Scenario Planning

Strategic Webinar Series15 May 2013

Agenda

• Opening remarks - Fiona Carter, Executive Officer SPS

• Scenarios for India and China to 2015 - Gill Ringland, CEO SAMI Consulting

• Scenarios on risks associated with ‘green’ technologies – John Reynolds, Executive Director SAMI Consulting

• Q&A

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The Strategic Planning Society SPS was formed in 1967 and is a global network dedicated to the

development of strategic thinking, strategic management and strategic leadership.

Our Members are individuals, corporate organizations and business schools.

We are dedicated to supporting Members to develop their strategic management and leadership capabilities.

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Our Missionimprove the practice, development

and recognition of strategic management

Our Visiona dynamic, global strategic management community

About the SPS Strategic Webinar series A series of Webinars launched in January 2013 for SPS Members

worldwide. Topics chosen for their broad application and appeal to the

Membership of SPS. To provide insight and practical recommendations for strategic

managers and leaders. Future sessions are planned to address subject areas such as strategy

and sustainability, strategy and organizational design and strategy implementation.

Let us know if you would like to contribute to an SPS Webinar.

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Scenario Planning

• There is ongoing turbulence of the world economy• Scenario planning is being increasingly used in the public, private and NGO

sectors. • Asset managers are realising that 80% of their concern needs to be with the global

business environment, and 20% with the specific investment – a reversal from the boom years to 2008.

Our speakers will share two case studies with you: • A set of scenarios for India and China to 2015, examining how they were

generated, what the scenarios got right and what not, lessons learnt. • Scenarios on risks associated with ‘green’ technologies.

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Our speakersJohn Reynolds•Executive Director of SAMI Consulting•Clients in the UK Europe and the USA. •Previously fifteen years of futures and strategy experience in the Senior Civil Service, Department of Trade and Industry, Laboratory of the Government Chemist, Radiocommunications Agency, UK Trade and Investment and the National Security Programme. .

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Gill Ringland•CEO of SAMI Consulting. •Previously head of strategy at ICL now part of Fujitsu. •Currently working with the European Commission, Eurocontrol, the Technology Strategy Board and ACCA.•Scenario planning books, also Beyond Crisis ,co-authored with Oliver Sparrow and Patricia Lustig, and recently, Here be Dragons.

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• Our offer– To enhance the capability to anticipate – To transform emergent thinking into strategy and

implementation– Consulting, backed up by executive education and research

to deliver “robust decisions in uncertain times”

• “You can never plan the future by the past”– Edmund Burke, 1729-1797

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• Report for the Corporation of London– Scenarios for India and China to 2015: implications for

Financial Services

• Report for the EU OSHA (Health and Safety Agency)– Green jobs and occupational safety and health:

Foresight on new and emerging risks associated with new technologies by 2020

• Both in pdf on the SAMI web site– www.samiconsulting.co.uk. Under News &

Publications.

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• Study commissioned by the City of London in 2006

• The City was concerned at the impact of India and China on London’s Financial Services– Were India and China the same or different?– Were India and China a threat or an opportunity?

• SAMI worked with Oxford Analytica• 5,000 copies of the report were distibuted

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• It is a mistake to see them as homogeneous – there are many Chinas and Indias.

• The dynamics of development apply to China or India as much as they do anywhere else.

• China or India can be thought of as a producer, a political power or a marketplace, each raising distinct questions leading to distinct approaches

• Our approach was - what are these countries going to be like as places to do business, in which to invest, with which to collaborate or compete?

10203040506070Attitudinal Distance

France

Japan

Spain

Brazil

China

Korea

India

Kenya

Indonesia

Nigeria

Australia

Canada

USA

UK

GermanyIndustrial

Developing

Market

Collective

Future-oriented

Mixed views

Mld Inc

Poor

Chile

S Africa

Peru

Ecuador

Guatamala

Mexico

Pakistan

Thailand

Turkey

China

India

-30

-20

-10

0

10

20

1960 1965 1970 1975 1980 1985 1990 1995 2000

Annual real GNP growth

China

Middle income

Lower middle income

Indexed GDP, 1960=100 (constant money)

500

1000

1500

2000

1960 1970 1980 1990 2000

India

Relative size in 2004

China

India

Lower middle income

Middle income

• Methodology– Worked with Oxford Analytica’s country experts to

develop the scenarios– Held workshops in the City of London to explore

implications for asset management, insurance and international banking

– Published report in October 2006

• Will focus here on– What were the scenarios and what has happened

since?

