Electrical and Electronic Institute
Technology Foresight for Electrical, Electronic and Software Industries Planning Project
James L. Morrison, Workshop Facilitator
Scenario Planning Workshop
Anticipating the Future
We are being bombarded by tumultuous forces for change as we go into the 21st Century: global communications, global economies, increased competition among agencies for scarce resources, increasing pressure for accountability and so on. In order to plan effectively in this environment, we must be able to anticipate new developments that will affect Thailand's electrical, electronic and software industries.
This workshop is designed to assist participants to anticipate the future more effectively. The specific objectives are to:
The publications below provide a description of the scenario planning method that we will use in this workshop.
Wednesday, September 3, 2003
0915-1015 Anticipating the Future
1045-1145 Identifying critical trends
1145-1200 Prioritizing critical trends
1330-1400 Implications of top four trends for E & E industries
1500-1600 Identifying potential events
1600-1630 Prioritizing potential events
Thursday, September 4, 2003
0830-0900 Introduction to scenario planning
0900-1030 Step 1: Frame the decision focus for the electrical appliances, electronic components, and software related to appliances and components industries
1030-1100 Step 1 Reportback
1100-1200 Step 2: Specify the key decision factors
1300-1330 Step 2 continued
1330-1400 Step 2 Reportbacks
1400-1530 Step 3: Identify and analyze the key environmental forces
1600-1630 Step 3 Reportbacks
Friday, September 5, 2003
0830-1000 Step 4: Establish the scenario logics
1000-1015 Prepare reportbacks
1030-1100 Step 4: Reportbacks
1100-1200 Step 5: Select and elaborate the scenarios
1300-1400 Continue with step 5
1400-1430 Step 5 reportbacks
1445-1545 Step 6: Interpret the scenarios for their decision implications
1545-1615 Prepare reportbacks
1645-1700 Wrap-up and next steps
Exercise: Trends Defining the Context for Thailand's Electrical and Electronics Industries
Trends are estimations/measurements of social, technological, economic, environmental, and political characteristics over time. They are gradual and long-term. Trend information may be used to describe the future, identify emerging issues, and project future events. They are essential elements in anticipating the future.
Trend statements should be clearly stated, concise, and contain only one idea. Examples of trend statements are:
Note that the first four trends require quantitative data. The last trend, perceived effectiveness of EEI research and development, requires qualitative data. Both types of trends are needed to define the context within which Thailand's electronics and electrical industries function. Our task is to identify critical trends, particularly those that are emerging, derive their implications for effective planning, and construct plans to take advantage of the opportunities they offer or ameliorate their consequences if they may negatively impact the industry. In trend identification, it is important to look widely in the social, technological, economic, environmental, and political (STEEP) sectors, locally, regionally, nationally, and internationally. Developments in one sector may directly affect the industry or they may affect developments in another sector, which, in turn, will directly affect the industry.
We will begin the exercise by forming into 6-8 person groups and selecting leadership roles in each group. The roles are facilitator, flip chart scribe, reporter, and paper hanger. We will change roles for exercises as described below so that you may expect to have at least one role during the workshop. No one is allowed to serve in the same role twice.
The first task in this exercise is to identify critical trends and prioritize them. You will use the Nominal Group Process for this exercise. That is, the facilitator will pose the question: What are the critical trends that define the context within which Thailand's electrical and electronic industries function? Take five minutes to think about the question. Think broadly through the social, technological, economic, environmental, and political sectors, locally and globally. Then begin the round robin process to post nominations from individual group members to the flip chart. When the facilitator calls time, you will go to the discussion/clarification phase, where the facilitator will ensure that group members understand and agree with the trend statements (prepare for some rewriting!).
We will then prioritize the trend statements by each person in each group voting the four "dots" you will be given. The criteria for voting is for you to select the four most critical trends. Put a dot on the left hand side of each trend statement (so that we can see the frequency distribution easily). Remember: one dot per trend.
Next, select one trend and derive the implications of that trend for the electrical and electronic industries if it were to develop like you expect it to.
Prepare your reportback to include the four most critical trends that you identified and the implications of one of those trends for the industry.
Exercise: Potential Events That Can Change the Future of Thailand's Electrical and Electronic Industries
The next exercise is to identify potential events that could affect the future of Thailand's electrical and electronic industries if they occurred. We will change group leadership roles for this exercise.
Events are unambiguous and confirmable. When they occur, the future is different. Event identification and analysis is critical in anticipatory planning.
