Management Consulting/HElp


1. What is Turnaround Management? Explain how turn around Management can be used for bringing change in organisations. Give examples.

2. State the reasons for the change to occur in organisations and substantiate it with illustrations.

3. Explain the importance of interventions to be used in bringing about change in organisations. Describe any two interventions and their merits and demerits in the context of organisations.

4. Differentiate between Transactional and Transformational leadership. Describe the competencies and skills required for a leader in order to bring change in organisations.

5. Describe various steps involved in organisational change to occur. Briefly discuss the role of chief implementor in bringing change in organisations.



I  will send  the balance  asap.

1.What is Turnaround Management? Explain how turn around Management can be used for bringing change in organisations. Give examples.

is  a  process of   devising , executing   and    managing  a  plan  of
corporate  renewal.  The  process  involves  identifying the  key  drivers
of  an  unstable business  and  implementing  a  sustainable  recovery
change   strategies  which  rapidly improves the  business.

THE  TURNAROUND   MANAGEMENT   involves  a  number
of  steps:
-sales  down  due  to   weak  economy.
-overly optimistic  sales projections
-poor  strategic  choices
-high  operating  costs
-high  fixed  costs that  decrease  flexibility
-insufficient  resources
-unsuccessful  R&D   projects
-high  successful  competitor
-excessive  debt burden
-inadequate  financial  controls.
1   Strategic restructuring: The focus lies on core markets and promising business segments. Corporate divisions destroying value are divested.
2   Operational restructuring: It focuses on leaner organization and leaner processes, on the simplification of manufacturing networks and corporate structures, as well as on maximizing efficiency and effectiveness.
3   Financial restructuring: A combination of cost reduction, more flexible structures, and the development of a sustainable financial concept.
1   the overall financial situation is as transparent as possible and that the influence of the identified restructuring measures becomes clear,
2   rapid analysis and concept development considering the information needs of  the stakeholders are conducted,
3   the most relevant people from the  organization are involved in order to achieve acceptance for the implementation of improvements,
4   consistent project management and controlling are established during the implementation phase to ensure that the pursued improvements are actually achieved,
5   all stakeholders are continuously informed and involved in order to identify risks and avoid counterproductive conflicts.
The  organisation I  am  referring to, was  facing
a  problem of  declining  sales/ market  share  for  2  
consecutive  year.

The  organization, I am  familiar  with  is  a
-a  large  manufacturer/ marketer of  safety products
-the products  are  used  as  [personal  protection safety] [ industrial  safety]
-the products  are  distributed through  the distributors as well as  sold directly
-the  products  are  sold  to various  industries like  mining/fireservices/defence/
as  well  as  to  various  manufacturing  companies.
-the  company employs  about  235  people.
-the  company  has  the following  functional   departments
*finance/ administration
*human resource
*customer  service
*warehousing/  transportation
-poor  strategic  choices
-high  operating  costs
-insufficient  resources
-high  successful  competitor
-inadequate  financial  controls.
-the demand for  the  market was growing  at   13%
-the   company  sales  was  growing  at 7%
-the company  was  selling directly  to  the  customers, using  the  salesforce.
-lack of  adequate  product  range.
-lack  of  market  coverage
-lack  of   skills  among  the  salesforce
-demand  for  technical  products
etc etc
-go  for  20%  growth ----per  annum  over  the  next  5  years.
-enter  new  market  segments. [ 15%  additional   sales  volume]
-offer  new  product [ 15%  additional   sales  volume ]
-restructure   the  marketing department [   3  product  group  management]
-to  achieve  80%  sales  through  distributors  in  5  years  time.
-to  conduct  more  marketing  development  for  new  products.
-to  train   all  staff in  the  product  knowledge.
1   Strategic restructuring: The focus lies on core markets and promising business segments. Corporate divisions destroying value are divested.
  -3  new  product  groups.
  -development   a  new  salesdepartment  to  develop   distributor  sales.
2   Operational restructuring: It focuses on leaner organization and leaner processes, on the simplification of manufacturing networks and corporate structures, as well as on maximizing efficiency and effectiveness.
3   Financial restructuring: A combination of cost reduction, more flexible structures, and the development of a sustainable financial concept.
-reorganizing   the sales  territories.
-appointment  of  new distribtors   --geographically.
-pay   for  performance   systems.
-implementation  of  the change  management  program
over   the  6 months  period.
which   included
-new  product  sourcing
-new  product  development
-new  sales  policies  development
-new  distributors   policies  development
-new  training  for salesforce - to manage the  distributors.
-new training for customer  service  staff.
-new  order  processing /  servicing  system.
etc etc

2.State the reasons for the change to occur in organisations and substantiate it with illustrations.

