| SCENARIO PLANNINGThere are a number of | | | | Pick a comfortable, hospitable location to conduct |
| approaches to scenario planning, and they differ | | | | a one to two day retreat.3. Include an individual |
| greatly based on the people doing the planning and | | | | from outside the industry, perhaps a board |
| the type of industry the planning is done for. | | | | member.4. Establish the rules:* Respect* No idea |
| Some of the best examples come from Citibank | | | | is crazy or bad* All alternatives are documented* |
| and Royal Dutch Shell and although the BASIC's of | | | | Outside the box thinking is encouraged5. Look at |
| each are the same the actual scenarios will be | | | | the past and the present as a platform for |
| very different. Where Shell would be concerned | | | | building future scenarios.6. Do preliminary scenario |
| with the Middle East cutting off oil supplies to one | | | | planning in small breakout sessions.7. Discuss |
| political entity or another while Citibank might be | | | | breakout session scenarios in the large group and |
| more concerned with Japan or the European | | | | play out the conversations. Build on the |
| economy going into a recession.The most | | | | concepts.In a fluid and changing environment, |
| important thing to remember is to challenge your | | | | scenarios prepare us for shocks and surprises. |
| assumptions and create a new and hopefully | | | | We have to develop a very flexible idea of |
| more realistic view of the future from which to | | | | strategy. It is no longer the fixed five year plan, |
| begin the strategic planning process. In many | | | | but a vision of the road ahead that is capable of |
| companies the entire concept of "strategic | | | | being modified at every twist and turn of events |
| planning" has been changed to "scenario planning." | | | | and still allow progress toward our objectives.In |
| If you can successfully test and restructure the | | | | the fluid environment of the distribution industry |
| assumptions of the decision makers you have a | | | | there are many possible futures. It is somewhat |
| much better chance of generating creative | | | | like the weather. It may be fine; it may rain; what |
| scenarios and, therefore, strong and aggressive | | | | if it snows? Strategy must now embrace the |
| strategic plans. The idea is not to "get it right" but | | | | "what if?" questions that go outside the reach of |
| to expand the thought process.Scenario planning | | | | our habitual mindset. This requires us to think with |
| IS NOT the logical projection of historical data so | | | | multiple futures. Each "what if" question requires a |
| that you can say, "In the next five years growth | | | | different story of the future, a scenario. Each |
| will average 3.5% a year, blah, blah, blah" - and | | | | story will be equally plausible if we can entertain |
| from there write a strategic plan.Scenario planning | | | | its assumptions. Scenarios are distinctly structured |
| IS a creative method of examining possible | | | | views of the future that are self-consistent and |
| futures and building the one that is desired while | | | | plausible. We must document two to six of the |
| taking into account what COULD happen and how | | | | scenarios your team has come up with. A bullet |
| it would affect the plan. A major advantage of | | | | point list of potential action items should |
| using scenarios to set up strategic planning is to | | | | accompany each scenario. These document |
| gain ideas and insights that would be missed by | | | | scenarios with the list of action items becomes |
| using the traditional projection process. It is also a | | | | the basis for a contingency action plan that helps |
| method of forcing the planning team to look at | | | | us prepare for the dynamics that may shape the |
| more than the "desired" outcome and, therefore, | | | | future of the distribution industry.The Benefits of |
| be prepared for or even aggressively plan for, | | | | Scenario PlanningThere are several important |
| events out of the ordinary.What do we need to | | | | benefits from taking the scenario planning |
| do to keep ourselves from being on the outside | | | | approach:1. First, it helps us to avoid the trap of |
| looking in? How is e-commerce & e-business going | | | | rigid strategy, which carries us too far down a |
| to impact our relationships with our customers | | | | given road to change easily and without great |
| and what can we do to position ourselves for | | | | cost.2. Second, it helps us get out of reactive |
| whatever you need to accomplish in that | | | | decision-making in which the environment has the |
| eventuality?If you could predict the future you | | | | upper hand over our mission. The daily grind can |
| would be telling fortunes instead of working in the | | | | all too easily take our eye off the future and |
| distribution industry.So what is this thing called | | | | confine us to a vicious cycle.3. Third, strategic |
| Scenario Planning all about?Scenario planning is just | | | | thinking with scenarios is a good way to initiate |
| a tool. Like any other management tool it is only | | | | the capability to be a learning organization, |
| valuable if you understand it and put it to | | | | especially if the scenario work is shared widely.4. |
| use.Scenario planning has progressed to the point | | | | Fourth, it is a powerful way of developing deeper |
| of becoming a popular management tool to | | | | alignment (not necessarily consensus) in |
