gm presentation-scenario planning

Primer on Strategy

Q - What is strategy?A - It’s as easy as

“ABC...”

Strategy: Creating “shareholder value” through effective strategy is as easy as A-B-C...

Where you AreWhere do you

want to Be

How to get there

(Course to follow)

Monitor & Evaluate(Strategic control)

Resource plansFinancial plans

Infrastructure plans

© Strategy Institute,after Bryson & Alston

SWOTSWOT

““PEST”PEST”

Not the only “model” – but the easiest to understand!

Desired Desired

futurefuture

ScenariosScenarios

Testing understanding

1. In your groups, select any organisation (Be creative!)

2. Using the ABC model of strategy formulation, how would you apply the three stages to this organisation

What is “Management?”

A quick refresher

The “4 functions” model Planning Organising Leading Controlling

The perfect marriage?Strategy Management

Easy as “ABC” Where Are you Where do you want

to Be The Course to follow

The “4 functions” model• Planning• Organising• Leading• Controlling

Henceforth you shall be known as “Strategic

Management”

What is the difference between strategic planning and strategy management?

Strategic Management is… Formulating a long-term view (vision and

mission) Focused towards (setting objectives) and

implementing programmes and projects that get you there

Using objectives as measurement to establish if the result attained the desired outcome;

An iterative process; Continuous evaluation

Definition…

The planning (formulation)implementationand evaluation of specific actions that will enable an organisation to achieve its set goals and objectives.


Imagine you are required to conduct an in-house training session in your unit group.

Discuss how you would explain to others what “Strategic Management” is.

The objective is to be able to relate to others in simple terms what is involved in the process

STRATEGIC MANAGEMENTSTRATEGIC MANAGEMENTFood for ThoughtFood for Thought

Every organisation requires 4 basic Every organisation requires 4 basic ingredients for it to be successful :ingredients for it to be successful : LeadershipLeadership A strategic planA strategic plan A management team capable of A management team capable of

implementing the strategy, andimplementing the strategy, and An action planAn action plan

(Peter Flack turnaround specialist (Peter Flack turnaround specialist Leisurenet)Leisurenet)

THE STRATEGIC PLANNING PROCESSTHE STRATEGIC PLANNING PROCESS

DEVELOP Vision

MissionValues

DEVELOP Vision

MissionValues

LONG-TERMOBJECTIVES

LONG-TERMOBJECTIVES

GENERATE, EVALUATE,

SELECTSTRATEGIES

GENERATE, EVALUATE,

SELECTSTRATEGIES

IMPLEMENTSTATEGIES –MGT ISSUES

IMPLEMENTSTATEGIES –MGT ISSUES

IMPLEMENTSTRATEGIES –MRK, FIN, HR,

OPS, ETC

IMPLEMENTSTRATEGIES –MRK, FIN, HR,

OPS, ETC

MEASURE, EVALUATEPERFORM

MEASURE, EVALUATEPERFORM

EXTERNALAUDIT

EXTERNALAUDIT

INTERNAL AUDIT

INTERNAL AUDIT

FEEDBACK

STRATEGY FORMULATION STRATEGY IMPLEMENTATION STRATEGY

EVALUATION

STRATEGIC PLANNING PHASESSTRATEGIC PLANNING PHASES

VISIONVISION

MISSIONMISSION

GOALSGOALS

OBJECTIVESOBJECTIVES

SWOT & PESTESWOT & PESTE

STRATEGIESSTRATEGIES

ACTION PLANSACTION PLANS

VISIONVISION

Vision without action is just a Vision without action is just a dreamdream

Action without vision just passes Action without vision just passes the timethe time

VISION WITH ACTION CAN VISION WITH ACTION CAN CHANGE YOUR STATION!CHANGE YOUR STATION!