It is important that an event statement be unambiguous; otherwise, it is not helpful in the planning process because (a) it is unclear what may be meant by the statement (i.e., different people may understand the statement differently) and (b) we have no clear target that allows us to derive implications and action steps. For example, consider the following event statement: There will be significant changes in political, social, and economic systems in Thailand. Each person on a planning team may agree with this statement, but may also interpret it differently. It would be far more useful in analysis for a statement like: A suicide bomber successfully detonates a bomb at the next APEC conference in Bangkok. Or NAFTA incorporates South America in a free trade zone. The latter statements are concrete, unambiguous, and signal significant change that could impact Thailand's electronics and electrical industries. Event statements are headlines that could appear in the local newspaper.
We will again use the Nominal Group Process for this exercise. Each group will select a new facilitator, flip chart scribe, reporter, and paper hanger. When this is accomplished, the group facilitator will pose the question: What are the potential events that would change the future of Thailand's electronic and electrical industries if they occurred? Take five minutes to think about the question, remembering to think broadly through the STEEP sectors, locally through globally. Then begin the round robin process to post nominations from individual group members to the flip chart. Spend 20-30 minutes on this part of the exercise. Then go to the discussion/clarification phase, where the facilitator will ensure that group members understand and agree with the event statements (prepare for some rewriting!).
The final part of this exercise is to select those events that may have the most impact on Thailand's electrical and electronic industries in the next five years. We will use the paste-on dots for this exercise. Group members will be given four green dots to indicate their selection. Voting criteria are as follows:
The next part of the exercise is to identify the signals that your top four events (as indicated by the frequency distribution of votes) could occur. Use the Nominal Group Process. We only have 20 minutes for this part of the exercise.
The next phase of the exercise is to derive the implications of your top four events for Thailand's electrical and electronic industries. In other words, assume that these events occur. What would happen to Thailand's electrical and electronic industries as a result of each event's occurrence?
Prepare a reportback consisting of the top four events that, if they occurred, would change the future of Thailand's electrical and electronic industries. For each event, list the signals that tell you that there is some probability of occurrence in the next five years and list the implications of each event if it does occur.
Scenario Planning Exercises
The primary resource underlying the scenario exercises comes from Morrison & Wilson (1996 and 1997). Scenarios are comprehensive, internally consistent, long-term perspectives on the future. They serve as a framework for strategic thinking. They provide insightful understanding of the dynamics of change, a fuller consideration of the range of opportunities and threats facing the organization, thereby reducing the organizations vulnerability to surprises. They encourage an expanded range of strategy options; a more resilient, flexible strategy; and a better assessment of risks. They also provide a sound basis for continuous monitoring of the environment and a common framework for our thinking about the future.
For the scenario planning exercises, we will focus on three areas of the electrical and electronic industries: electrical appliances, electronic components, and the software that that supports the first two areas. Participants will self-select to work in these areas.
Step l: Identify and analyze the issues that provide the decision focus. The process starts, not by plunging into a description of the future, but rather by clarifying the strategic decisions that we are faced with, and which the scenarios should help us address. The decision can be as broad as the strategic future of the industry (e.g., "What vision of Thailand's electrical appliance industry should industry leaders pursue?) or as specific as the development of a new initiative (e.g., "Should we base our software on the Linux operating system?"). Regardless of the scope of the decision, clarifying the "decision focus" of the whole process is doubly important. In the first place, it serves to remind us that scenarios are not an end in themselves: they are a means to help us make better strategic decisions. They must, therefore, be grounded in our planning needs. Secondly, this focus considerably eases the problem of how to use the scenarios. Without it, the scenarios would too easily drift into broad generalizations about the future of our society; and their implications for our particular industry would be lost.
Step 2: Specify Key Decision Factors. Having thought through the strategic decision we want to make, we are then in a better position to examine the "key decision factors." It is easiest to think of these factors as "the main things we would like to know about the future in order to make our decision." Granted that we cannot actually know the future, it would still be helpful--if, for example, we are planning for the electronics software industry--if we had some "fix" on having 1 terebyte drives readily and inexpensively available by 2008. Once again, clarifying in our minds what the essential decision factors are helps to focus the work-process on what is important for our planning purposes.
