TOPIC 15 - Scenarios to indicative strategy Flashcards
What is the difference between strategy and strategic planning?
Strategic planning: “Strategic planning, as it has been practiced, has really been strategic programming, the articulation and elaboration of strategies, or visions, that already exist.”
Strategy: “capturing what the manager learns from all sources (both the soft insights from his or her personal experiences and the experiences of others throughout the organization and the hard data from market research and the like) and then synthesizing that learning into… the direction that the business should pursue.”
What not to do when going from scenarios to strategy?
- We do not calculate the most probable scenario.
That’s predicting the future. - We do not identify the best scenario and go with that one.
Unless we genuinely have shaping power over the external world, this doesn’t work.
What two questions should we ask about the strategy in the context of the scenarios?
- Is the strategy robust for the expected future (which is no more than a scenario)?
- Is it robust for plausible alternatives to the expected future? (How does current or planned decisions hold up up in each scenario?)
How does idea stimulus and decisions discovery workwhen going from scenario to strategy?
Start with the scenario, work backwards from each scenario:
* What would be a good product, strategy or market position in it?
* Ideation: Who will be successful in this world? Why? What resources, capabilities, business models, and other key success factors do they possess?
What is a gap analysis and how does it work?
Gap analysis for each scenario:
* What are key success factors for the scenario?
* What is our present strength in this capability?
Gap closure for each scenario. develop or acquire the knowledge, capabilities, and positions that the scenario requires.
Develop or acquire the knowledge, capabilities, and positions that the scenario requires.
Exploit advantages.
What elements are in the business model canvas?
Key partners: With whom?
Key activities: By doing what?
Key ressources: With what?
Value proposition: What?
Customer relationships: How?
Channels: via whom/what?
Customer segments: To whom?
Cost structure: Major costs
Revenue streams: Charge how?
Explain the strategy diamond
Arenas: Where will we be active?
Vehicles: How will we get there?
Staging: What will be our speed and sequence of moves?
Differentiators: How will we win?
Economic logic: How will returns be obtained?
Explain Osterwalder value proposition canvas
How can we create gain for the customers?
How can we relieve pain for the customers?
What gains do the customers want?
What pains do the customers have?
What are the four different approaches to going from scenarios to strategy?
Sensitivity analysis/risk assessment
Strategy evaluation
Strategy development (using a “planning-focus” scenario)
Strategy development (without using a “planning-focus” scenario)
Explain the “Sensitivity analysis/risk assessment”-approach to going from scenarios to strategy?
Sensitivity analysis/risk assessment
This approach utilizes sensitivity analysis and risk assessment to evaluate a single strategic decisions such as a potential investment, by
1. first identifying the key conditions (such as market growth rate, changes in regulatory climate, technological developments) that the future environment would have to meet for the decisions to be “go” and then assess the state of these conditions in each scenario.
2. Then you can assess how successful and how resilient or vulnerable, a “go” decision would be in each scenario
3. assess the overall resilience of a decision to proceed with the proposed strategy, and to consider the need or desirability of “hedging” or modifying the original decision in some way in order to increase its resilience
Explain the “Strategy evaluation”-approach to going from scenarios to strategy?
Strategy evaluation
This approach is the testing of an existing strategy against the different scenarios. If the company have already formulated a strategy and wish to evaluate this strategy, this can be done by creating scenarios and testing the strategy against all the scenarios. This is done by
1. First, it is necessary to disaggregate the strategy into its specific thrusts (e.g., “Focus on upscale consumer market segments,” “Diversify into related services areas”) and spell out its goals and objectives.
2. Then it is possible to assess the relevance and likely success (in terms of meeting the desired objectives) of these thrusts in the diverse conditions of the scenarios. Assessing the results of this impact analysis should then enable the management team to identify:
3. (a) opportunities that the strategy addresses and those that it misses; (b) threats/risks that the analysis has foreseen or overlooked; and (c) comparative competitive success or failure. At this point, it is possible to identify options for changes in strategy and the need for contingency planning.
4. (It is also very useful to evaluate competitors strategies, to see how yours hold up compared to competitors
Explain the “Strategy development (using a “planning-focus” scenario)”-approach to going from scenarios to strategy?
This approach is an attempt to bridge the “culture gap” between traditional planning that relies on single-point forecasting and scenario planning. Basically, it consists of selecting one of the scenarios as a starting point and focus for strategy development, and then using the other scenarios to test the strategy’s resilience and assess the need for modification, “hedging” or contingency planning.
The steps involved in this approach are as follows:
1. review the scenarios to identify the key opportunities and threats for the business, looking at each scenario in turn and then looking across all scenarios (to identify common opportunities and threats);
2. determine, based on this review, what the company should do, and should not do, in any case;
3. select a “planning focus” scenario (usually the “most probable” one);
4. integrate the strategic elements identified in step b into a coherent strategy for the “planning focus” scenario;
5. test this strategy against the remaining scenarios to assess its resilience or vulnerability;
6. review the results of this test to determine the need for strategy modification, “hedging,” and contingency planning.
Explain the “Strategy development (without using a “planning-focus” scenario)”-approach to going from scenarios to strategy?
Strategy development (without using a “planning-focus” scenario)
In this approach, executives take all scenarios at face value without judging probabilities and aim for the development of a resilient strategy that can deal with wide variations in business conditions. The step-by-step process in this approach considers:
1. identifying the key elements of a successful strategy (such as geographic scope, market focus, product range, basis of competition);
2. analyzing each scenario to determine the optimal setting for each strategy element (e.g., what would be the best marketing strategy for Scenario A? for Scenario B?);
3. reviewing these scenario-specific settings to determine the most resilient option for each strategy element; and
4. integrating these strategy options into an overall, coordinated business strategy.
