Tag: Scenario Planning

Futuring & Innovation: Compelling Topics

  • There are forces that may help facilitate or reduce the likelihood of success of innovation, such as technological, cultural, economic, legal, ethical, temporal, social, societal, global, national, and local.
  • TED talks are videos that addresses innovations related to Technology, Education, and Design, and they can be found at this Web site,
  • Sociotechnical Systems: the interplay, impact, and mutual influence when technology is introduced into a social system, i.e. workplace, school, home, etc. (com, n.d.; Sociotechnical theory, n.d.) The social system comprises people at all levels of knowledge, skills, attitudes, values and needs (Sociotechnical theory, n.d.).
  • Think tanks are a group of people that review the literature, discuss the literature, think about ideas, do tons of research, write, provide ideas, legitimize ideas, advocate, lobby, and arguing just to address a problem(s) (Mendizabal, 2011; TBS, 2015; Whittenhauer, n.d.). In short, they are idea factories: creating, producing, and sharing (Whittenhauer, n.d.). The balance between research, consultancy, and advocacy and their source of their arguments/ideas: applied, empirical, synthesis, theoretical or academic research; help shape what type of think tank they are (Mendizabal, 2011). Finally, there are two types of think tank models, one roof model where everyone gathers in one physical place to meet face-to-face or the without walls model where members only communicate through technological means (Whittenhauer, n.d.).
  • Nominal Grouping Technique (NTG) is a tool for decision making, where it can be used to identify elements of a problem, identify and rank goals by priorities, identify experts, involve people from all levels to promote buy-in of the results (Deip, Thensen, Motiwalla, & Seshardi, 1997; Hashim et al., 2016; Pulat, 2014). Pulat (2014) describes the process as listing and prioritizing a list of options that is created through a normal brainstorming session, where the list of ideas is generated without criticism or evaluation.  Whereas Deip et al. (1977) describe the process as one that taps into the experiences of all people by asking them all to state their idea on a list, and no discussion is permitted until all ideas are listed, from which after a discussion on each item on the list can ranking each idea can begin. Finally, Hashim et al. (2016) stated that the method is best used to help a small team to reach consensus by gathering ideas from all and exciting buy-in of ideas.
  • Dalkey and Helmer (1963), described that the Delphi project as a way to use expert opinion, with the hopes of getting the strongest consensus of a group of experts. Pulat (2014) states that ideas are listed, and prioritized by a weighted point system to help reduce the number of possible solutions with no communication between the experts or of the results during the process until the very end.  However, Dalkey and Helmer (1963) described the process as repeated interviewing or questioning individual experts while avoiding confrontation of other experts.  Questions are centered on some central problem and between each round of questioning consists of available data requested by one expert to be shown to all experts, or new information that is considered potentially relevant by an expert (Dalkey & Helmer, 1963; Pulat, 2014).  The solution from this technique improves with soliciting experts with a range of experiences (Okoli & Pawlowski, 2004; Pulat, 2014).
  • Serendipitous innovations: discovering what makes one thing special and applying it elsewhere, like Velcro’s.
  • Exaptation innovations: Never giving up, finding secondary uses for the same product, and not being afraid to pivot when needed, like Play-Doh.
  • Erroneous innovations: Creating something by accident in the pursuit of something else, like Saccharin (C7H5NO3S) the artificial sweetener.
  • Kodak is a great example where a good plan but something went wrong because of circumstances beyond their control.
  • The traditional forecast is essentially extrapolating where you were and where are you are now into the future, and at the end of this extrapolated line this is “the most likely scenario” (Wade, 2012; Wade, 2014). Mathematical formulations and extrapolations is a mechanical basis for traditional forecasting (Wade, 2012). At one point, these forecasts make ±5-10% in their projections and call it the “the best and worst case scenario” (Wade, 2012; Wade, 2014).  This ± difference is a range of possibilities out of an actual 360o solution spherical space (Wade, 2014). There are both mathematical forms of extrapolation and mental forms of extrapolation and both are quite dangerous because they assume that the world doesn’t change much (Wade, 2012).
  • Scenario planning could be done with 9-30 participants (Wade, 2012). But, a key requirement of scenario planning is for everyone to understand that knowing the future is impossible and yet people want to know where the future could go (Wade, 2014).  However, it is important to note that scenarios are not predictions; scenarios only illuminate different ways the future may unfold (Wade, 2012)! Therefore, this tool to come up with an approach that is creative, yet methodological, that would help spell out some of the future scenarios that could happen has ten steps (Wade, 2012; Wade, 2014):
    1. Framing the challenge
    2. Gathering information
    3. Identifying driving forces
    4. Defining the future’s critical “either/or” uncertainties
    5. Generating the scenarios
    6. Fleshing them out and creating story lines
    7. Validating the scenarios and identifying future research needs
    8. Assessing their implications and defining possible responses
    9. Identifying signposts
    10. Monitoring and updating the scenarios as times goes on