Step 3: Identify and Analyze the Key Environmental Forces. Next, we need to review the trends and events identified and assessed at the beginning of the workshop that will shape the future of these "key decision factors." We can think of these forces as falling into one of two categories--micro-forces that impact most directly and specifically on the industry, such as changing work force skill requirements, government's role in regulating the industry; and macro-trends such as shifting demographic patterns, economic growth and income distribution, and the diffusion of information technology. The objective is to start building a conceptual model of the relevant environment, one that is as complete as possible, including all the critical trends and forces, and that maps out the key cause-and-effect relationships among these forces. The better we understand the multiplicity, interaction and uncertainties of these forces, the more realistic our planning is likely to be and the better able we can be to prepare ourselves for sudden shifts in trends and the onset of what would otherwise be surprises.
Next, we need to sort out these forces (trends and potential events), ranking each in terms of its strength of impact on the industry and degree of uncertainty of the trend or event developing as we conjecture (a simple "High-Medium-Low" scoring system as portrayed in the Figure 3 below). As a result of this sorting out, we can focus our attention on:
Step 4: Establish the scenario logics. This step is the heart of the process and establishes the basic structure of the scenarios. It is that stage in the process where intuition/insight/creativity plays the greatest role. Theoretically at least, it would be possible to develop scenarios around all the high impact/high uncertainty forces identified in the previous step. Practically, however, this would result in an unwieldy process and an impossibly large number of scenarios. Even if the sorting-out process in Step 3 reduced the number of critical forces to, say, fifteen or twenty, taking all the permutations and combinations of the alternative outcomes of these forces would produce an almost astronomically high number of scenarios, far more than the human mind could encompass and any planning system could utilize. As a practical matter, we must recognize that even those executives who are prepared to venture beyond single-point forecasting balk at having to deal with more than three, or at most four, alternative scenarios in their strategic thinking and decision making.
So the central challenge in this step is to develop a structure that will produce a manageable number of scenarios-and do so logically. Scenario logics are a response to this challenge in that they are the organizing principles around which scenarios are structured. They focus on the critical external uncertainties for the organization and present alternative "theories of the way the world might work" along each of these axes of uncertainty. For example, economic growth will be "driven by expanding trade" or "hobbled by increasing protectionism"; competition in our markets will be "marked by growing consolidation" or "restructured by the entry of new players." They are logical in the sense that a persuasive and rational case can be made for each of the contradictory outcomes; indeed, it is often the case that our disagreements about the future are the very source of these logics.
If we examine the "high impact/high uncertainty" forces, we will likely find that most of them can be grouped around two or three critical "axes of uncertainty." Each of these axes presents two opposite "logics"--different views or theories of "the way the world might work" in the future. For example, one axis might pose the alternative views that "Japanese investors will double their investments in Thailand's electrical and electronic industries" or "a recession causes a severe reduction in Japanese investments abroad" (Bear in mind that these are polar opposites, with intervening mid-points: but the essence of scenarios is, not to examine every, possibility, but to force our planning to consider the possibility of drastically different futures.)
The interplay of these axes and their alternative logics will present us with the basis for selecting 3-4 scenarios that we believe effectively bound the "envelope of uncertainty" that faces us.
Step 5: Select and elaborate the scenarios. In determining how many scenarios to elaborate, we should remember a basic dictum: develop the minimum number of scenarios needed to bound the "envelope of uncertainty." This number is usually three or four. The objective is not to cover the whole envelope of our uncertainty with a multiplicity of slightly varying futures, but rather to push the boundaries of plausibility using a limited number of starkly different scenarios.
What do we end up with? What do scenarios look like? There are many forms that scenarios can take, but the three most important features are:
Step 6: Interpret the scenarios for their strategic implications for the industry. This is the stage at which we seek to interpret the scenarios, linking them back to the strategic decision(s) we focused on in Step 1.
Strategy, of course, requires far more than scenarios in its development: strategic vision, goals and objectives, competitive analysis, assessment of core competencies, for instance. But this final step in the scenario process can develop some initial and valuable strategic insights.
There are many ways of looking at this question of "strategic implications," but perhaps the simplest and most direct approach is to answer two questions:
A second possible approach is to use the scenarios as test beds for assessing the resilience and vulnerability of the industry's current strategy. This exercise can be as straightforward as a judgmental assessment by the executive team as to how well (or badly) the strategy plays out in each scenario. A start would be to go through an opportunities/ threats assessment (as above) and then use this assessment to address a second set of questions: are we satisfied with the resilience of our current strategy, its flexibility to deal with different possible conditions? Are there things we could do to improve its resilience? And, importantly, are there contingency plans we should put in place to help us move in a different direction, if that is necessary?
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