Scenario-based Strategic Planning

Scenario-based Strategic Planning
Contents
CEO’s Influence on Scenario Planning
Scenario Planning Sessions
Take Away Message – Scenario Planning
Strategic Implementation
“Global GDP still expected to remain solid at 4.75 % in 2008” IMF, October 2007
Responsibility for Implementation
1997
Impacts of Scenario Planning
Positives
Scenario
“Experience”
THANK YOU!
Q&A
Pre-workshop
Interviews
Define Implications
Outcomes
Strategic
Plan

Establishment of roles and institutions to overview implementation

Project Oversight Committee

Coordinator of strategic initiatives

(John McDevitt)

Member of the Management Committee
Reports directly to CEO

Overview of Scenario Planning

Overview of UPS

Scenario Planning at UPS

Strategy Implementation at UPS

Conclusion

Allows a future “context” for the company to be realised.
Richer outcome than an analysis of a competitive structure
Identify creative and alternative solutions
Effective tool to counteract action-orientated biases (Lovallo & Sibony, 2010)

Validated & reaffirmed UPS’s Direction
Deeper Understanding of Regional Nuances

The Black Swan Events
UPS Timeline
Scenario Planning Sessions at UPS
Strategic Plan
The Long Way of Strategy
“The US have a very powerful intelligence system”
2004

۱۹۰۷: UPS founded in Seattle, Washington

۱۹۹۶: Strategy Advisory Group and Corporate Strategy Group formed

۱۹۹۷: First scenario planning session

No formal strategic-planning process

for 90 years!

۲۰۰۴: Second scenario planning session

۲۰۰۵: Update of Strategy road map
Developed Early Warning Signals
Draft
Storyline
Scenario Planning
Workshops
scenario planning

UPS Centennial Plan

Identification of 4 Strategic Imperatives
Winning Team
Value-Added Solutions
Customer Focus
Enterprise Excellence

Over-Optimism
False Forecast
Strategic Planning at
United Parcel Services
Scenario
Planning

۱. Tangled Paths

۲. Regressive World

۳. Global Scale Prevails

۴. Brave New World
Outcomes
Creation of Scenarios
“Without scenario planning, you don’t see the big changes until they are history” Vern Higberg, UPS
Negatives
“Scenario planning looks pretty, but does it have any impact on what people do?”
Creation of Scenarios
Extensive
Pre-workshop
Interviews

۱. Company City

۲. Bordered Disorder

۳. Connected Chaos

۴. Networks without Borders

Corporate Charter
Backdrop for Strategic

Decisions

Mind-set Shift

Out-
comes
Implemen-
tation

Conversion of Centennial Plan and Strategic Imperatives into practice

Implementation in a complex organisation is challenging.

Environment

۱۹۹۰’s: A growing competition from private companies and government-supported agencies

Jim Kelly’s vision

New challenges that needed to be taken into account

Why UPS choose Scenario Planning?

A real strategy was needed to stay a leader,
To face and adapt to the big changes

Deep pockets

Extremely time consuming

Lack of realism – felt by UPS marketing dept

Presenters:

Dang Duy Cuong
Zaina Fikri
Tara Byrne
Jonathan Meurer
Alice Varley

Positioning

Prepares a company for uncertainty

In turbulent industries scenario planning can be effective

Tool for making the unthinkable into real options

Scenario Planning
Workshops

Counter Action-oriented biases by recognizing uncertainties

Premortem

Decision Trees++

Strategic Planning at United Parcel Service

In: Business and Management
Submitted By lvburberry
Words 711
Pages 3
Case questions
What are the strengths and weaknesses of scenario planning? What is your evaluation of UPS’s 1997 scenario planning exercise? Its Horizon 2017 planning exercise? How do the two efforts compare? Evaluate the following elements of UPS’s approach to strategic planning:
The UPS charter The Centennial Plan The Strategy Road Map

Why was John McDevitt put in charge of “strategic integration?” Should he remain in that role?

What is the strength and weakness of scenario planning?
Strength
 Build foundation for source of long term competitive advantage  Provide backdrop of strategic decision (pg.6)
• Acquisition of Mail Boxes Etc.

 Change mind-set
• Make people think beyond the operational mind • Prepare to be proactive and creative

 Enable to be sensitive for change in external environment  Alternative views of the future  Provide and prepare the company for potential change in the future’s market.

Weakness
 Lack of realism  Requires learning curve to have adequate result  Too abstract and difficult to apply  Indirect linkage to daily operation or strategy  Depend on participants’ motivation and knowledge  Not point out the strengths and weakness of company

What is your evaluation of UPS’s 1997 scenario planning exercise?
Evaluation on 1997 Scenario planning
Initiative to build foundation for source of long term competitive advantage Positive aspects
• Become backdrop of UPS Charter and changed mission statement • Initiate to have foundation of unified corporate level decision making
 Early years: $11bn project was initiated by small project group

• Lead to define four themes • Provide common vocabulary which unify the organization’s mind-set • Guide to investigate opportunities

Negative aspects
• No early warning signal is defined • Initiate dramatic presentations
 importance doesn’t lie on…