Generally speaking, the process of scenario planning begins with leading executives at a company, who first identify a certain issue or focal point. For example, an e-commerce company may try to decide whether to expand the scope of its offerings new arenas. Before doing so, it may want to determine the likely long-term impact of different conditions and variables before significant resources are invested. Based on this central issue or focal point, different social, economic, political, and technological forces are taken into consideration. When considered along with current conditions, some of them may be quite easy to foresee or estimate, while others are more difficult. Those forces that are both uncertain and critical to the central issue or focal point serve as the basis for exploration in each scenario or story, several of which are developed. Each scenario shows a different possible end result based on how the different factors play out.
Darwin magazine provided an excellent real-world example of how one company used scenario planning. In 1996, National City Corp. was faced with several business challenges, including figuring out what role the Internet would play in the banking world, increasing competition for market share, and the need to increase earnings. The bank was about to invest $40 million in a new customer information system. However, there were many unanswered questions about the direction in which the company was headed. Jon Gorney, who was in charge of information systems at National City, needed answers before making such a big investment.
Gorney hired Northeast Consulting Resources Inc. (NCRI) to conduct a three-day scenario planning workshop at the cost of $500,000. His staff interviewed 50 executives from each of the bank's divisions to obtain information, including their visions of the bank's strategic direction and how they used technology. After many interviews, three different visions emerged. One vision (which was consistent with industry trends) saw the bank heading in a direction where many of its different services were tailored to meet the needs of individual customers. A second vision saw the bank focusing on the development of its financial products, instead of its customers. Finally, a third vision saw the bank launching a second online-only bank that would compete with its physical banks.
After these three visions of the future were developed, 150 events (both internal and external) were identified which could impact each vision. During the workshop, these events were ranked by executives from different National City banks, based on how likely each one was to occur. Later, different groups investigated how the different scenarios would be impacted by the events that had been ranked. After a great deal of debate and discussion, the ultimate decision was left to National City's chairman and chief executive officer, who opted for the customer-focused vision. Scenario planning helped the information technology and banking professionals to understand one another. It also helped everyone to share and agree on a common vision, and made Gorney more comfortable about spending $40 million.
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