Scenario Planning in a Project Management Context

Transcription

1 Scenario Planning in a Project Management Context

2 AGENDA History of Scenario Planning What is Scenario Planning? Scenario Planning vs Forecasting Practical Application of Scenario Planning in a project environment The Scenario Planning Process Q&A Session

3 History of Scenario Planning The concept first emerged following World War II, as a method for military planning. The U.S. Air Force tried to imagine what its opponents might do, and to prepare alternative strategies

4 History of Scenario Planning In the 1960s, Herman Kahn, who had been part of the Air Force effort, refined scenarios as a tool for business prognostication

5 History of Scenario Planning Scenarios reached a new dimension in the early 1970s with Pierre Wack s work in Shell, which enabled the company to anticipate the rise and subsequent fall of oil prices in 1973

6 Companies using Scenario Planning

7 Planning - How to get it right? The phonograph is of no commercial value Thomas Edison, 1880 There is no reason for any individual to have a computer in their home. - Ken Olsen, President of Digital Computers (DEC), 1977 Internal sales forecasts for PCs for the 1980s: 295,000. Actual sales for PCs in the 1980s: over 25,000,000 - IBM, 1979 Anyone who thinks the ANC is going to run South Africa is living in cloud cuckoo land. - Margaret Thatcher, 1987 They couldn t hit an elephant at that dist - Last words of General Sedgewick, 1864

8 What is Scenario Planning? An outline of possible future development an imagined sequence of events, esp. any of several detailed plans or possibilities

9 Some Quotes on Scenario Planning In the business world, the rear view mirror is always clearer than the windshield. Warren Buffett However certain our expectation, the moment foreseen may be unexpected when it arrives. -- T.S. Eliot

10 Scenario Planning is not about predicting the future

11 Scenario Planning is about Story Telling

12 Scenario Planning is about dealing with uncertainties

13 Scenario Planning is about. What if?

14 Scenario are different stories about how the future might develop Scenario 1 Scenario 2 Scenario 3 Scenario 4 Today Single-point forecast The future

15 The Scenario of Life

16 Benefits of Scenarios New ways of thinking about and planning for the future Removal of blinders Exploration of new ideas and business opportunities A test bed for evaluation of business goals and strategies Identification of optimal and robust goals and strategies A map of the future A common mental framework for discussing future issues Faster response to a changing business environment

17 Benefits of Scenarios Scenarios aim to strech thinking about the future and widen the range of alternatives considered Michael Porter: Competitive Advantage To create the future, a company must first be capable of imagining it Gary Hamel and C.K. Prahalad: Competing for the Future Scenarios are the most powerful vehicles I know for challenging our mental models about the world, and lifting the blinders that limit our creativity and resourcefulness Peter Schwartz: The Art of the Long View

18 Rules for Scenarios 1) Multiple Views: Scenarios always involve more than one view of the future. That is their explicit objective. A single view is a forecast. 2) Qualitative Change: Scenarios are most appropriate when dealing with complex, highly uncertain situations in which qualitative, non-quantifiable forces are at work. (e.g., social values, technology, regulations, etc.). 3) Objective: Scenarios describe what could happen, not what we want to happen. Objectivity requires that scenarios be internally consistent and feasible. If scenarios are viewed as impossible or not feasible, they are rejected. The challenge is to broaden thinking without becoming unbelievable.

19 Rules for Scenarios 4) Open-Ended: Scenarios are stories. They do not provide precise details. Challenging and engaging scenarios allow the reader to add details which help bring the scenarios alive. 5) Focused and Relevant: Scenarios must be relevant to the situation at hand. They must focus on the driving forces and the critical uncertainties relevant to the decisions under consideration.

