Let’s say it clearly: If a company doesn’t understand its competitive advantages and its current and future business models, it’s doomed. Not only will it fail in the marketplace, but also it will waste tons of cash on technology along the way.
So what business are you in?
If the strategists in your company have difficulty answering this question, then you’re in deep trouble–especially if you’re a technology manager expected to make decisions about what to buy, build, in-source, or outsource.
Scenario planning can help reduce uncertainty about the future. Because it can bring business goals and objectives into focus, IT should be intimately involved to produce a better alignment of business and IT resources.
For the uninitiated, scenario planning is a methodology that, when successfully implemented, produces a range of possibilities surrounding future events. The possibilities are defined around some specific parameters, such as the amount of government regulation, the penetration of the Internet, and the depth of business-to-business transaction processing. The objective of scenario planning is not an elegant document suitable for publication in the Harvard Business Review, but a vehicle for provoking thought.
Environmental Trends Analysis
To get started, you need to monitor the trends that pertain to your industry on a regular basis, including social, political, workplace, work habit, regulation/de-regulation, national and global economic, and macro technology trends.
Next, you need to monitor and report on known and anticipated competitors. The good news here is that people love to read stuff about the competition. This is because we benchmark and validate our behavior against our competitors. The huge danger is that if the competition you’re tracking only exhibits a linear extrapolation from your current business models — and that’s all you track — you’re likely to miss the out-of-the-box, unconventional competitors that can do serious damage to your market share.
Current Business Profiles
You should also profile competitor business models and processes–as well as your own–at least annually, including details about the products and services they offer, their channel strategies, and their market niches.
Potential Business Profiles
Based on all of the above–the environmental scan, competitor analyses, and existing business models–you should be able to define future models and processes. This is the essence of the scenario generation process. The key here is to simultaneously extrapolate from current trends and leapfrog current models into whole new business arenas. What, for example, will be the new model for customer service? What will your sales and marketing strategies have to look like? How will you cross-sell on- and off-line?
Confidence & Risk Analysis
During the scenario planning process, a key question you have to answer is this: Do you have the expertise in-house to think creatively and objectively about future business? If you do, then beg, borrow or steal their time; if not, hire some industry gurus with deep industry knowledge and empower them to speak candidly. Once you’ve corralled them get them to validate each other’s insights.
After you’ve modeled the future, prioritize the processes, products, and services that will keep you competitive. Keep the list short: a 20-item to-do list will always yield 15 orphans.
Then convert the prioritized processes, products, and services into high-level technology requirements with specific references to communications, applications, data, security, standards, and people investments you’ll need to make. You should also make a list of services that might be in-sourced, co-sourced, or outsourced. And, yes, you should begin to price out the big-ticket items, such as a communications infrastructure upgrade or an enterprise applications migration.
You will also need to create a “devil’s advocate” process run by some tough critics of all this creative thinking. The objective here is to subject the new business models and processes to a serious reality-check. If you can’t find in-house honest brokers then get some tough consultants in to scrub the scenarios.
That’s enough about the substance of the process. Let’s turn to the politics. To build influential scenarios, you’ll need the following:
These are minimum prerequisites to success. If one or more is missing, you’re toast.
Next month we’ll look at communications.//
Steve Andriole is the founder & CTO of TechVestCo, a new economy consortium that focuses on optimizing investments in information technology. He is formerly the Senior Vice President & Chief Technology Officer of Safeguard Scientifics, Inc. and the Chief Technology Officer and Senior Vice President for Technology Strategy at CIGNA Corporation. His career began at the Defense Advanced Research Projects Agency where he was the Director of Cybernetics Technology. He can be reached at email@example.com.