Strategic Framing

Webinar on Managing Uncertainty.

February 24, 2009
11:00 a.m. to 12:00 p.m. (EST)
FREE – RSVP at https://www2.gotomeeting.com/register/367870545

Sponsored by Decision Strategies International

As Darwin observed, it is not the strongest or smartest who survive but those who are most adaptive to change. What has your company done to increase its adaptiveness? Have recent world events caused you to accelerate your efforts?

This webcast will provide practical ways to manage uncertainty by showing you how to:

• Use scenario planning to improve your organization’s insight and foresight
• Devise adaptive strategies with sufficient flexibility to deal with the unexpected
• Implement a dynamic monitoring system to track the external world in real time
• Improve your organization’s agility in terms of structure, processes, and rewards
• Enhance your information and decision making procedures to remain vigilant
• Foster strong leadership at multiple levels

Dr. Paul Schoemaker, Founder and Chairman of Decision Strategies International, Research Director of the Mack Center for Technological Innovation and Adjunct Professor of Marketing, The Wharton School, University of Pennsylvania, will review key points of the attached article “Are You Ready For Global Turmoil?” and best practices for managing uncertainty.

Bernardo Sichel, Managing Director of Consulting at Decision Strategies International will give practical tips and advice for applying scenarios to near term decisions and risk management.

Commander Steve Kelly, United States Navy OPNAV Planning Group, and Sandra Thompson, Global Director, Strategic Growth, Johnson & Johnson Diabetes Care Franchise, will share their experiences incorporating scenario planning and adaptive strategies to manage uncertainty.

Dr. Scott Snyder, CEO and President of Decision Strategies International, will moderate this interactive discussion and summarize key take- aways and best practices for participants to take back to their own business today.

RSVP:
Space is limited. Reserve your Webinar seat now at: https://www2.gotomeeting.com/register/367870545

For more on scenario planning see:

1. Scenario planning in finance
2. Implementing scenario planning in your organization
3. Interesting output from 1997 scenario planning exercise

There is an interesting side story to the surprisingly deep and rapid drop in demand for new cars.  Part of the blame for the drop can be attributed to the impressively successful marketing work within the auto industry over the past thirty years.

You will often hear analysts or commentators note that cars are necessities given that our entire way of living (where we live, how we buy, etc.) is based on a car culture.  It is true that most of us in the United States depend upon our car to get through our daily lives.  However, that fact no longer translates into car purchase decisions being approached as necessities.

For a large portion of the population, a new car is a luxury not a neccesity. There are two primary reasons for this shift.

1. Increase in cars per family.  In 1970, there was an average of 1.25 cars per family.   By 2005, the average was 2.3.  During this time we’ve seen a significant shift towards two income families so we would expect the need for cars to increase along with the two income trend.  However, the shift to two cars has increased family flexibility.  If a car breaks down in a one car family, options to get to work are limited and the family will likely be forced to purchase a car.  In a two car family, even with two working adults, family members can shift schedules to manage on one car for an extended time.  I speak from recent experience here, thanks to the actions of an over-eager deer on a local highway,

2. Misalignment of marketing demand and product lifespan.  This is the primary reason new cars are now luxuries.  According to a study by R.L. Polk, the median age of passenger cars in 2006 was 9.2 years.

Over the past 30 years, auto manufacturers have poured marketing efforts into getting Americans to trade in their cars every 2-3 years.    The average car age at trade in in the US is aproximately 6 years (I’ve found different statistics on this but the range is from 5.8-6.6 years).   It is deceptive to focus on the average though.  A significant minority of new car buyers routinely trade in their automobiles every three years.  For these consumers, a new car purchase is a luxury and a big one at that.

This story is one of an incredible marketing success.   Savy marketing increased demand for new cars.  In good economic times, this has driven demand well above “car as neccessity” demand.  Now we can see the dark side of this success.  Because product marketing is not aligned with product lifespan, few people actually need to purchase a new car at any given time.   Add in the glut of available used cars, due to supply based on the luxury product model, and you have the current situation of a deep and shockingly rapid plummet in new car demand.