Resources:

  • Dalkey, N., & Helmer, O. (1963). An experimental application of the Delphi method to the use of experts.Management science, 9(3), 458-467.
  • Deip, P., Thesen, A., Motiwalla, J., & Seshardi, N. (1977). Nominal group technique.
  • com (n.d.) socio-technical system. A Dictionary of Sociology. Retrieved from Encyclopedia.com: http://www.encyclopedia.com/social-sciences/dictionaries-thesauruses-pictures-and-press-releases/socio-technical-system
  • Hashim, A. T., Ariffin, A., Razalli, A. R., Shukor, A. A., NizamNasrifan, M., Ariffin, A. K., … & Yusof, N. A. A. (2016). Nominal Group Technique: a Brainstorming Tool for Identifying Learning Activities Using Musical Instruments to Enhance Creativity and Imagination of Young Children.International Advisory Board,23, 80.
  • Mendizabal, E. (2011). Different ways to define and describe think tanks. On Think Tanks. Retrieved from https://onthinktanks.org/articles/different-ways-to-define-and-describe-think-tanks/
  • Okoli, C., & Pawlowski, S. D. (2004). The Delphi method as a research tool: an example, design considerations and applications.Information & management, 42(1), 15-29.
  • Pulat, B. (2014) Lean/six sigma black belt certification workshop: body of knowledge. Creative Insights, LLC.
  • Socio-Technical Theory (n.d.) Brigham Young University. Retrieved from http://istheory.byu.edu/wiki/Socio-technical_theory
  • Wade, W. (2012) Scenario Planning: A Field Guide to the Future. John Wiley & Sons P&T. VitalSource Bookshelf Online.
  • Wade, W. (2014). Scenario Planning – Thinking differently about future innovation. Globis Retrieved from http://e.globis.jp/article/343

Whittenhauer, K. (n.d.). Effective think tank methods. eHow. Retrieved from http://www.ehow.com/way_5728092_effective-think-tank-methods.html

Sony Walkman and Scenario Planning

The Sony Walkman: Scenario-type planning

Sony didn’t do the proper scenario-type planning and only relied on standard forecasting, which is why it’s market share fell behind Apple’s.  A key requirement for scenario planning is for everyone in the planning session to understand that knowing the future is impossible and yet people want to know where the future could go (Wade, 2014).  However, it is important to note that scenarios are not predictions; scenarios only illuminate different ways the future may unfold (Wade, 2012)! Sony should have created a brainstorming session to identify as many of the driving force(s) or trend(s) that could have an impact the Sony Walkman (Wade, 2014)?  Thus, Sony should have thought of any trend or force (direct, indirect, or very indirect) that would have any effect in any way and any magnitude to the problem.

The Sony Walkman Story

Before the introduction of the Sony Walkman, cassette player technology existed in the 1960s, but households preferred to listen to vinyl records instead (Haire, 2009). The Walkman, a device that merged a light weight and portable cassette player with a light weight headphone, was introduced to the Japanese market in 1979 where it was sold out in three months at $150 per device (Adner, 2012; Franzen, 2014).  The device even had two headphone jacks so that two people can listen to the same music/recording at the same time (Haire, 2009). In the 1980s, the Walkman commanded about 50% of the market share in both Japan and the U.S. selling over 200 million devices over 30 years (Adner, 2012; Haire, 2009). The iPod made by Apple from 2001-2009 sold 160 million units (Haire, 2009).