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• India is a very complex and consensus driven society

• Would frustration about – China’s example– Loss of esteem in Asia– New generation with new views

lead to further liberalisation of economic, regulatory and social controls?

• How would the balance of power between a federal style of government with localism, and a more centralised system, play out?

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Liberalisation is reversed

Liberalisation accelerates

Centralised system of governance

Federal style of governance

The Elephant Lumbers along

The Elephant

Breaks its Chains

Retreat to the Woods

2006

• India is one of the fastest growing economies in the world as a result of liberalization of the last decades, covering manufacturing, agriculture and financial services.

• The balance of power between the central government and the states has shifted slightly towards central government as India moves to play a bigger part on the world stage viz-a-viz the UN, Pakistan, etc. For comparison purposes, the central government of India has more power than the US Federal Government.

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Liberalisation is reversed

Liberalisation accelerates

Centralised system of governance

Federal style of governance

The Elephant Lumbers along

The Elephant Breaks its Chains

Retreat to the Woods

2006

• How long can China’s rapid economic growth persist?– Can China cope with the complexity it is creating?– What are the adaptation mechanisms?

• How will China interact with the rest of the world?– Will she be seen as a source of economic wealth and

growth?– And/or a threat on the world stage, a source of instability?

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2006

• China’s economic growth has continued– No longer as connected to US trade after 2008: – focus on growing internal consumer markets– 7.7% growth annualised in last quarter

• China has a foreign policy to protect its interests– investments in raw materials in Africa, Latin America,

SE Asia, ex-USSR countries ,---– Seen as a source of cyber-crime– aggressive in South China Sea– Supports North Korea (shared road bridge)

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2006

• Scenarios need to build on history but not be constrained by the past– Experts can find it difficult to recognise signs of change

• Thinking about the trajectory – how the organisation might get from A to B is important for identifying early indicators that might show which scenario was emerging– Elephant Breaks its Chains – early indicator: Indian companies

off-shoring to lower wage economies. – Lion leads the Dance – early indicator: gradual liberalisation of

the renminbi $ exchange rate

• The scenarios allowed for discussion of previously less explored future directions for China and India.

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• Project for European Agency for Safety and Health at Work (EU-OSHA) http://www.samiconsulting.co.uk/4EUOSHAreport2013.pdf

• Worked with UK Health and Safety Laboratory (HSL) and Technopolis

• Looked at new and emerging risks from new technologies in ‘green jobs’ to 2020

• Scenarios central to the project

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• Selection of (16) key drivers of change• Selection of key technologies (Nanomaterials;

bioenergy; waste management; construction; transport; manufacturing; decentralised energy production & transmission; energy storage; wind energy)

• Developed a set of base scenarios• Developed timelines for each key

technology• Analysed new and emerging risk for safety

and health at work

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1. Economic Growth• Growth In Europe• Global Growth rates

2. Green Culture and Values• Public Opinion• Government Incentives and controls• Energy Efficiency and Resource Use• Waste Management and Recycling

3. Rate of Innovation in Green technology

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Gre

en

Val

ues

Economic Growth

Deep GreenStrongly green

culture and values

Bonus WorldStrong Growth

Global and European

Win - WinHigh innovation in Green Technology

Ve

ry S

tron

g

Low Growth High Growth

We

ak

Scenario 4No progress over

a lost decade

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Innovation AxisInnovation Axis

(Diagrammatic representation only)

For Profit

For Green Future

For Green

Growth

Defined by• Strongly Green Values• High economic growth• High rate of Innovation in Green

Technologies

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• Green growth is sustainable.

• Green activities are seen as a major contribution to economic growth rather than simply as a cost

• Technology is delivering on its promise to make green growth achievable.

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• Growing public concerns over climate change and other environmental threats

• Mandate for deeply green legislation

• Green behaviour is strongly approved of

• Better models show how vulnerable the human race will be to climate change and the loss of ecosystems services.

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• The trajectory of technology accelerates – More and more young engineers and scientists

qualify around the world,

– Developments are propagated immediately

• Technology has made green growth achievable. Most innovations use fewer resources and less pollution.

• Energy science continues to deliver

• The path to a zero-carbon future is now clear

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“I guess every smart grid needs a call centre but it’s still

pretty stressful”

“We scored 8 out of 10 in the last

green audit…

how can we do even better next

time?”

“every day we continue to re-

design the human-machine

interface...”