| support and even replace, in some cases, the | | | | management teams, even those that have |
| strategic planning process. It is a useful, practical | | | | worked together over long periods of |
| and uncomplicated way to think about the future. | | | | times.Although it is important not to view |
| Scenario planning allows you to look at an array | | | | scenarios as any kind of forecasting of the future, |
| of alternative plausible futures (although it is | | | | never-the-less organizations that practice it do get |
| recommended that these alternatives should be | | | | better at spotting the driving forces that can |
| limited to two to six maximum).The purpose of | | | | change the industry and get a few steps ahead |
| scenario planning is not to imminently decide which | | | | of those who don't see it coming. This is especially |
| scenario is correct. Look at each plausible future | | | | true of discontinuities. In many situations the |
| scenario and examine how prepared your | | | | gaining of even a few months of extra lead-time |
| company is for the potential change and | | | | to meet eventualities represents serious |
| consequences. Ideally you should try to establish | | | | competitive advantage.Finally, it offers a significant |
| markers or milestones that may occur in each | | | | contribution to transforming an organization into |
| scenario that would alert you to which scenario is | | | | an alert objective focused distributor.Scenario |
| actually unfolding. By knowing in advance due to | | | | planning is based on the assumption that the end |
| these pre-determined benchmarks you put | | | | game vision and the strategic plan are flexible. |
| yourself ahead of your competition in not only | | | | Consequently, a robust flexible strategy that |
| reacting to the events but actually having an | | | | would perform well over different scenarios is |
| outline of a plan in place to take advantage of the | | | | essential. This is why it is important to identify |
| situation.To be successful at scenario planning, | | | | specific action items for each scenario. These |
| your scenario planning team and you must be able | | | | bullet pointed action items become the challenging |
| to suspend your disbeliefs in all possible | | | | factors to test the flexibility of the strategic |
| futures.Remember, the cosmic truth of scenario | | | | plan.Tips For Scenario Team LeadersScenario |
| planning rests on the belief that the future cannot | | | | planning is similar to brainstorming - in fact, |
| be predicted absolutely. Therefore, who is say | | | | brainstorming can be very effectively used PRIOR |
| what is and isn't really possible?To help in the | | | | to scenario planning to come up with scenario |
| suspension of your disbelief, consider the | | | | topics or to kick off the process. The concepts |
| following:"Silicon intelligence is going to evolve to | | | | of brain storming - i.e. no boundaries, no pooh |
| the point where it will get hard to tell computers | | | | poohing! Nothing should stop the flow and the |
| from human beings." Gorden E. Moore, Intel | | | | creativity.A. Avoid Plots Which Follow The "Most |
| Corp."Silicon will even give birth to new kinds of | | | | Likely" Progression.The idea behind scenario |
| life. The advantage of this new silicon life is | | | | planning is to get beyond the standard forecasting |
| immortality and unimaginable brainpower. Inspired | | | | done for typical strategic planning sessions. |
| scientists will forge composite human-silicon life | | | | Therefore, it is imperative that participants "think |
| forms with a common conscious that transcends | | | | outside the box." Wild scenarios can always be |
| all living beings." Robert E. Newham, Scientist, Penn | | | | reined in after the original ideas are extracted |
| State University"Super brainy machines could | | | | from them but mundane scenarios will always be |
| make the science fiction nightmare come true." | | | | mundane, and will not contribute to growth. |
| Kevin Warwick, Cybernetics ResearchThe human | | | | Thinking outside the box in its simplest term |
| brain has only a short time left as the smartest | | | | means that we should not start with today and |
| thing on earth. The speed and complexity of | | | | work forward for our scenario. We need to look |
| computers will continue to double every 18 | | | | to the future and write the scenario as if we are |
| months through 2012. The density of computer | | | | already there.B. Don't Allow "Probabilities" To Be |
| circuits will have jumped 1,000 fold and the raw | | | | Assigned To Scenarios.As soon as participants |
| processing power of a human brain will fit into a | | | | see probabilities assigned to their scenarios they |
| shoebox. With luck, that milestone may come as | | | | will begin to think inside the box again. They will |
| early as 2005." John C. Carson, Irvine Sensors | | | | try to "win" by getting the highest score, which |
| Corp.Now that we've stated our case in Cyber | | | | undoubtedly will be for the scenario closest to the |
| Power terms, perhaps any disbelief about | | | | "normal" progression. Defeat this by valuing all |
| potential evolutionary change in the distribution | | | | scenarios equally by not assigning values at all.C. |
| industry can be put to rest and we can look at | | | | Be Creative With Scenario Names To Stimulate |