20 When to choose Scenario Planning? Engage in Scenario Planning YES

21 Scenario Planning vs Forecasting Decisions based on Expectations Future Uncertain Range of Futures Insight Robust Strategies Future Predictable Consensus Future Accuracy Optimal Strategy

22 Scenario Planning vs Forecasting Degree of Uncertainty Uncertainty Forecasting Scenario Planning Time Predictability

23 Scenario Planning vs Forecasting Scenario Planning Focuses on multiple possibilities Deals with What if? About possibilities Forecasting Predicts one future Deals with how and when About probabilities

24 Projects are always part of the Strategy VISION MISSION STRATEGY Strategy Driving Forces

25 Implementing Strategic Change Potential Strategic Investment Market Expansion Infrastructure Development Mergers & Acquisition PROJECTS New Product Introduction Process Improvement Successful Project Implementation is key to meeting the businesses strategic goals

26 Where does scenario planning apply on a project? Wherever there is a high level of uncertainty about the possible impact of a key issue on the project Examples are; Expected Business Benefits Project Scope/Schedule/Budget High Level Project Risks Stakeholder Engagement and Behavior

27 Where does scenario planning apply on a project? Scenario Planning should be done during the Project Planning process Where long term decisions have to be made Plausible scenarios should be developed for the project s critical success factors Contingencies to be defined for each scenario

28 Scenario Planning Process Scenario Planning is a team effort The team needs to be balanced and representing multiple viewpoints The more diversified the team is the better

29 Scenario Planning Process Ground Rules for the Team: Adopting a round robin approach, where each member gets to present a single relevant idea in turn, with individuals dropping out as ideas are exhausted Accepting and agreeing that no idea can be challenged or excluded on the basis that it is wrong or nonsense

30 Scenario Planning Process Ground Rules for the Team: Allowing only questions of clarification, such as Why do you think that?, What would happen if?, Who do you think would? Holding a truly democratic forum that invites creativity, innovation and fresh ideas

31 Scenario Planning Process Step 1: Define the Key Focal Issue Step 2: Define the Critical Factors (Driving Forces) Step 3: Cluster the Driving Forces Step 4: Determine the Uncertainties Step 4: Build Scenarios Step 5: Create Options Step 6: Refine Options Step 7: Maintain Learning

32 Step 1: Define the Key Focal Issue What is the key focal issue of concern facing the members? What is currently causing inaction and inertia? What confusion exists that prevents a unified focus on planning and action? What keeps you awake at night? As a group, agree the single most important issue that causes uncertainty about the future and define it in a few words: e.g. The volatile political climate in the country might impact the success of the project Describe the focal issue of concern in a way that the complete team identifies with it.

33 Power Step 1b: Stakeholder Analysis Analyze the sensitivity of the key stakeholders in relation to the key focal issue Determine how the stakeholders would be affected by the key focal issue Apply a Power/Interest Matrix to determine their power to affect the issue and their interest to do so. H Context Setters Players Crowd Bystanders L L Interest H

34 Step 2: Define the Driving Forces Individually, consider the driving forces that impact the selected issue Political Economic Social Technological Ecological Legal factors Forces indicate change of direction, size, status, position, value, etc. Subjects/topics do not Forces indicate change, but should not indicate direction or dimension unless you are 100% certain

35 Step 2: Define the Driving Forces As a group, use the round robin approach to discuss each member s most critical driving forces Ensure that you have a shared understanding of the nature of the driving force Consider your individual views on possible impacts and outcomes of these, not necessarily agreeing on what these might be Record your driving forces individually clear and concise on separate sticky notes

36 Step 2: Define the Driving Forces Discuss and agree two extreme outcomes for each driving force These should present the limits of possibility for outcome within what is considered possible and plausible over the scenario timescale In some instances, there may need to be a third extreme where development is not linear, e.g. not confined to a single technology, or will impact different social groups in different ways. 1a 1 1c? 1b

37 Step 3: Cluster the Driving Forces Cluster the driving forces through discussing linkages of cause/effect or chronology Which driving force outcomes will directly affect the outcome of others? Which events must unfold before others can take place? Name the clusters in order to identify a small number of higher level factors Record the names on separate sticky notes

38 Step 4: Determine the Uncertainties Place your cluster heading higher level factors along the full length of the low impact/high impact axis of the matrix, discussing and agreeing positions relative to each other there are no absolute measures to this What is each factor s degree of impact on the key focal issue over the timescale relative to all others? High certainty Low impact High impact Low certainty

39 Step 4: Determine the Uncertainties Select the two factors (A and B) that combine the greatest perceived impact on the core issue with the greatest uncertainty as to what that impact will be We may be highly certain that something will happen e.g. climate change but highly uncertain as to what impact it may have increasing storm activity, drought, flood? High certainty Low impact High impact Low certainty Factor A Factor B

