SCENARIO PLANNING: A TOOL FOR STRATEGIC THINKING
- Paul J. H. Shoemaker
(READING 4)
Among the many tools the manager can use for strategic planning, scenario
planning stands out for its ability to capture the whole range of
possibilities in rich detail. By identifying basic trend uncertainties, a
manager can construct a series of scenarios that will help to compensate
for the usual error in decision making- overconfidence and tunnel vision.
Through case studies of inter-public, an international advertising agency
and Anglo-American Corporation in South Africa, the author describes how to
build scenarios in a step by step process and how to use the resulting
theories to plan a company's future.

A planning tool, it simplifies the avalanche of data into limited number of
possible states. Scenario planning differs from other planning method, such
as contingency planning, sensitivity analysis and computer simulations. In
short, scenario planning attempts to capture the richness and range pf
possibilities, stimulating decision maker to consider changes they
otherwise ignore. At the same time, it organizes those possibilities into
narratives that are easier to grasp and use than great volumes of data.
Using scenarios, the technique is available to virtually any situation in
which the decision maker would like to imagine how the future might unfold.
In this article, He focuses particularly in developing scenarios for
strategic planning but the same basic method applies to other situation on
decision making under uncertainty.

Constructing scenarios, scenario planning attempts to compensate for two
common actor in decision making - under prediction and over prediction of
case. He describes the process of developing scenarios, and those are the
following; Define the scope, Identify the major stakeholders, Identify key
uncertainties, Construct initial scenario themes, Check the consistency and
plausibility, Develop learning scenarios, Identify research needs, Develop
quantitative models, and Evolve towards decision scenarios.

Scenario planning at Ad Agency - advertising industry has experienced the
flurry of mergers and take-overs which has resulted in giant agency system
like inter-public group, Saatchi and Saatchi, the Omnicom group and Dentsu
in Japan. Few years ago, he helped the inter-public develop scenarios to
assess whether the global agency concepts, which Marion Harper pioneered
the agency was still viable. When interviewing key advertising executives
in 1990, He asked them about the past changes in the industry and (its
causes), current trends, key uncertainties (and their interrelationships),
and their overall views of the future. Steps in the process- step one,
Identify the relevant issues by studying the past, especially its sources
of turmoil of change. Step two, Specialize the nature of investment. Step
three, Identify industry experts, managers and manageable outsiders. And
lastly, Identify critical uncertainties (step four).

Three scenarios for the advertising industry: Total Globalization, advance
communication technology speeds up homogenization of the world's culture as
global marketers expand. Many mega-agencies invest heavily in managerial
training and development, via "in-house universities" which give them a
strong edge. Popularization is "Hot", globalization and localization
flourished side by side, due to the emergence of strong regional trade
blocks. Mega-shops serve global marketers of consumer products, providing a
broad range of services and developing close relationships. In addition,
the increasing fragmentation of media favors more specialized players that
understand selected niches better. Mega-shop Dinosaurs, the mega-shop reign
for a short time, they are eventually chippered by their sheer size,
central ownership, bureaucracy that often accompanies such structures.
They are slow to adapt media changes, relying instead to personal
relationship through account executives. As a consequence, their
flexibility and creativity suffers. In addition, advertisers in many
countries remain highly sensitive to agency account conflicts.

It is useful to consider 3 classes of knowledge; (1) Things we know we
know. (2) Things we know we don't know. (3) Things we don't know we don't
know. Scenario planning requires intellectual courage to reveal evidence
that does not fit our current conceptual maps, especially when it threatens
our very existence. , "the test of a first- rate intelligence is the
ability to hold two conflicting ideas in mind at the same time, and still
retain the ability to function."