Then, in 1990 CDs and digital music files like the mp3 came into existence (Adner, 2012; Franzen, 2014).  CDs and mp3s provided better quality and integrity than cassettes, which started to drive the cassette player’s market share towards zero.  Cassettes worked on the film, which tends to degrade with time as well, where the digital files didn’t.  The first mp3 player was from Saehan Information Systems, in 1998 (Adner, 2012).  Sony quickly adapted to these new formats as well and created the CD version of the Walkman and eventually the mp3 version of the Walkman, but it still stuck onto is proprietary music format the ATRAC (Franzen, 2014; Haire, 2009). Also, the industry saw this change from cassettes to CDs to mp3s has happened and was trying to figure out which mp3 player would eventually dominate the market like the Walkman did (Adner, 2012).

In 2001, the iPod came into the scene and took over the market, even when the market was already saturated with about 50 different types of mp3 players (Adner, 2012).  Steve Jobs learned that on its own, the iPod was useless, but with broadband download speeds and mp3 marketplace the market was ready for the easy to use the device at $399 and 5 GB of storage (Adner, 2012, Apple, n.d.). What made the iPod so successful was the analysis of the challenging forces that made mp3 players a hard market to sell and addressing them by providing seamless integration with an mp3, which was introduced the iTunes music management software in its first iteration in 2001 and re-imagined storefront called the iTunes Music store in 2003 (Adner, 2012).

By 2008, Apple had claimed 48% of the market share in mp3 devices which was similar levels of the Walkman in the 1980s (Adner, 2012). In 2010 the cassette version of the Walkman device line came to an end (Franzen, 2014). In 2015, the newest mp3 Walkman device the ZX2 is $1200 with 128 GB and expandable microSD card slot, which is now Sony’s aim for higher quality audio devices (Miller, 2015). Unfortunately, the ZX1 and ZX2 doesn’t have smartphone features like apps (Franzen, 2014; Miller, 2015).

Challenging forces to move from the Walkman to mp3 players:

Legally: In 1998-2001 there was no storefront to download mp3 music legally (Adner, 2012).

Technology: Even if music was obtained legally from CDs, people had to use a third party software to convert files, which in those computational computing days took hours to conduct (Adner, 2012).

Therefore, who cares if you are first to market (Saehan Information Systems) if there is no easy way to download mp3 music easily and legally.

Supporting forces to move from mp3 players to the iPod:

Legally: The iTunes Music Store, allowed for songs to be downloaded at a modest price and legally for $0.99, which Apple was able to get 10% commission from it (Adner, 2012).

Technology: The seamless integration of the iPod to the music storefront made the device easy to use, which helped increased its market share in the mp3 market. By 2009, over 8 Billion songs were sold, totally $800 Million in revenue (Adner, 2012).  This iTunes storefront, became a cash cow for Apple, while the iPod went under further innovation into the iPhone product line and the iPod touch product line (Apple, n.d.).

Example Scenario Planning four quadrants for the Sony Walkman case based on the forces listed above:

capture

Conclusion

Sony didn’t do proper scenario-type planning and only relied on standard forecasting, which is why it’s market share fell behind Apple’s.  However, the lesson learned from this case study is that a company doesn’t need to be the first mover to make it big in the market. A proper scenario planning could be the key to succeeding when entering a saturated market.  Apple was three years late to the party, yet it was their patience, learning about the supporting and challenging forces for mp3 player dominance, and letting the key market players align for their product, was the key to Apple’s success.

It is easy to do a scenario planning exercise on past events to today’s events (Wade, 2014). It is harder to do scenario planning moving into the future. Also, scenario planning events should never remain static.  The future is always evolving.  Thus, the scenario plan should change to reflect the new landscape, but the difference is that this planning allows for the mind to be more flexible and receptive to pivot quickly (Wade, 2014).  Scenario planning can take into account any force, not just the two listed above Political/Legal, Economical, Environmental, Societal, Technological, etc. (Wade 2012, Wade 2014).