“welcome to the L.Z.C. Safety & Health @

Work training module.

Today we look at everyday hazards...”

Win-Win Human systemsWin-Win Human systems

‘‘Win-Win ManufacturingWin-Win Manufacturing

now that robots or “co-bots” do

most of the work.... What’s there to worry

about ???

Boredom ... insecurity ...

Keeping up with innovation ... And, what if they do not

keep out of our way...

+++ THIS HUMAN HAS A

POOR TRAINING

RECORD+++ KEEP HER

UNDER ACTIVE SURVEILLANCE

+++

Defined by• High economic growth• Low Green Values• Medium rate of Innovation in Green Technology

(directed towards profits)

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• People will choose the route of increased prosperity – when faced with the costs of going green.

• Technology is helping the world to be more efficient in its use of resources – but this efficiency merely translates into

increased consumption• Carbon emissions and resource use are

still rising.– High resource price stimulate increased

supply 36

• Technology continues to advance, driven by the profit motive

• High levels of overall innovation

• High growth allows capital-intensive inventions to be implemented quickly.

• Energy sciences continue to deliver, – but it is not clear how or whether a zero-

carbon future can be achieved without unacceptable compromises

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“Drilling at 4000m is easy... no-one

can see anything, so you just get on

with it”

“we’re freezing in

here... Would love to invest in efficiency

but that would reduce this

year’s profits

“you seem to have good job satisfaction… it also pays for the new sports

car”“they call this the

graveyard shift - 7pm to 7am ... lucky we’re

allowed to go to the toilet at midnight”

‘‘Bonus World’ Human systemsBonus World’ Human systems

“Hello - how may I help

you??” (....I used to work just in

retail... Now I am expected to be a manufacturer as well. I just press the buttons and hope it is OK! )

I’ll have a Zpad4.2 ...

in lime green and purple ... and a cup of coffee while I wait please

‘‘Bonus World’ ManufacturingBonus World’ Manufacturing

Defined by

• Strongly Green Values

• Low economic growth

• Medium rate of Innovation in Green Technologies

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• A Green economy is achievable – but at the cost of economic growth.

• Sustainability and Greenness are valued by people more than economic growth

• Green activities are seen as a cost that needs to be borne.

• High taxes on pollution and carbon emissions

• Technology is helping to deliver a green future

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• Growing public concern over climate change and other environmental threats

• Mandate for green legislation • Green behaviour is strongly approved of• Better models show how vulnerable the

human race may be to climate change and the loss of ecosystems services

• Repeated resource shortages reinforce the need to be green

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• Technology continues to advance, driven by a desire to achieve sustainability

• Restricted levels of capital investment restrict the adoption of capital-intensive innovations

• Energy sciences continue to deliver– but it is now clear that low economic growth is

necessary to achieve a zero-carbon future

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“We can power the firm on these out-of-date ELV

batteries... is it the yellow

wire to white?”

“Solar panels are great

because they are ‘green’...

You don’t need skills or

qualifications, just get up

there and do it”“everybody loves this

green bicycle delivery

service ... but the trailer gets

heavier and heavier”

“welcome to the community wind energy

cooperative …”

‘‘Deep Green’ Human systemsDeep Green’ Human systems

Today it’s plasma TVs –

very hi-tech.... Tomorrow, washing

machines and hoovers. Day after... Radios

and alarm clocks.

Yeah right – who needs the latest model

when you can fix anything you

want ??

‘‘Deep Green’ ManufacturingDeep Green’ Manufacturing

• The scenarios facilitated important discussions between different groups of stakeholders in a neutral and safe environment

• Many current assumptions were challenged (including targets that are unlikely to be met)

• Some organisations realised that their plans were not robust

• The scenarios could be used for the analysis of a broader range of technologies and policies

• The scenarios were a robust tool for the anticipation and analysis of future challenges; and developing more robust ‘future proofed’ strategies and policies

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Open for Q&AIf you would like to get our monthly enewsletter eSAMI ---- please ask – esami@samiconsulting.co.uk.

For details of our training courses (with the Horizon Scanning Centre of the Government Office for Science) contact training @samiconsulting.co.uk.

For details of our Blowing the Cobwebs off our Mind events, please ask, cobwebs@samiconsulting.co.uk.

Next on the SPS Calendar

The webinar series continues:• 11 June – Strategy and Sustainability• 2 July – Global Trends in the Consulting Market

Annual General Meeting4th June 2013, 18.00-20.00 Central London