Dreams & VisionsDreams & Visions

Dreams are nice but not always practicalDreams are nice but not always practical

A vision is realistic and achievableA vision is realistic and achievable

Dreams are positive (unless they are Dreams are positive (unless they are nightmares)nightmares)

Vision allows for the inevitabilities of real Vision allows for the inevitabilities of real lifelife

Dreams are not fulfilled--you wake upDreams are not fulfilled--you wake up

Vision is fulfilled through a strategic planVision is fulfilled through a strategic plan

MISSIONMISSION

WhatWhat

WhyWhy

For whomFor whom

HowHow

GOALS AND OBJECTIVESGOALS AND OBJECTIVES

Provide Provide guidelines guidelines for taking for taking

action on the action on the organisation’organisation’

s purposes purpose

GOALSGOALS

A relatively enduring intention to actA relatively enduring intention to act A target for accomplishment!A target for accomplishment! A guide for decision-makingA guide for decision-making Link purpose (vision) to action!Link purpose (vision) to action!

OBJECTIVESOBJECTIVES

An objective is a …An objective is a …

SPECIFIC, MEASUREABLE RESULT TO SPECIFIC, MEASUREABLE RESULT TO BE ACHIEVED BY A SPECIFIC BE ACHIEVED BY A SPECIFIC

POINT IN TIMEPOINT IN TIME

Objectives stem directly from goals!Objectives stem directly from goals! One goal may have many objectives!One goal may have many objectives!

EXAMPLE…??EXAMPLE…??

GOALGOAL

To decrease To decrease crimecrime

OBJECTIVEOBJECTIVE

To decrease To decrease gang related gang related crime by 25% crime by 25%

in the next in the next quarterquarter

Environmental trend Environmental trend assessmentassessment

• P - PoliticalP - Political• E – EconomicE – Economic• S – SocialS – Social• T – TechnologicalT – Technological• E - EnvironmentE - Environment

... and any other relevant trends that may ... and any other relevant trends that may impact on your organisation (eg legislation?)impact on your organisation (eg legislation?)

Organisational assessmentOrganisational assessment

S – StrengthsS – Strengths

W – W – WeaknessesWeaknesses

O – O – OpportunitiesOpportunities

T - ThreatsT - Threats

STRENGTHSSTRENGTHS

……is a competitive is a competitive advantage!advantage!

It is something It is something that the that the organisation does organisation does better than other better than other organisationsorganisations

WEAKNESSWEAKNESS

…….is a .is a competitive competitive DISadvantageDISadvantage

It is something It is something the organisation the organisation does NOT do as does NOT do as well as other well as other organisations!organisations!

OPPORTUNITYOPPORTUNITY

Is a possible Is a possible change in the change in the

world outside an world outside an organisation organisation

which improves which improves its ability to its ability to

compete and compete and meet the needs meet the needs of its communityof its community

THREATTHREAT

Is a possible Is a possible change in the change in the world outside world outside

the organisation the organisation which threatens which threatens

its ability to its ability to compete or meet compete or meet the needs of its the needs of its

communitycommunity


In groups develop prepare a SWOT and PESTE review for The Fender Bender School of Advanced Driving

The SWOT/Gap AnalysisThe SWOT/Gap AnalysisThe SWOT/Gap AnalysisThe SWOT/Gap Analysis

Vision3-5 years

Situation Audit

The

“GAP”

Where you Where you want to go?want to go?

Where you Where you are today?are today? What you have What you have

to do to get there?to do to get there?

STRATEGIESSTRATEGIES

STRATEGIES OUTLINE THE ACTIONS STRATEGIES OUTLINE THE ACTIONS WHICH ARE NEEDED TO CROSS WHICH ARE NEEDED TO CROSS

THE GAP BETWEEN THE GAP BETWEEN WEAKNESSES/THREATS AND WEAKNESSES/THREATS AND STRENGTHS/OPPORTUNITIESSTRENGTHS/OPPORTUNITIES

A strategy links the Goals and A strategy links the Goals and Objectives to ACTION detail!!!!!Objectives to ACTION detail!!!!!