| the process of Scenario Planning.Determine Your | | | | Imagination.This entire concept is oriented to |
| ObjectivesLook at specific objectives based on | | | | "outside of the box" thinking, therefore, every |
| your own end game five years into the future. | | | | effort must be made to stimulate original and |
| Ask yourself questions related to your specific | | | | creative thought, both in the scenario creation |
| objectives; should I diversify and take on | | | | process as well as the strategic planning process |
| additional products outside the traditional line? | | | | that follows it. Use of dramatic and creative |
| Should I merge with XYZ? Don't worry too much | | | | names for scenarios will reinforce the creative |
| about the types of questions that come to mind. | | | | thought process and add to the excitement.D. |
| Exploring all these questions may lead you to | | | | Demand Ownership Of The Scenarios.Managers at |
| discovering the right ones that fit your specific | | | | every level MUST accept ownership of the |
| objectives.Remember, looking into the future, | | | | scenario process and the scenarios that are |
| trying to determine the impact of roll ups, big box | | | | generated by it. The final direction taken by the |
| competition and factory direct channel confusion | | | | company may be far from the plots in the |
| often leads us only to uncertainty. However, in | | | | scenarios, but the final result will be crafted from |
| spite of the uncertainty, it is no longer acceptable | | | | the imagination and the findings in the scenarios.E. |
| to just try to run your business the way you | | | | Be Creative In Communicating Scenarios.The |
| have in the past. Evolution in the distribution | | | | scenarios created are the basis for the planning |
| industry brought on by the new century is forcing | | | | process. If they are dull and communicated |
| us to set a course in advance, to steer through | | | | poorly, the enthusiasm with which they were |
| the cloudy issues on the horizon and put a stake | | | | created will be lost to the strategic planning |
| in the ground by investigating different | | | | process. Relate the strategies in a creative fashion |
| scenarios.You cannot afford to wait for certainty | | | | - as a TV news broadcast, a skit, or some other |
| to appear. By then it may be too late. | | | | creative outlet.Scenario planning can be |
| Consequently, scenario planning can help us make | | | | fun.Scenario planning encourages creativity and it |
| decisions in the midst of uncertainty. That makes | | | | will challenge managers to get beyond old |
| it a valuable tool.Identify External FactorsFactors | | | | paradigms. Use it as a platform to begin your |
| such as market size, market trends, industry | | | | strategic planning process. You may find it much |
| trends, consumer spending, new construction, | | | | easier to determine your "end game" once you've |
| home sales, remodeling, government regulations, | | | | completed a day of scenario planning. |
| undiscovered market niches and even the level of | | | | Try it, you might like it. Besides, you have |
| consumer debt should be considered in the | | | | everything to gain and nothing to lose.Dr. Rick |
| process. Given the impossibility of knowing | | | | Johnson () is the founder of CEO Strategist LLC. |
| precisely how the future will evolve means that | | | | an experienced based firm specializing in leadership. |
| you must adopt a strategy that is flexible enough | | | | CEO Strategist LLC. works in an advisory capacity |
| to work well over several different | | | | with company executives in board representation, |
| scenarios.Identify the Driving ForcesForces within | | | | executive coaching, team coaching and education |
| your organization and within the distribution | | | | and training to make the changes necessary to |
| industry are critical to your scenario planning. Ask | | | | create or maintain competitive advantage. You |
| yourself which of these forces are the most | | | | can contact them by calling 352-750-0868, or visit |
| critical to your future objectives. Some may | | | | for more information.Rick received an MBA from |
| affect the scenarios equally. Some may lead you | | | | Keller Graduate School in Chicago, Illinois and a |
| to altering options within the scenario. The | | | | Bachelor's degree in Operations Management from |
| purpose of identifying these forces is not to | | | | Capital University, Columbus Ohio. Rick recently |
| pinpoint future events but to highlight forces that | | | | completed his dissertation on Strategic Leadership |
| may push your company or the industry in | | | | and received his Ph.D. He's also a published book |
| different directions.Ready, Set, GoSo, we've | | | | author with four titles to his credit: "The Toolkit |
| taxed our brain and determined our "end game" | | | | for Improved Business Performance in Wholesale |
| for our strategic planning session and it's now time | | | | Distribution," the NWFA & NAFCD "Roadmap", |
| to get a team together to take a shot at this | | | | Lone Wolf-Lead Wolf-The Evolution of Sales" and |
| thing called Scenario Planning. How do we start?1. | | | | a fiction novel - "Shattered Innocence." Rick's next |
| Establish an initial planning team. This will likely | | | | book due to be published in November is titled; |
| include all those involved in the strategic planning | | | | Lone Wolf - Lead Wolf, The Evolution of |
| process, key decision makers and stakeholders.2. | | | | Leadership. |