 |
| https://hmpi.org/2017/09/08/scenario-planning-tools-for-organizations-struggling-with- healthcare-reform-uncertainty-the-case-of-oscar-health-insurance/ |
Planning
and Forecasting Scenarios
Introduction
Mariton (2016) stated that Scenario Planning is formulating assumptions to foreseeing the
future and assessing how one’s business environment changes overtime regarding that
future. In other words, Scenario type Planning is recognizing a set of
uncertainties, various “realities” of what could happen in the future of the
business. Traditional forecasting, on the other hand, is when one
leverages past and current happenings to predict the ultimate possible outcome
in the forthcoming (Deal, 2019). Usually traditional forecasting utilizes
historical quantitative methods (Saulsgiver,2018). Such methods predict
happenings in the future depending on data from the past and present which
makes it very rigid risk management assessment.
Here a case study that missed
proper scenario type planning but relied only on standard forecasting will be
introduced. Arising from that gap, we will be discussing how scenario-type
planning support planning and innovation for change, forces involved and their
impacts, demonstrate an appropriate illustration
or model, personal plan to uses scenario planning for future innovation
efforts, and explain if scenario
planning account for the social impact of change.
1.
How does scenario-type planning
support planning and innovation for change?
The case study here to explain is about a pizza or any similar
food delivery business as explained by Deal (2019). One could utilize data of
ordered pizza over the last five Superbowl’s to forecast sufficient pizza, chefs,
drivers, etc. could be required for the future Superbowl. However, if there are
any data fluctuations or there is any unseen situations, the past information will
not probably give a precise representation of the data (Posadas, 2017). For instance,
a Pizza selling company found in Denver, CO and a Superbowl event in the city
may twist the predicted values may be seen higher demand because of the nearness
of the teams playing. Another big uncertainty that may affect the forecasted
numbers is the rapid weather fluctuation in Colorado. Fluctuated weather in Denver
such as snowstorm may impact transportation time which would make significant
delayed in delivery. Looking multiple uncertainty scenarios such as bad weather,
higher customer demand and others, the owners could come with feasible
solutions such as hiring more drivers than instore employees to achieve customer
demands for pizza while managing the weather situation, and so on. Scenario
type planning plays a great job to assist such in administration process by
attempting to assess various variables that impact a decision. However, traditional
forecasting usually fails due reason that past or historic data does not
exactly represent the future during dynamic nature.
2.
What forces are involved, and
what impacts do they make?
The forces that drive in the above scenarios are mostly economical
and societal demands. Business owners want to consistently live sustainable and
look ahead to the future to deal with the possible uncertainties that could
affect their business. That means they look forward to looking the best
scenarios that could get them profit and serve their communities.
3.
Include an appropriate
illustration or a model.
Scenario planning is a strategic instrument which has been created
particularly to address the most critical uncertainties in an organization aspect
(Lefferts et al., 2019. This can be well illustrated as in Figure 1 below which
compares both traditional forecasting and scenario type planning.
Figure1: Forecast Planning vs Scenario
Planning (Lefferts et al., 2019)
The illustration (Figure1) tells us that though scenario planning does
not predict any outcome, it is an instrument to direct business owners to study
various likelihood futures and that allow them to prepare ahead for whatsoever
the future holds.
4.
How will you use scenario
planning for future innovation efforts and the impact implied?
Scenario planning intentions to
identify future vital uncertainty scenarios and prepare some reasonable
scenarios to assess the influences and possible responses for each scenario. As
can be seen from Figure 2 below, scenario development process has four
significant steps (Mariton, 2016). These are:
· Identify your driving forces: The
process would better to start with the driving forces that is discussing what
significant change in technology, economics, politics, and societal impacts in
the future will be and assess their impacts or risks.
· Identify your critical uncertainties: This is to pick up only two of the most critical uncertainties
from the list that most impact on one’s business.
· Develop a range of plausible scenarios: The model may be represented with a matrix in which
two of the critical uncertainties as axis. From that, it is possible to represent
four possible scenarios for the future utilizing any of the directions each of
the uncertainties construct.
· Discuss the implications: In this final stage, one need
to discuss the different impacts and implications of each scenario. Then one
need to start to put strategies by accounting every scenario.
Figure 2: Scenario Development Process (Mariton (2016)
Conclusion:
Let me conclude by quoting a statement from an article posted in Forbs by Ogilvy (2015) that states, “What if we're wrong? Scenario planning guards against the dangers of placing all of the organization's eggs into the basket of just one forecast, however well founded that forecast may be.”
Reference
1.
Mariton, j., (2016). What is Scenario Planning and
How to Use It.
https://www.smestrategy.net/blog/what-is-scenario-planning-and-how-to-use-it
2.
Deal, J., (2019). Scenario Planning Vs. Traditional
Forecasting. https://www.n6networks.com/single-post/2019/02/04/scenario-planning-vs-traditional- forecasting.
3.
Saulsgiver,
M., (2018). Scenario Planning versus
Forecasting.
https://sfginc.com/scenario-planning-versus-forecasting/
4.
Posadas, S. (2017). When traditional forecasting doesn’t fit
- Clockwork Solutions. Retrieved from https://clockwork-solutions.com/traditional-forecasting-doesnt-fit/
5. Lefferts, M., Liu, T., & Friedlander, J., (2017). Scenario Planning Tools For Organizations Struggling With Healthcare Reform Uncertainty – The Case Of Oscar Health Insurance. Health Management Policy and Innovation, Volume 2, Issue 2.
6. Ogilvy,
J., (2015). Scenario Planning and
Strategic Forecasting. https://www.forbes.com/sites/stratfor/2015/01/08/scenario-planning-and-strategic-forecasting/?sh=563f7c5f411a