STRATEGIES define and lead to STRATEGIES define and lead to PerformancePerformance

What countsWhat countsgets measured gets measured

What getsWhat getsmeasuredmeasuredgets donegets done

What getsWhat getsdone getsdone getsrewardedrewarded

What getsWhat getsrewardedrewardedcounts counts

ACTION PLANSACTION PLANS

What (to achieve)What (to achieve) Minimum standards Minimum standards

(for success)(for success) Activities (step by Activities (step by

step)step) Who (names)Who (names) When (dates)When (dates) Resources / budgetResources / budget Possible problemsPossible problems

The tasks of Strategic Planning – The tasks of Strategic Planning –

a summarya summary

Defining the business

and developing

a vision

SWOT and gap

analysis -setting

objectives

Crafting a strategic

action plan

Implementing and

executing strategy

Evaluating performancereviewing –

adjusting and correcting

Failing to plan is planning to fail

Failing to plan is planning to fail

“Those who are saying it can not be done, should get out of

the way of those who are already doing it!”

And now, it’s up to youAnd now, it’s up to you

Strategic planning

Scenario PlanningScenario Planning

Planning for the Future in an Planning for the Future in an Uncertain WorldUncertain World

Scenarios as Building Blocks of Scenarios as Building Blocks of Organizational PerformanceOrganizational Performance

Scenario ThinkingScenario Thinking

A discipline for encouraging A discipline for encouraging creative and entrepreneurial creative and entrepreneurial thinking and action “in thinking and action “in contexts of change, contexts of change, complexity, and uncertainty.”complexity, and uncertainty.”

Pierre Wack, originator of scenario Pierre Wack, originator of scenario thinkingthinking

Thinking About the FutureThinking About the Future

“ “Futurism is an art of re-perception. Futurism is an art of re-perception. It means recognizing that life will It means recognizing that life will change, must change, and has change, must change, and has changed, and it suggests how and changed, and it suggests how and why. It shows that old perceptions why. It shows that old perceptions have lost their validity, while new have lost their validity, while new ones are possible.” ones are possible.”

Bruce Sterling, science fiction writerBruce Sterling, science fiction writer

Scenario Thinking/PlanningScenario Thinking/Planning

A powerful process for organizations A powerful process for organizations to plan for the future in an uncertain to plan for the future in an uncertain worldworld

Assumes that the future is unpred-Assumes that the future is unpred-ictable, that change will happen, and ictable, that change will happen, and that organizations benefit by thinking that organizations benefit by thinking about alternative futures and the about alternative futures and the strategic options to navigate through strategic options to navigate through and take advantage of potential and take advantage of potential scenariosscenarios

ScenariosScenarios

Are stories about how the future might Are stories about how the future might unfold for our organizations, issues, unfold for our organizations, issues, nations, and the world.nations, and the world.

Are not predictions, rather, they are Are not predictions, rather, they are provocative and plausible stores about provocative and plausible stores about the diverse ways in which relevant the diverse ways in which relevant issues outside our organizations might issues outside our organizations might evolve.evolve.

ScenariosScenarios

Are hypotheses, not predictions, created and Are hypotheses, not predictions, created and used in sets of multiple stories, usually three used in sets of multiple stories, usually three or four, that capture a range of possibilities, or four, that capture a range of possibilities, good and bad, expected and surprising.good and bad, expected and surprising.

Are designed to stretch our thinking about Are designed to stretch our thinking about the opportunities and threats the future the opportunities and threats the future might hold, and to weigh those opportunities might hold, and to weigh those opportunities and threats when making both short- and and threats when making both short- and long-term strategic decisions. long-term strategic decisions.