40 Step 5: Build the Scenarios For your identified factors A and B, brainstorm your perceptions of two very different ways in which the factor might evolve over the next decade or so Think broadly about how you would describe the resultant outcomes in terms of society, environment, economy, etc. to a complete stranger who knows nothing of the issue or context Consider the interactions of the two sets of different outcomes for factors A and B best outcomes A1 and B1, worst outcomes A2 and B2 Brainstorm descriptors of four futures defined by their interaction: A1/B1, A1/B2, A2/B1 and A2/B2

41 Step 5: Build the Scenarios Add notes to provide greater depth and build rich descriptions of four possible and plausible futures Think carefully and deeply about sense making, logic.. plausibility and possibility of what you are writing Develop the storyline that links each possible future back to the present Build logical chains of causality and chronology through strategic conversation of events, actions, people, etc. Combine comfort of the known with discomfort of what has not been considered Scenario A1/B2: TITLE

42 Step 5: Build the Scenarios Develop a causal relationship between the current day drivers and the future scenarios (Forward Logic) Driver Condition Condition Condition Condition Scenario A Scenario B Scenario C Scenario D

43 Step 5: Build the Scenarios Develop a causal relationship between the future scenarios and the current drivers (Backward Logic) High Level Factor 1 High Level Factor 2 Condition Condition Condition Condition Condition Scenario A Condition Condition Condition High Level Factor 3

44 Step 5: Build the Scenarios Other Techniques that can be used to define driving forces and scenarios are; Monte Carlo Analysis Delphi Technique Mind Mapping Interrelationship Digraphs

45 Step 6: Create Options The next step is to use the scenarios to brainstorm business solutions From these we derive one simple plan for each scenario. The set of plans for each scenario are then compared: the common elements form the core business plan those differentiated by scenario become options for the future

46 Step 7: Refine Options The core plan is now established. This next stage refines the options and finalises the overall plans The approach chosen will depend upon the balance between risk and reward that the stakeholders wish to maintain The various options are tested in the different scenarios to evaluate their performance. Tests can involve script-writing, war-gaming or mathematical modelling The options are synthesised in one plan and the decision points defined, in order to achieve the business objectives

47 Step 8: Maintain Learning In the short term, an effective early-warning system can be created by establishing processes such as: short-listing critical parameters summarising significant scenario events defining how to track critical parameters and significant scenario events agreeing management process for tracking maintaining a strict schedule of reviews allocating clear responsibilities for tracking establishing processes for rapidly assessing consequences of events keeping the stakeholders up-to-date with regular bulletins adjusting business plans to keep pace with change in the business environment

48 Let s look at an Example

49 New Toll road from Kuala Lumpur to Bangkok

50 New Cure for Male Baldness

51 Mars One First Space Colony on Mars

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53 What is the BIG question?

54 Will we be able to put 4 people on Mars by 2023?

55 Who are the Stakeholders?

56 Power Stakeholder Analysis H Regulators and Agencies Banks? Context Setters Players Producers Participants Donors General Public Crowd Bystanders Bloggers News Media Action Groups L Interest H

57 What are the driving forces?

58 Political Which nation will the colony belong to? Who will be the leader of the colony? Any constitution needed? Will the world political powers stay out of the project?

59 Economical Will we be able to generate sufficient funds to get the people to Mars? Will there be enough ongoing income to sustain the colony? How much money will the project cost?

60 Sociological Will we be able to get enough volunteers? Will people be able to get through the 8 month journey? Will people be able to cope with the life on Mars? Will we be able to rely on enough viewers for the Reality show? Will there be protests and action groups? Will people stay interested in the project?

61 Technological Will we be able to reach Mars with people on board? Will we be able to sustain the radiation on Mars? Will we be able to maintain a breathable atmosphere? Will we be able to generate sufficient energy? Will we be able to grow sufficient food? Will we be able to generate sufficient water?

62 What are the key factors (clusters)?

63 Low Impact High Impact Key Factors High Uncertainty Politics Technology Funding Protests L L Low Uncertainty Interest

64 Technological Setbacks Smooth Technological advances Scenarios Abundant Funding Race for Time Smooth Sailing A B Launch Aborted C Bust the Piggy Bank D L L Limited Funding

65 Causal Relationship Current Technology Condition Condition Condition Condition Scenario A Scenario C Scenario B Scenario D

66 New Thinking in Project Management THANK YOU