal with a number of outcomes.
"People generally like to think along straight lines and not out of the box, so we were asked to think of challenging and extreme access scenarios to provoke debate," explains Kate Pitts, strategy manager for future business at the Post Office.
The ensuing three scenarios depicted (see box xxx) had the power to shock people into discussion, and this was perhaps the greatest value of the exercise. But the Post Office has also used scenario planning to identify new roles it could fulfil, including the logistics function of managing all the returns generated by online purchasing, for example.
A sense of deja vu frequently accompanied Pitts' scenario building exercises, which was hardly surprising since many of the models used by the Post Office are borrowed from history. An all-in-one delivery and returns service and the one-stop-shop of the ghetto both figured in the Victorian era, where they took the form of the carrier wagon and the general store.
For Pitts, a high point was the level of acceptance of her team's work within the Post Office - in particular, the broadly held view that "all three scenarios are co-existing now". She was also excited to discover how similar their scenarios were to those being developed by other organisations and recommends the DTI's paper "Smoke on the Water, Fire in the Sky" to anyone interested in predicting the future.
A major effect of scenario planning is that it has pushed the Post Office into much heavier lobbying of the Government. For example, with universal broadband access being seen as a crucial issue to a healthy future economy and society, the Post Office now responds to all Government white papers on this and other issues. As Pitts points out: "Once you start on scenario planning, don't expect it to stop. It's like permanent work in progress."
Another enthusiastic adopter of scenario planning is British Telecom, which is using it to predict how existing and emerging e-business models will shape the roles of senior professionals. Speaking at a recent communications management e-business forum, Alastair Light [CHECK HIS TITLE] used scenario planning to describe how the everyday working lives of the procurement, marketing and finance director might look.
In a networked, non-linear world, the poles of co-operation and competition become dynamic to create opportunities, innovations, trends and challenges - together with a climate of unpredictability. "Technology provides the positive feedback loop that can amplify these forces so as to create a world of increasing returns or abundance," says Campbell.
The Post Office offers the following three scenarios for the UK economy:
The Martini world
An ideal future where access to online services is any time, any place, anywhere. Take the example of Susan, a self-employed designer who works remotely on contracts for Japanese and US clients. Her smart fridge generates and sends shopping e-mails, and her e-mails appear on a wall screen in the kitchen.
A divided nation
Access to the broadband superhighway, or lack of it, divides society into haves and have-nots. The example this time is Henrik, the son of an immigrant with no formal education and no access to the Internet. He is part of an underclass, denied access to online services and opportunities, and consigned to rural ghettos where post and other delivery services refuse to call.
The economy is dominated by family units employed in marketing British historical and cultural products to overseas markets. Joe the butcher, for example, uses the Internet to export his organic sausages to China and enjoys plenty of leisure time.
BT predicts the following three job profiles for 2005:
B2B trading portals for procurement and distribution will have a huge impact on this role. Having received a forecast for the next trading quarter that indicates a shortage in supply of a critical raw material, the procurement director goes to a leading online chemical exchange and checks the spot market for plastic resins. Using a service to validate the financial background of potential new suppliers, the procurement director makes a shortlist and within hours has a number of bids to choose from.
The maturing of the application service provision model will transform the life of the marketing director. For example, a financial services company would plan and execute a marketing campaign using the services of a specialist marketing ASP. After logging onto its portal, it would be a simple matter of uploading historical market data and doing some 17-dimensional cluster analysis before initiating an e-mail campaign. The highly specialist ASP could cost the owner up to £10m to set up, but renting the application to plan and run a campaign would cost in the region of £5,000 a day.
By 2005, the books are closed daily and processes like managing bad debt are automated. The FD chairs a daily conference call in which all heads of business discuss the real-time financial position of the company. This frees up time for the FD to concentrate on managing cashflow and forecasts, and using surpluses in a creative manner.