FUTURES RESEARCH

7224 Future Research Quarterly - Scenarios to Robust Strategies

Mercer, D, From Scenarios to Robust Strategies: The Links Managers Make, Futures Research Quarterly, 2001

FROM SCENARIOS TO ROBUST STRATEGIES: THE LINKS MANAGERS MAKE

by David Mercer

[2,900 words]

BIOGRAPHICAL NOTE

The author, who chairs the WFS chapter in the United Kingdom, is a senior lecturer in the Centre for Strategy and Policy, at the Open University Business School, of which he was the first Head. In addition to running its MA (Marketing) programme, and being the author of a number of books, including the MBA text-book 'Marketing' (in its second editions in both the US and Europe ), he is also Director of the 'OU’s ‘Futures Observatory’ (previously the ‘Millennium Project’). Supported by a number of multinationals and governments, this is run jointly with The Strategic Planning Society.
 

FROM SCENARIOS TO ROBUST STRATEGIES: THE LINKS MANAGERS MAKE

INTRODUCTION

The Open University Business School (OUBS) Futures Observatory has been developing, and testing, new approaches to scenario forecasting for a decade. The ultimate outcomes of these processes are 'robust strategies', which protect the organisation from threats to its long-term survival. The techniques involved in the production of 'simpler scenarios' [1], and the outcomes which have resulted [2], have already been widely reported. However, the subsequent development of long-term (robust) strategies - based on these scenarios - has been less well researched.

In general, the latter part of the long-range planning process, once the scenarios have been produced, involves three main stages:

1.      Prioritising The Drivers Surfaced During The Scenario Work

2.      Identifying The Resulting Turning Points

3.      Producing Robust Strategies To Address These

The research covered in this paper, therefore, examines the links between these stages - beyond the basic production of scenarios, as adopted in practice. Indeed, it largely focuses on the latter two stages:

Isolate Turning Points

The starting point of the plan itself must be a definitive statement, of what has emerged from the preceding scenario work. This should be a formal 'map' of the turning points, which will decide the long-term future of the organization - perhaps its very survival. This is the step which defeats most organisations. If they do not recognize what factors will determine their fate, then they will not be able to create the most effective robust strategies to address them.

The first requirement, then, is to identify which are the key issues which the robust strategies should address. This is a process of focusing on the key factors which must be addressed; in the context of  limited resources. The main emphasis in this process is, therefore, on prioritization; on which factors are crucial to the future of the organization, matters of life and death, and which are relatively less important. A lesser dimension in this process will also be that of the likelihood of the ‘event’ actually occurring; but it should be noted that even a relatively unlikely event will need to be considered if its impacts could be central to the future development of the organization.

This is probably best undertaken as a group process. Our practical experience[3] suggests, however, that most groups move at this stage from the use of Post-It-Notes™ placed on the conference room wall - our preferred 'medium' for the group work involved in the earlier scenario stage -  to use of more mundane flip-charts to communicate and record their decisions.

Decide The Robust Strategies

The subsequent stage clearly is at the heart of the whole process. What is needed is a set of strategies to protect against (or to capitalise on) what has emerged from the previous step - in terms of effectively addressing the key turning points. In practice, it often proves to be considerably easier than the earlier stages; since, as is often the case, asking the right question is harder than producing the required answer. Indeed, the best format for this part of the long-range marketing plan may just be a simple two-column table; with the key turning points in the left-hand column and the matching robust strategies in the right-hand one[4].

RESEARCH TECHNIQUES

 The research reported here took the form of content analysis of students' 'Tutor Marked Assessments' (TMAs); the scenario based reports they were obliged to produce as part of the OUBS 'Challenge of the External Environment' (B885) course. Two sets of such content analyses were carried out; the first in 1993, a year after the start of the course when the initial set of traditional techniques had bedded down, and five years later in 1998, when major revisions - designed to optimise use of the techniques - had been introduced.

The results from the earlier stage were included in our earlier paper[5], which reported the usage of the various techniques, and another[6], which covered the outcomes. The problems revealed by the latter were the main stimulus for the changes later put in place. More specifically, although only a small number (32) of cases were analysed, in this way, as part of the 1993 work, it was clear that almost all these students had failed to integrate their scenarios into the subsequent corporate strategies; indeed only 17% delivered strategies which effectively addressed the outcome of the preceding scenarios.

The later, definitive exercise, completed by 129 students taking the 1998 B885 course (who agreed for their work to be used), indicated that - indeed - the problems had been largely rectified. Following the theme, of the importance of clear - indeed prescriptive - instructions, a number of techniques were not just taught on the course but were also included in the formal instructions for the student exercise. In general, these techniques were then implemented by the great majority of students. For example:

Use of Turning Points                                        88%

Production of Robust Strategies                        88%

The main lesson of this comparison, therefore, was that the more authoritative, and the clearer, the directions the more likely it is that they will be followed. This may seem an obvious conclusion, but it is an important one; especially in a field so complicated by pseudo-scientific jargon!

The further work, reported in this paper, looked more specifically at how the three stages were linked together in terms of the issues/strategies addressed.

PRACTICAL OUTCOMES

1.      Drivers for Change

1993 - the main failure of the earlier, 1993, exercise was the narrow - and misplaced - focus for the outcomes of the students' scenarios. Thus, as reported in our earlier paper[6], the work of more than half of those students was dominated by regulatory and related political issues - effectively sub-contracting their sector's external strategies to government. A further quarter chose economic drivers as the dominant elements; but just 17% looked for technical, and 8% social, influences as the main drivers operating in their sectors.

1998 - in comparison with those in 1993, the later cohort of students produced a much larger list (averaging 32 drivers each), which was more evenly balanced; with just 25% difference in 'penetration' across the first 10 drivers - as shown in the table below. Regulation still appeared, indeed as the second most frequently mentioned driver. The list of the top ten drivers was, however, dominated by technology (three entries) and social (five entries) issues, more in line with our global scenario results[7] - which are listed in the Appendix - albeit with a more practical focus, which might be expected where the scenarios were focused on (industry) sectors.

2) Turning Points

1998 - although the overall list of turning points (key issues) across all students - as shown below - was almost as long as that above for the drivers, the number identified by each student was lower (averaging 8 turning points each). More significant, however, the emphasis shifted somewhat; to marketing related issues. These accounted for three entries in the list of the top ten drivers, where social/political/economic issues dropped to three and technology to two places on the list.

In terms of the changes in levels, in particular, a comparison, below, between the original drivers and these turning points shows an even greater emphasis on marketing issues; with all of the issues relating to marketing receiving significantly greater attention.

3) Robust Strategies

1998 - much the same number of robust strategies (8 each on average), as turning points, was nominated by students. In this case, though, the direct links to the original drivers were less obviously direct; with marketing related issues dominating the head of the table, accounting for no less than seven entries in the list of the top ten drivers, where social/political/economic issues only appeared in the form of 'lobbying' and technology held just one place. Indeed, the list of the top ten might almost have come from a marketing textbook! Even so, the detailed content tracking showed that the students clearly had derived these factors from their scenario work, rather than basing them on previous teaching. The shape of the list can, therefore, be considered to be representative of the robust strategies encountered in the wider organisational environment.

On the other hand, comparing these results with the most similar ones for the turning points emerging from the previous stage, some of the greatest changes may be seen in terms of managing the various sets of relationships; especially in terms of the groups stakeholders (such as staff and customers) who are typically not centrally considered in normal corporate strategies. This is perhaps a surprising result; though conventional marketing factors still dominate the top of even this table.