Global Business NetworkGlobal Business Network

Thinking About the FutureThinking About the Future

“… “…forces will affect the world, in ways that forces will affect the world, in ways that most decision makers do not automatically most decision makers do not automatically expect….what scenario planners call expect….what scenario planners call predetermined elementspredetermined elements: forces that we : forces that we can anticipate with certainty because they can anticipate with certainty because they have already begun to take place. They have already begun to take place. They are going to surprise us because, while are going to surprise us because, while the basic events are virtually the basic events are virtually predetermined, the timing, results, and predetermined, the timing, results, and consequences are not…..but we can consequences are not…..but we can anticipate the range of possible results….” anticipate the range of possible results….” Peter Schwartz, futuristPeter Schwartz, futurist


Both a process and a postureBoth a process and a posture – it – it is the process which scenarios are is the process which scenarios are developed and then used to developed and then used to inform strategy. After that process inform strategy. After that process itself is internalized, scenario itself is internalized, scenario thinking becomes a posture thinking becomes a posture toward the world – a way of toward the world – a way of thinking about and managing thinking about and managing change, exploring the future to change, exploring the future to greet it better prepared.greet it better prepared.


Begins by identifying forces of Begins by identifying forces of change in the world that may have change in the world that may have impact on the people served by the impact on the people served by the organization as well as the strategic organization as well as the strategic direction of the organization itself.direction of the organization itself.

These forces are combined in These forces are combined in different ways to create a set of different ways to create a set of diverse stories about how the future diverse stories about how the future could unfold.could unfold.

Global Business NetworkGlobal Business Network

Benefits of Scenario PlanningBenefits of Scenario Planning

Stretch and develop the thinking of Stretch and develop the thinking of key players about possible future key players about possible future business conditionsbusiness conditions

Encourage flexibility of thinking Encourage flexibility of thinking amongst key playersamongst key players

Confront conventional wisdomConfront conventional wisdom Make assumptions explicitMake assumptions explicit

GuidelinesGuidelines

Long ViewLong View – day-to-day work is – day-to-day work is usually driven by near-term usually driven by near-term concerns and urgent needs – concerns and urgent needs – scenario thinking requir4es scenario thinking requir4es looking beyond immediate looking beyond immediate demands and peering far enough demands and peering far enough into the future to see new into the future to see new possibilities – asking “what possibilities – asking “what if……”if……”


Outside-In ThinkingOutside-In Thinking – most think – most think from the inside, the things they from the inside, the things they control, out to the world they control, out to the world they would like to shape. Conversely, would like to shape. Conversely, thinkiing from the outside-in thinkiing from the outside-in begins with pondering external begins with pondering external changes that might, over time, changes that might, over time, profoundly affect your work.profoundly affect your work.


Multiple PerspectivesMultiple Perspectives – the – the introduction of multiple perspectives introduction of multiple perspectives -- different from managing multiple -- different from managing multiple stakeholders – is based on diverse stakeholders – is based on diverse voices that shed new light on voices that shed new light on strategic challenges, helps to better strategic challenges, helps to better understand one’s own assumptions, understand one’s own assumptions, and exposes new ideas that inform and exposes new ideas that inform perspective and help to see the big perspective and help to see the big picture of an issue or idea.picture of an issue or idea. Global Business Global Business

NetworkNetwork

Scenario BuildingScenario Building

Scenarios are tools to help us take a Scenarios are tools to help us take a long view in an environment of long view in an environment of uncertaintyuncertainty

They are stories about the way(s) the They are stories about the way(s) the world might turn out in the future….world might turn out in the future….

… …..that help us adapt to changing ..that help us adapt to changing aspects of our environment;aspects of our environment;

… …..about different pathways to ..about different pathways to tomorrowtomorrow

Scenarios are memories of the future.Scenarios are memories of the future.