The interesting question rattling around my head is what other industries have been successful in creating this misalignment of marketing demand and product lifespan?  Housing comes to mind immediately.  Anyone have others?

It is difficult to put resources into strategic planning when faced with a difficult business environment.  When everyone is running faster just to meet their end of year goals, it is hard to justify pulling senior decision-makers out of the game to spend time on long-term planning. 

The strategic checkup with implementation follow through is a great option.  This is the two minute drill of strategic planning.  Find a single day (perhaps on a weekend) and gather your key decision makers together for a disciplined look at the next 1, 3, or 5 years.  The trick is to keep it short but commit to the follow through.  Too many off-site planning sessions become wasted time after the fact when nothing ever comes of the ideas.  At DSI, we offer a process to keep the off-site meeting on task and interesting but we also have the expertise to help you design the implementation once the decision makers go back to their jobs putting out fires.

In the following video, John Austin describes how a strategic check-up can be an ideal approach to corporate planning during economic downturns.

Scenario planning has a number of outcomes. As a strategic planning process, it generates a level of creativity that can help a senior team get beyond the obvious, predictable, tired strategies being pursued by all their competitors.

Like any strategic planning process, scenario planning is only as good as the follow through. What is done with the strategy plannng outcome? How is the resultant strategy implemented?

We’ve found value in using an options-based implementation strategy as a path forward from the planning process. In addition, the options approach creates excellent opportunities for leadership development when combined with a change leadership cohort of key executives or high potential employees. I’ve always found my work coaching such cohorts immensely satisfying.

Scenario planning also creates rich insight that can be used as the basis for ‘conversation starter’ articles. Scenarios can spark new thinking by creating vivid stories of possible futures.

One example of such an output is the Scenarios for Credit Unions report DSI completed. This report is a great example of the kind of output our consultants can generate at the end of a scenario planning process.

For more on scenario planning see:

1. Scenario planning in finance
2. Implementing scenario planning in your organization
3. Interesting output from 1997 scenario planning exercise

Roch Paryre, Ph.D., a Senior Partner at DSI, describes the tyranny of small steps and avoiding business failure. Excerpt from a talk on strategic thinking and decision making.

Contact us for more information about Dr. Paryre and other DSI speakers.

Roch Paryre, Ph.D. describes the challenge of rewarding decision process instead of decision outcome. Excerpt from a talk on strategic thinking and decision making.

Contact us for more information about Dr. Paryre and other DSI speakers.

Companies designed to do things faster and better can be blindsided by innovations. When a system is build on predictability, environmental change wreaks havoc. With the proper resources and mindset, executives can create vigilent companies capable of thriving in the midst of industry innovation, change, and upheaval.

Roch Parayre, Ph.D. uses his experience working at McDonalds to illustrate the challenges facing performance organizations.

Overconfidence can derail a strategic planning process. It can cause smart people to assume they know more than they do. It can lead groups of people to confidently predict a future when the future is uncertain. It can make a strategy a narrowly focused agenda instead of a map of strategic options for thriving in an uncertain environment.

Roch Parayre, Ph.D. gives some famous examples of overconfidence.

A good decision process can greatly improve the quality of decision outcomes. By developing a common decision approach, an organization’s leaders can begin to build a culture of decision quality. When executives adopt a common decision making framework, they begin to use a shared decision process language and are better able to challenge decision processes in use. In the following video, Dr. Paul Schoemaker describes the steps in an effective decision process.

Strategic planning has the potential to help an organization anticipate and thrive in uncertain environments. However, this potential can only be realized if the planning is done in a way that counteracts the cognitive biases of participants. Such tendencies as overconfidence, over-reliance on trends, a desire for certainty, and groupthink can cause a strategic planning session to end with less than optimal results.