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Oliver Wight Blog

Response Readiness | Part Two: The Forces Shaping Your Organisations' Future

By Stuart Harman, Partner at Oliver Wight Asia Pacific

9 November 2020


Whilst most organisations recognise the value of scenario and contingency planning, our research at Oliver Wight has identified that many are not employing it with sufficient rigour to gain the full benefit. They are not creating the responses to potential alternative futures that are likely to have the most significant impact on their business.

To help organisations get Ready to Respond we have created a 10-step process for Scenario & Contingency Action Planning.

The first step involves Defining the entity and its current environment that you are creating Scenario & Contingency Action Plans for.

You may be thinking ‘of course we know about the entity, its our own organisation!’ but, in our experience, when this step is missed out, it can lead to uncertainty and confusion in understanding the outcomes that have the greatest potential to impact your organisation.

Adapted from the SCQuARE strategic thinking and presentation methodology, this step involves:

  1. Precisely defining the organisation, or part of the organisation, that you are going to develop scenario and contingency plans for.
  2. Identifying the current aims and mission of the organisation.
  3. Identifying any pre-set objectives, such as corporate targets, strategic business objectives etc.
  4. Identifying and capturing what success looks like for the organisation.
  5. Capturing positive and neutral facts that "set the scene" for the organisation. This will provide the context and ensure that the potential conditions and uncertainties identified in subsequent steps are viewed in full perspective.
  6. Identifying key strengths or resources that the organisation currently possesses.

 

Once the entity and its current environment have been defined, the second step in the Scenario & Contingency Action Planning process is to identify the driving forces that could shape the organisation's future. Examples that are "top of mind" for most organisations today include:

The future impact of COVID-19:

  • Second and third waves, the reaction of governments and subsequent impact on economic activities.
  • Consumer behaviour e.g. working from home, attitudes to/ability to travel.
  • Impact on supply chains, including lead times, costs and reliability of supply.

A number of our client companies are currently wrestling with the timing and impact of a looming "COVID cliff" where existing government stimulus is predicted to be wound back, resulting in a significant decrease in business and consumer spending.

Other examples of external forces that could affect your business might include:

  • Competitor activities
  • Regulation changes
  • Environmental and climate changes
  • Technology changes

We have found two useful models for identifying potentially impactful uncertainties:

  1. PEST analysis - conducted through the lenses of Political, Economic, Social and Technological factors
  2. Porter's Five Forces Model - uses the forces of Threat of New Entrants, Bargaining Power of Suppliers, Bargaining Power of Customers, Threat of Substitute Products or Services, and Rivalry Amongst Existing Competitors as lenses through which to view specific outcomes.

 

For organisations that operate a robust Integrated Business Planning (IBP) process, insights about future driving forces can come from the assumptions captured to support product, demand and supply plans out across the 24- to 36-month future planning horizon. Using IBP to zero in on the areas of uncertainty in the future planning horizon that could have the most material impact on the organisation is a fundamental element of IBP that turns reactive companies into proactive ones.

In our next article, we will look at how organisations can determine which of the driving forces identified constitute critical uncertainties they should create scenario and contingency plans for.