STRATEGIC MANAGEMENT

THROUGH

VISIONARY LEADERSHIP

THE HISTORY AND LANDSCAPE OF STRATEGIC MANAGEMENT ARE LITTERED WITH WRECKAGE OF BUSINESSESES THAT WENT AWRY

SOME OF THOSE ORGANIZATIONSHAD BRIGHT AND EXPERIENCED CEO

BUT…

FAILED TO GRASP AND USE THE FORGOTTEN ”S”OF STRATEGIC LEADERSHIP TOOL…

SCENARIO PLANNING

TRADITIONAL TOOLS SUCH AS…

SENSITIVITY ANALYSIS

MONTE CARLO SIMULATION

ECONOMETRICS MODELS

EXTRAPOLATION OF PAST AND PRESENT EVENTS

…DO NOT SUFFICE

BECAUSE OF…

SPEED OF INFORMATION & TECHNOLOGY

ECONOMIC CYCLE

CHANGE IS THE NEW NORMAL…IN AFAST-MOVING WORLD

AND THIS TYPE OF EVENTS…

FINANCIAL CRISIS IN 2008

JAPAN EARTHQUAKE

EBOLA EPIDEMIC

OIL PRICE

WARS IN THE MIDDLE EAST

…SO… WHAT IS A MUST HAVE TOOL IN YOUR ARSENAL?

… IT’S CLEARLY

SCENARIO PLANNING

…BEFORE ELABORATING ANY FURTHER …

…IT WILL BE NECESSARY TO KNOW THE COGNITIVE BIASES AFFECTING OUR DECISION-MAKERS

…THEN WE CAN UNDERTANDWHAT SCENARIO PLANNINGCAN DO AS A REMEDY

…AGAINWHAT ARE THE STRATEGIC BIASES AFFECTING OUR DECISION MAKERS?

COGNITIVE BIASES AFFECTING OUR

DECISION MAKERS ARE…

THE TENDENCY, WHEN MAKING HIRING DECISIONS, TOFAVOR POTENTIAL CANDIDATES

WHO DON’T COMPETE WITH ONE’S PARTICULAR STRENGTH

1

THE TENDENCY TO BE OVER-OPTIMISTIC, OVERESTMATING FAVORABLE AND PLEASING OUTCOMES

2

THE TENDENCY TO OVERESTIMATE ONE’S DEGREE OF INFLUENCE OVER EXTERNAL EVENTS

3

THE TENDENCY TO DO (OR BELIEVE) THINGS MANY OTHER PEOPLE DO (OR BELIEVE) THE SAME

4

IS A COGNITIVE HEURISTIC IN WHICH A DECISION MAKER RELIES UPON KNOWLEDGE THAT IS READILY AVAILABLE RATHER THAN EXAMINE OTHER ALTERNATIVES

5

THIS HAPPENS WHEN BETTER INFORMED-PEOPLE FIND IT EXTREMELY DIFFICULT TO THINK ABOUT PROBLEMS FROM THE PERSPECTIVE OF LESS-INFORMEDPEOPLE

6

EXESSIVE PRIDEOR SEL-CONFIDENCE

7

THE TENDENCY TO SEARCH FOR, INTERPRET AND FOCUS ON AND REMEMBER ANY INFORMATION IN A WAY THAT CONFIRMS ONE’SPRECONCEPTIONS

8

THE SITUATION THATOCCURS WHEN THE DECISION MAKER ALREADY MADE UP HIS MIND SO THAT HE DOESN’T FULLY EXAMINEOTHER OPTIONS

9

THIS SITUATION OCCURS WHEN THE CEO USE ALL HIS INFLUENCE TO SELECTIVELY CHOOSE PEOPLE WHO WE WILL NEVER CHALLENGE OR DISAGREE WITH WHATEVER HE DOES

10

SCENARIO PLANNING FORGOTTEN “S” OF STRATEGIC LEADESHIP

WHAT IS SCENARIO PLANNING?

