Presented by: Suzanne K. Lemen, SPHR

1. Scenario Planning: A Requirement for Competent HR Presented by: Suzanne K. Lemen, SPHR

2. Today’s Objectives • Understand use of scenario thinking in planning process • Understand eight steps to scenario planning • Develop an Action Plan for the use of Scenario Planning in your organization

3. Role of HR in Planning Process Strategic HR Requirements: • Part of Planning Team • Must Understand Business • Provides the Human Capital Perspective • Assists the Leadership Team in Innovative Ways of Thinking about Planning

4. Scenario Thinking Enhances The Planning Process • Scenario Thinking has been around for 40 years • Military has used the process since 1940 • Recently became very Popular • Used by many of the Top Companies • Important Tool in these Uncertain Times

5. World is Changing Rapidly Changes include: Political/Governmental Affects Natural Disasters Terrorism Product Tampering Infrastructure Compromises Global Issues Opportunities Others Why You Should Care????

6. Why You Should Care???? What Scenarios Could Affect Your Business? What Scenarios Are Beyond Your Comprehension?

7. Traditional Planning • Define Business Goal or Objective • Gather Information – Internal/External • Develop Alternative Strategies • Implement Plan • Evaluate and Revise as Needed

8. Traditional Planning Very Linear Systematic Based on Forecasting Good to Use in Stable Environment

9. What Happens in Today’s Environment? • Shelf Dust • Organizations Unprepared for the Unexpected • Implementation of Strategies that lead to Disaster • Lowered Earnings, Decline of Business

10. Scenario Planning • AKA Scenario Thinking • Creates a Map of Uncertainty • Stories of the Future that Might Unfold • Not Predictions

11. Scenario Planning Scenarios can be positive or negative Different way of Thinking about the Future Helps the Organization to be Better Prepared Can Result in Surprising Outcomes

12. Example: Oil Prices • Historically Oil Prices have been Forecasted • In the 1970’s Oil Companies Realized that Forecasting Might be Dated • Scenario Planning led to Huge Profits as Prices rose Rapidly

13. Example: Price of Silicon Chip • Vision of Individual PC’s • Smaller, Faster, Cheaper • $100 Laptop for every Child in Developing Nations • What’s Next?

14. Scenarios as a Competitive Advantage Each Example: • Organization was Prepared • Able to Act Quickly • Beat Competitors • Avoided Risk

15. Thinking in a Non-Linear Way Why? Always True? Another Way? Challenge Perspective Possibilities

16. Thinking in a Non-Linear Way Get Diversity Look Far Out into the Future • Think from the External and not the Internal • Keep asking Why about Assumptions • Consider the What If’s

17. Thinking in a Non-Linear Way Let’s Try It Find a Partner Spend 3 Minutes What will happen with the Price of Oil 10 years from Now in the USA

18. Thinking in a Non-Linear Way What did you Consider? External forces Political forces Terrorism Innovation Technology Resources from Outer Space

19. Thinking in a Non-Linear Way Hard? Easy? Was it Out of the Box? Uncomfortable? These are all Challenges to Scenario Thinking

20. Scenario Planning Must Create a Map for Possible Futures Use the Mapping to pick the best Strategies Goal is to Make Strategic Decisions for all Plausible Futures

21. Scenario Planning - Example Food Business Scenario identified that Government Outlaws High Fructose Corn Syrup How does this affect choice of Strategies?

22. Scenario Planning - Steps Step One – Key Decisions What determines success? Circumstances that lead to success or failure? Where is industry going? Consider prejudices/assumptions Consider Business System Issues

23. Scenario Planning -Steps Step Two – Do Homework Internal Scan External Scan Open to the Unexpected Consider Science and Technology New ideas/Fringe Ideas Perception Changing Events

24. Scenario Planning -Steps Step Three – Identify Driving Forces of Scenario Elements that Move the Plot of the Scenario Social/Demographics Technology Economics/Politics Environmental Little Control over Driving Forces

25. Scenario Planning - Steps Step Four – Identify Predetermined Elements No matter which Scenario it Will be True Example: Baby Bust Finite amount of Oil

26. Scenario Planning -Steps Step Five – Identify Critical Uncertainties Plan for them Question Assumptions of Predetermined Elements These are the Variables in the Scenarios Create parallel scenarios Identify two or three factors that are the most important and most uncertain Goal is to have a few scenarios that really make a difference

27. Scenario Planning -Steps Step Six – Compose Scenarios Diverse planning team meets Bring Research Answer Questions: Uncertain Inevitable What if this Scenario Combine into 2 or 3 scenarios

28. Scenario Planning -Steps Step Seven – Analyze Decisions Relative to Scenarios How does Decision look? What are Vulnerabilities? If looks good in only one scenario then it is high Risk Adapt Strategy?

29. Scenario Planning -Steps Step Eight – Select Indicators As History Unfolds, Monitor Indicators Scenarios then lead to Industry specific implications and action plans

30. Using Scenario Planning Strategic Planning Process Any Planning Process Method of Making Better Decisions How will you Implement Concepts Today in Your Business?

31. Suzanne K. Lemen, SPHR Dynamic Corporate Solutions, Inc. Phone 904-278-5383 slemen@dynamiccorp.com www.dynamiccorp.com