Achieving Excellence in Sales The EMCS Marketing

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The Art of Strategic ConversationTesting
strategies via Scenario Planning Adrian Said
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Corporate Strategic Planning
Integrated Organization Effort
Satisfy Customer Needs
Focus on Long-Term Success
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Strategic Thinking FrameworkThe approach adopted
for this Workshop
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The Strategic Planning Process
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Corporate Strategic Planning
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Strategic Thinking FrameworkThe approach adopted
for this Workshop
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DESCRIBING THE ENVIRONMENT
Customers
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DESCRIBING THE ENVIRONMENT

• Economic
• Public Deficit/Fiscal/Monetary policy
• Employment
• Investment level
• Tourist arrivals
• Inflation
• Disposable income
• Rate of interest
• FDI

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DESCRIBING THE ENVIRONMENT

• Political
• EU
• Direction/Stability VISION
• Government fees
• Privatisation
• Industrial Policy
• Welfare State
• Education

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DESCRIBING THE ENVIRONMENT

• Social
• Working mothers
• Increased female participation
• Ageing population
• Shorter working weeks
• University student intake

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DESCRIBING THE ENVIRONMENT

• Technology
• Working from home (remote technology)
• E-commerce/M-commerce
• Substitutes
• Convergence of technologies

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The Competitive Environment
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The Competitive Environment
SUPPLIER POWER Factors determining power of
supplier relative to producers same as those
determining power of producers relative to
buyers RANKING HIGH MEDIUM LOW
THREAT OF SUBSTITUTES RANKING HIGH MEDIUM LOW

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The Competitive Environment
BUYER POWER Is the buyer in a position to
dictate? RANKING HIGH MEDIUM LOW
THREAT OF ENTRY RANKING HIGH MEDIUM LOW
RIVALRY RANKING HIGH MEDIUM LOW
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Overall Industry Competitiveness

• Low/Medium/High

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Introduction to Scenario PlanningForecasting
techniques

• Models are often used to anticipate real life
• Wind tunnels are used to test car shapes
• Airframe designers use fatigue tests to reveal
  potential stresses and cracks
• Mathematical and computer models are used to
  schedule and allocate resources
• Production planning for factories
• Agricultural production models
• Hospital meal consumption

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Introduction to Scenario PlanningForecasting
techniques

• Typical Forecasting Techniques
• Econometric modeling
• Delphi Method
• Scenarios

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The Danger in Forecasting is..
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Introduction to Scenario Planning

• Forecasts based on current trends or estimated
  based on history are dangerous if the environment
  is changing rapidly
• The emphasis has moved from forecasting to
  foresight

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What is Scenario Planning?
Scenario planning is a particular methodology
that allows organizations, and individual units,
to develop a clearer understanding of what the
future strategic environment might be
like. Scenario planning focuses on key drivers
of change which are critical to the future of an
organization. The scenario development process
allows staff to explore how those drivers might
affect the organization, and to make better
informed decisions about how to position the
organization for the future
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Scenario Utilization

• Method of studying the most important driving
  forces affecting our futures.
• A team process that encourages exchange of
  knowledge and issues important to the future
• Purpose To devise strategies to counter
  adversities and anticipate potential
  opportunities
• Deliverables A set of scenarios and a set of
  strategies for each scenario
• Examples Military, business, environmental
  study, politics

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Scenarios A Case Study
In times of rapid change, an inability to see an
emergent novel reality by being locked inside
obsolete assumptions often causes strategic
failure, particularly in large, well-run
companies. (Pierre Wack, HBR 1980)
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Scenarios A Case Study
Delta case study A company involved in the
blending, bottling, and distribution of alcoholic
spirits Set in a historic context of long
periods of incremental change in the business
environment
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Scenarios A Case Study
Prior to the scenario intervention, the risks
were seen as not serious if the company kept
to its original strategy
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Scenarios A Case Study
Most of our clients come to us for mainly
historical reasons. In this business, the crux is
word of mouth. People need to know who you
are. Our investment is geared towards our
existing business, both quality and throughput.
It is not intended to serve major new business
opportunities. The main constraint to
expanding our business is the demand for the type
of services we offer. Our facilities are the
key. We must continue to spend on them.
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Scenarios A Case Study
And the risks of continuing with the
current strategy were minimised.
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Scenarios A Case Study
The wider industry is looking for ways to
reduce stocks and working capital, but at the
same time to increase variety and choice to the
market. If we find some magic formula here we
have got it made. Although we are not any
longer a cost centre, we will continue to live
with the dilemma that if we improve
our efficiency our customers will expect a lower
price. There is no other price standard to look
at than our cost. There is no going market rate
for the job. Also we are very close to our
customers. We will therefore never be
extraordinary profitable. And we can prosper only
under the protective arm of the Group.
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Scenarios A Case Study
In the 70s the parent Group bought a
food company. This proved a disaster. The company
has been disposed of. But the memory lingers on.
This is one thing we will never do again. It is
unlikely that the Group will diversify from
spirits.
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Scenarios A Case Study
The organizational jolt invoked by
the intervention provided a new understanding.
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Scenarios A Case Study
The management team came to the realization that
the current configuration of operational
activities resulted in the company absorbing
suppliers and customers risk Supplier risk
arose from Delta Co. holding, and paying for,
large stocks of empty bottles, labels, packages
and bottle caps. Customer risk revolved around
the fact that customers were requesting orders at
short notice and, to accommodate these, Delta Co.
had to regularly amend production schedules,
significantly increasing their operating costs.
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Scenarios A Case Study
I never thought about this before I am
depressed, we are being stuffed by our customers,
we are locked into the risk of customers. Delta
Co. gives value, creates value for others,
why? Delta takes a worthless product and creates
value in the process, for little reward. Here
the participants were reflecting on their
experience and considering the lack of scope
Delta Co. had to plan production - due to short
lead-time demands from customers
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Further insights from the workshops
There was a realization within the team that the
industry structure had moved from three tiers
(raw materials, blending and bottling, and brand
management) to two tiers (production and customer
relationships). Delta Co. had almost no
involvement with external customers and therefore
no intelligence about market demand. This lack
of involvement resulted in little internal
understanding of the relationship between the
brand and customers, and Deltas role in that
relationship
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Further insights from the workshops
The outcome of the scenario intervention was to
introduce challenge or jolt to business-as-usual
thinking at Delta Co, causing a
re-conceptualisation of Deltas business idea
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Further insights from the workshops
Prior to the intervention, Delta had
not explicitly articulated any major
concern(s) regarding the contextual environment
and had indicated that the key managerial issue
was simply the desire for a growth in bottling of
25 (to reduce unit cost of production). .
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Further insights from the workshops
At the conclusion of the intervention, the
response being formulated had moved from a
situation of reactive production systems, to cope
with uneven demands. The new focus was in
managing the overall supply chain through
partnerships with customers and suppliers.
Deltas new business idea achieved evenness /
predictability in both supply and customer
demands lower unit cost of production. .
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Approach
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Conclusion

• What are scenarios?
• What we ARE NOT trying to do is
• predict the future
• What we ARE trying to do is
• engage in an interesting conversation about the
  future
• explore what might happen and why
• challenge some individual and shared mental
  models