References

Traditional Forecasting Vs. Scenario Planning

Traditional Forecasting

Traditional forecast is essentially extrapolating where you were and where are you are now into the future, and at the end of this extrapolated line this is “the most likely scenario” (Wade, 2012; Wade, 2014).  Mathematical formulations and extrapolations is a mechanical basis for traditional forecasting (Wade, 2012). At one point, these forecasts make ±5-10% in their projections and call it the “the best and worst case scenario” (Wade, 2012; Wade, 2014).  This ± difference is a range of possibilities out of an actual 360o solution spherical space (Wade, 2014). There are both mathematical forms of extrapolation and mental forms of extrapolation and both are quite dangerous because they assume that the world doesn’t change much (Wade, 2012).  However, disruptions like new political situations, new management ideas, new economic situations, new regulations, new technological developments, a new competitor, new customer behavior, new societal attitudes and new geopolitical tensions, could move this forecast in either direction, such that it is no longer accurate (Wade, 2014). We shouldn’t just forecast the future via extrapolation; we should start to anticipate it through scenario analysis (Wade, 2012).

Advantages (Wade, 2012; Wade, 2014):

+ Simple to personally understand, only three outcomes, with one that is “the most likely scenario.”

+ Simple for managements to understand and move forward on

Disadvantages (Wade, 2012; Wade, 2014):

– Considered persistence forecasting, which is the least accurate in the long term

– Fails to take into account disruptions that may impact the scenario that is being analyzed

– Leads to a false sense of security that could be fatal in some situations

– A rigid technique that doesn’t allow for flexibility.

Scenario Planning

Scenario planning could be done with 9-30 participants (Wade, 2012).  But, a key requirement of scenario planning is for everyone to understand that knowing the future is impossible and yet people want to know where the future could go (Wade, 2014).  However, it is important to note that scenarios are not predictions; scenarios only illuminate different ways the future may unfold (Wade, 2012)!

Therefore, this tool to come up with an approach that is creative, yet methodological, that would help spell out some of the future scenarios that could happen has ten steps (Wade, 2012; Wade, 2014):

  • Framing the challenge
  • Gathering information
  • Identifying driving forces
  • Defining the future’s critical “either/or” uncertainties
  • Generating the scenarios
  • Fleshing them out and creating story lines
  • Validating the scenarios and identifying future research needs
  • Assessing their implications and defining possible responses
  • Identifying signposts
  • Monitoring and updating the scenarios as times goes on

However, in a talk Wade (2014), distilled his 10 step process, to help cover the core steps in scenario planning:

  • Create a brainstorming session to identify as many of the driving force(s) or trend(s) that could have an impact on the problem at hand? Think of any trend or force (direct, indirect, or very indirect) that would have any effect in any way and any magnitude to the problem and they could fall under the following categories:
    • Political
    • Economical
    • Environmental
    • Societal
    • Technological
  • Next, the group must understand the critical uncertainties in the future, from the overwhelming list. There are three types of uncertainties:
    • Some forces have a very low impact but very in uncertainty called secondary elements.
    • Some forces have a very high impact but low uncertainty called predetermined elements.
    • Some forces have a very high impact and high uncertainty call critical uncertainties.
  • Subsequently, select the top two most critical uncertainties and model the most extreme cases of each outcome, it is “either … or …”. They must be contrasting landscapes from each other. Place one critical uncertainty’s either/or in one axis, and the other on the other axis.
  • Finally, the group should describe the different types of scenarios. What would be the key challenges and key issues would be faced in either of these four different scenarios? How should the responses look like?  What are the opportunities and the challenges will be faced? This helps the group to strategically plan and find a way to potentially innovate in this landscape, to outthink their competitors (Wade, 2014)?

Advantages (Frum, 2013; Wade, 2012; Wade, 2014):

+ Focuses on the top two most critical uncertainties to drive simplicity

+ Helps define the extremes in the four different Landscapes and their unique Challenges, Responses, and Opportunities to innovate to create a portfolio of future scenarios

+ An analytical planning method helping to discover the Strengths, Weaknesses, Opportunities, and Threats affecting each scenario

+ Helps you focus on the players in each landscape: competitors, customers, suppliers, employees, key stakeholders, etc.

Disadvantages (Wade, 2012; Wade, 2014):

– No one has a crystal ball

– More time consuming than traditional forecasting

– Only focuses on 2 of the most critical uncertainties, in the real world there are more critical uncertainties needed for analysis.

References