Scenario ProcessScenario Process

Determine the key questionDetermine the key question Identify major factors in the Identify major factors in the

environmentenvironment Identify driving forcesIdentify driving forces Rank by importance & Rank by importance &

uncertaintyuncertainty Develop scenariosDevelop scenarios Determine implicationsDetermine implications Identify leading indicatorsIdentify leading indicators

Key QuestionKey Question

What are the implications of What are the implications of alternative futures for post-election alternative futures for post-election South AfricaSouth Africa

... and,... and,

what are the implications of ACSA’s what are the implications of ACSA’s positioning in this environmentpositioning in this environment

Identify Major Factors Identify Major Factors in the Environmentin the Environment

Global change (economics)Global change (economics) Changes in public habitsChanges in public habits Technology leading to alternative Technology leading to alternative

behavioursbehaviours The thinking of people you The thinking of people you

respectrespect Beware of surprisesBeware of surprises

Identify Driving Forces and Identify Driving Forces and UncertaintiesUncertainties

Potential categories to think Potential categories to think about:about:

SocietySociety

EconomicsEconomics

PoliticsPolitics

EnvironmentEnvironment Predetermined elementsPredetermined elements UncertaintiesUncertainties

Rank By Importance & Rank By Importance & UncertaintyUncertainty Two criteria – the degree of:Two criteria – the degree of:

* Importance for the issue* Importance for the issue

* Uncertainty surrounding those * Uncertainty surrounding those factors and trends factors and trends

The point is to identify the two or The point is to identify the two or three factors or trends that are most three factors or trends that are most important important andand most uncertain most uncertain

Develop Scenario LogicsDevelop Scenario Logics

Once the fundamental axes of Once the fundamental axes of crucial uncertainties have been crucial uncertainties have been identified it is useful to present identified it is useful to present them as a spectrum (along one them as a spectrum (along one axes), or as a matrix (with two axes), or as a matrix (with two axes), or as a volume (with three axes), or as a volume (with three axes)axes)

Flesh Out the ScenariosFlesh Out the Scenarios

Write stories – create a narrativeWrite stories – create a narrative

Each key factor or trend should Each key factor or trend should be given some attentionbe given some attention

Determine ImplicationsDetermine Implications

Return to the key question – what Return to the key question – what are the implications of each are the implications of each scenario?scenario?

What does this mean for What does this mean for strategy?strategy?

What are the opportunities, What are the opportunities, options, risks?options, risks?

What are the choices?What are the choices?

Implications for LeadershipImplications for LeadershipWith Multiple ScenariosWith Multiple Scenarios

Common strategyCommon strategy

Hedge strategyHedge strategy

Bet on one strategyBet on one strategy

Identify Leading IndicatorsIdentify Leading Indicators

What should we look and listen What should we look and listen for that will tell us a scenario is for that will tell us a scenario is emerging/developing?emerging/developing?

What should we look and listen What should we look and listen for that will tell us a scenario is for that will tell us a scenario is changing?changing?

Scenarios we have known...Scenarios we have known...

Scenarios we Scenarios we know...know...

19701970

Death of “permanence”Death of “permanence” Transience (throw away Transience (throw away

society)society) Novelty (science)Novelty (science) DiversityDiversity Limits of adaptabilityLimits of adaptability


19801980 Industrial Society Information Society Forced Technology High Tech/High Touch National Economy World Economy Short Term Long Term Centralization Decentralization Institutional Help Self-Help Representative Democracy Participatory Democracy Hierarchies Networking North South Either/Or Multiple Option


19801980

1 1 Agrarian society2 Industrial revolution3 “Next transformation”

(knowledge, technology, “a civilisation with its own distinctive world outlook”


19921992

Unfavourable scenario

One-party stateBlack governmentAfrican socialism

budget deficitsinflationcontrols

Economic declineflight of skills — white

backlashZimbabweLebanonEthiopia

0% growth during transition

Favourable scenario

Democratic governmentBlack/white coalitionTwo-house legislature

(like United States)Bill of rights - freedom of

speech and association - protection of persons and property

Pragmatic economic policy

2.5%-3.0% growth during transition

(Unable to cite successful role model)


20002000

Fox:Fox: CunningCunning ““Many dens”Many dens” FlexibleFlexible AdaptableAdaptable Sensitive to their Sensitive to their

environmentenvironment

HedgehogHedgehog PonderousPonderous One burrowOne burrow HibernateHibernate Fixed in their waysFixed in their ways Rely on self-Rely on self-

protectionprotection


20032003

World of eldersWorld of elders Great flood of peopleGreat flood of people Return of the long Return of the long

boomboom New world orderNew world order Catalogue of disorderCatalogue of disorder Breakthroughs in Breakthroughs in

breaking throughbreaking through Cleaner, deadlier Cleaner, deadlier

worldworld

• Sub-Saharan Africa (not SA)

• “back to 1800s”

• Brute power is law

• Fewer schools, hospitals, telephones, power generators than the year before.