“SCENARIO PLANNING IS A STRUCTURED WAY FOR ORGANIZATIONS TO THINK ABOUTTHE FUTURE”

“An internally consistent view of what might turn out to be—not a forecast, but one possible future outcome (Porter, 1985).”

“Scenario planning reduces overconfidence

bias,(Schoemaker,93)

”

“Scenario planning

reduces the confirmation

bias, (Bradfield,2008)”

WHAT ARE THE TWO PILLARS OF SCENARIO PLANNING?

TRENDS…

UNCERTAINTIES

HOW DO YOU ASCERTAIN THE TRENDS IN YOUR INDUSTRY?

YOU CAN USE SOME WELL-KNOWNFRAMEWORKS LIKEMACROECONOMIC ENVIRONMENTANALYSIS

…OR YOU CAN BREAKDOWN YOURBUSINESS BY STEKEHOLDERS

…AND, I FORGOT THE VALUE CHAIN

HOW DO YOU ASCERTAIN THE UNCERTAINTIES FACING YOUR ORGANIZATION?

CREATE BRAINSTORMING SESSIONS WITHIN YOUR ORGANIZATION WITH A CROSS-FUNCTIONAL TEAM

USE QUALITATIVE RESEARCH SUCHAS DELPHI METHOD WITH EXPERTSOF YOUR CHOICE

…NOW YOU ARE READY TOBUILD YOUR SCENARIOS

DEFINE THE SCOPE AND TIME FRAME OF YOUR SCENARIO PLANNING

…DEPENDING ON YOUR CONTEXT AND INDUSTRY… AND THE TRENDS ANDUNCERTAINTIESYOU’VE IDENTIFIED EARLIER

…FIRST FOCUS ON TWO UNCERTAINTIES IN YOUR CONTEXT AND INDUSTRY

…THEN ASCERTAIN INTERRELATIONSAND CORRELATIONS AMONG YOUR VARIABLES

…INCLUDING THE UNCERTAINTIES AND TRENDS YOU’VE IDENTIFIED EARLIER

…THEN YOU SHOULD GET SOMETHING LIKE THE MATRIX BELOW

UNCERTAINTY 1

THE FOUR SCENARIOS YOUIDENTIFIED ARE THE PLAUSIBLE FUTURE, BUT REMEMBER YOU CAN PREPARE MORE SCENARIOS!!

…WHEN YOU ANALYZE YOUR PLAUSIBLE FUTURE IN THE FOUR SCENARIOS,WHAT ARE THE KEYS SUCCESS FACTORS OR COMPETENCIES YOU WILL NEED TO SUCCEED?

…IN OTHER WORDS, WHAT ARE THE COMPETENCIES YOU MUST HAVE THAT ARE COMMON TO ALL SCENARIOS?

THESE COMPETENCIES WILL BE YOUR “ROBUST SCENARIO”…AND YOU MUST BEGIN TO BUILD THESE COMPETENCIES TO SUCCEED

…DO THE COMPETENCIES GAP ANALYSIS BETWEEN THE FUTURE COMPETENCIES NEEDED AND THE ACTUAL COMPETENCIES AT YOUR ORGANIZATION

HAVE A MONITORINGMECHANISM/TEAM AT YOUR ORGANIZATION TO MONITOR YOUR SCENARIOS

…THE MONITORING WILL WORK LIKE “IF THIS THEN THAT”THAT IS, FOR EXAMPLEIF THE FDA APPROVES THAT DRUG THEN THE SCENARIO LINKED TO THAT IS UNFOLDING

…ANOTHER EXAMPLEIF A BILL LINKED TO A SPECIFIC SCENARIO IS APPROVED IN THE CONGRESS THEN THAT SCENARIO ISUNFOLDING.OR IN A FREE TRADE AGREEMENT YESOR NO MEANS DIFFERENT SCENARIOS

CONGRATULATION!YOU CAN NOW MANAGE LIKE

VISIONARY LEADER

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