Scenario-based Strategic Planning
In a world characterized by increasing complexity and volatility, managers must be able to flexibly adapt their strategies to changing environments. Traditional methods of strategic management often fail in this context. Therefore, Roland Berger School of Strategy and Economics is presenting its new book entitled Scenario-based strategic planning – Developing strategies in an uncertain world (Springer, 2013). The concept described in this book is designed to serve as a framework for strategic management in this day and age of uncertainty.
"Scenario planning makes it easier to manage a business and therefore is a key tool for decision makers," explains Prof. Dr. Burkhard Schwenker, CEO of Roland Berger Strategy Consultants. He is publishing the book together with Prof. Dr. Torsten Wulf from HHL Leipzig Graduate School of Management's Center for Strategy and Scenario Planning. Wulf says: "Working with scenarios enables a new quality of strategy, expands your horizon in the strategy development framework and increases the room for strategic action."
Previous methods for scenario planning were complicated and very time-consuming. The new concept, however, is embedded in strategic planning and provides ideal tools to reduce complexity and make projects more efficient. This innovative approach was developed by Roland Berger together with the HHL Leipzig Graduate School of Management's Center for Strategy and Scenario Planning. The authors are Schwenker and Wulf (eds.), Duce Gotora and Nicklas Holgersson (Roland Berger Strategy Consultants); Christian Brands, Philip Meißner and Stephan Stubner (Center of Strategy and Scenario Planning); Cornelia Geißler and Christian Krys (Roland Berger School of Strategy and Economics).
- Managers need to understand the impact of uncertainty on planning and decision making, as well as its consequences for strategic management in general
- Scenario-based planning provides a powerful methodological framework to account for uncertainty, volatility and complexity in the strategic management process
- Scenario planning can increase the quality of strategic decisions in an uncertain environment and lead to flexible strategies that counteract volatility.
THE BIG PICTURE
The authors take a closer look at core challenges facing strategic management in the 21st century. They identify uncertainty as a major issue and analyze its main determinants: volatility, complexity and ambiguity. The authors show how much more uncertain the world has become for managers today and point out the advantages as well as the limitations of traditional planning tools. Finally, they discuss different forecasting methodologies such as prediction markets or simulations that help reduce uncertainty and assess the impact of potential changes.
The book describes the HHL-Roland Berger approach to scenario-based strategic planning and its underlying concepts and ideas. The authors present the overall methodology and its benefits for the strategic management process, and also provide a blueprint for integrating it into existing planning processes.
SIX HANDS-ON TOOLS
Managers are provided with a set of six hands-on tools. The authors demonstrate how each tool is applied in practice, using a case study from the European airline industry and a consulting project for one of the world's largest multi-sector companies.
IMPACT ON DECISION-MAKING QUALITY
The book also shows how the approach affects decision-making quality and strategic flexibility. Scenario planning can help managers quickly reduce the negative effects of cognitive biases and cope with new developments. And thanks to its positive influence on the quality of decisions, scenario planning is also likely to improve overall business performance.
"Scenario-based Strategic Planning" can be ordered at www.springer.com
Listen to Prof. Wulf's interview about an effective method for dealing with the given uncertainty on management radio.