• De-development.

• Natural resources no business extracting Nations’ indifference seen as racism.

• SA (AIDS?), Ghana, perhaps Mozambique

“Otherwise, one can imagine things getting so bad that there is a move to re-colonise the continent and start over, perhaps under the auspices of the United Nations. But it would require at least twenty or thirty years of misery to get to that point”.

• Sub-Saharan Africa (not SA)

• “back to 1800s”

• Brute power is law

• Fewer schools, hospitals, telephones, power generators than the year before.

• De-development.

• Natural resources no business extracting Nations’ indifference seen as racism.

• SA (AIDS?), Ghana, perhaps Mozambique

“Otherwise, one can imagine things getting so bad that there is a move to re-colonise the continent and start over, perhaps under the auspices of the United Nations. But it would require at least twenty or thirty years of misery to get to that point”.

Dealing with Dealing with uncertainties...uncertainties...

20082008

Black Swans are random events that underlie our lives (from Polokwane to world disasters)

Their impact is huge they're nearly impossible to

predict after they happen we

always try to rationalize them

A call to ignore the “experts”

stop trying to predict everything and take advantage of uncertainty.

Strategic MeasurementStrategic Measurement

INDICATOR DEVELOPMENTINDICATOR DEVELOPMENT

What is an indicator ?What is an indicator ?

A measuring instrument used to give a A measuring instrument used to give a

concrete but indirect value to an other concrete but indirect value to an other

wise non-measurable, intangible wise non-measurable, intangible

conceptconcept

7070

Various levels of indicatorsVarious levels of indicators

Input indicatorsInput indicators

Output indicators Output indicators

Process indicatorsProcess indicators

Outcome Outcome indicatorsindicators

EconomyEconomy

EfficiencyEfficiency

EffectivenessEffectiveness

Indicator typesIndicator types

Qualitative vs quantitative indicatorsQualitative vs quantitative indicators Objective vs subjective indicatorsObjective vs subjective indicators Sectoral vs integrated indicatorsSectoral vs integrated indicators Single vs composite indicators Single vs composite indicators

(indices), or (indices), or Multi-dimensional vs Multi-dimensional vs single dimensionalsingle dimensional

Dynamic indicators vs static indicatorsDynamic indicators vs static indicators Indicator frameworks vs accounting Indicator frameworks vs accounting

systemssystems

Indicator guidelines 1Indicator guidelines 1

Indicator clear, unambiguous, simple Indicator clear, unambiguous, simple & easy to understand & explain& easy to understand & explain

Highlight an important quality or Highlight an important quality or characteristic characteristic

Be measurable (quantitatively or Be measurable (quantitatively or qualitatively)qualitatively)

Be appropriate for the context within Be appropriate for the context within which it is appliedwhich it is applied


• Widely accepted as scientifically valid measure

• Sufficient cost-effective historical, current and future data of a sufficient quality

• Data appropriate for different levels of aggregation

• Data internationally comparable


Isolated indicators, indices or Isolated indicators, indices or accounting systems are all valid accounting systems are all valid measuring instruments if applied measuring instruments if applied correctly correctly

Indicators should be developed in Indicators should be developed in participation with stakeholdersparticipation with stakeholders

Dataset to include metadata Dataset to include metadata information stating explicitly quality of information stating explicitly quality of data, sensitivity, uncertainty, data, sensitivity, uncertainty, variability, accuracy and error marginsvariability, accuracy and error margins

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