Change is inevitable in the life of an organisation. In today’s business world, most of the organisations are facing a dynamic and changing business environment. They should either change or die, there is no third alternative. Organizations that learn and cope with change will thrive and flourish and others who fail to do so will be wiped out. The major forces which make the changes not only desirable but inevitable are technological, economic, political, social, legal, international and labour market environments.
In very simple words, we can say that change means the alteration of status quo or making things different. “The term change refers to any alterations which occurs in the overall work environment of an organisation.”
“When an organizational system is disturbed by some internal or external force, change frequently occurs. Change, as a process, is simply modification of the structure or process of a system. It may be good or bad, the concept is descriptive only.”
There are a number of factors both internal and external which affect organizational functioning. Any change in these factors necessitates changes in an organisation. The more important factors are as follows:
External Forces
Every organization exists in some context; no organization is an island in itself. Each must continually interact with other organizations and individuals- the consumers, suppliers, unions, shareholders, government and many more. Each organization has goals and responsibilities related to each other in the environment. The present day environment is dynamic and will continue to be dynamic. Changes in social, political, economic, technology, and legal environment force organizations to change themselves. Such changes may result in organizational changes like major functions production process, labour-management relations, nature of competitions, economic constraints, organizational methods etc. In order to survive in the changing environment, organization must change. How the change in various environmental, organizations, must change. How the changes in various environmental factors necessitate change in the organization may be seen in following context:-
•   Technology: When there is a change in technology in the organizational environment and other organizations adopt the new technology, the organizations under focus become less cost effective and its competitive position weakens. Therefore, it has to adopt new technology, its work structure is affected and a new equilibrium has to be established.
•   Marketing conditions: Since every organization exports its outputs to the environment, an organization has to face competition in the market. There may be two types of forces which may affect the competitive position of an organization –other organizations supplying the same products and, buyers who are not buying the product. Any changes in these forces may require suitable changes in the in the organization. For example, when Indian economy was liberalized, there were many foreign organizations that entered the Indian market. This forced many Indian organizations to realign themselves with the new situations. The result in that there have been many cases of divesting the business and concentrating on the core business, acquiring core business, and developing competitive competence to face competitive threats. Similarly, there may be changes in buyers in terms of their needs, liking –disliking and income disposal for a product. These changes from the organizations to bring those products which meet buyer’s requirement.
•   Social changes: Social changes reflect in terms of people’s aspirations, the needs, and their ways of working. Social changes have taken place because of the several forces like level of education, urbanization, feeling of autonomy, and international impact due to new information sources. These social changes affect the behavior of people in the organization. There, it is required to make adjustment in its working so that it matches with people.
•   Political and legal changes: Political and legal factors broadly define the activities which an oganisation can undertake and the methods which will be followed by it in accomplishing those activities. Any changes in these political and legal factors may affect the organization operation.
Internal Forces
It is not only the changes in external factors, which may necessitate organizational changes; any change in organization’s internal factors may also necessitate changes. Such a change is required because of two reasons: changes in managerial personnel and deficiency in existing organizational practices.
•   Changes in the managerial personnel: Besides environmental changes there is a change in managerial personnel. Old managers are replaced by new mangers, which necessitated because of retirement, promotion, transfer or dismissal. Each new manager brings his own ideas and way of working in the organization. The relationships, more in the organization. The relationships, more particularly informal ones, changes because of changes in managerial personnel. Moreover, attitude of the personnel change even though there is no changes in them. The result in that an organization has to change accordingly.
•   Deficiency in Existing organization: Sometimes, changes are necessary because of deficiency in the present organizational arrangement ad process. These deficiencies may be in the form of unmanageable span of management, large number of managerial levels, lack in co-ordination between various departments, obstacles in communication, multiplicity of committees, lack of uniformity in policy decisions, lack of cooperation between the line and staff, and so on. Beside these internal factors, there are two more internal factors that give rise to organizational changes.
•   Nature of the work force: The nature of work force has changed over a passage of time. Different work values have been expressed by different generations. Workers who are in the age group of 50 plus value loyalty to their employers. Workers in their mid thirties to forties are loyal to themselves only. The youngest generation of workers is loyal to their career. The profile of the workforce is also changing fast. The new generation of workers has better educational; they place greater emphasis on human values and questions authority of managers. Their behavior has also become very complex and leading them towards organizational goals is a challenge for the managers. The employee turnover is also very high which again put strain on the management.
•   To avoid developing inertia: In many cases, organizational changes take place just to avoid developing inertia or inflexibility. Conscious manager take into account this view of organization that organization should be dynamic because any single method is not the best tool of management every time. Thus, changes are incorporated so that the personnel develop liking for change and there is no unnecessary resistance when major change in the organization are brought about.

Organizations may need to reengineer processes to achieve optimum workflow and productivity. Process-oriented change is often related to an organization's production process or how the organization assembles products or delivers services. The adoption of robotics in a manufacturing plant or of laser-scanning checkout systems at supermarkets are examples of process-oriented changes.

The  organization, I am  familiar  with  is  a
-a  large  manufacturer/ marketer of  safety products
-the products  are  used  as  [personal  protection safety] [ industrial  safety]
-the products  are  distributed through  the distributors as well as  sold directly
-the  products  are  sold  to various  industries like  mining/fireservices/defence/
as  well  as  to  various  manufacturing  companies.
-the  company employs  about  235  people.
-the  company  has  the following  functional   departments
*finance/ administration
*human resource
*customer  service
*warehousing/  transportation

Recent changes have caused supply chain management to gain importance

Changes in five factors are largely responsible for the increased IMPORTANCE.
•   Information technology
•   Visibility of best practices
•   Consumer behavior
•   Competition
•   The importance of speed
Technology. Although people have been talking about the idea of the integrated supply chain for a long time, it's only been in the last decade or so that information technology has made it possible to bring many concepts to life. However, information technology is merely the facilitator.
Visibility of best practices. People are realizing the enormous amounts of money they've been leaving on the table in supply chain management because they have not been doing things right. So we're really talking about a need for greater understanding of supply chain economics and the visibility of successful firms.
Some firms have completely changed the competitive dynamics of their industries because of the kind of competitive advantage they've been able to gain in the supply chain. Wal-Mart, of course, is the obvious one. The impact of their ability to get products to the customer and the impact of the economics have really changed the nature of competition. Not only did others start to emulate this model, but more visible models of different ways to do things in the supply chain have also emerged.
Consumer behavior. Today, customers are much more demanding than they have ever been in business history. They have the information at their fingertips, they know exactly what they want, and they know when and how they want it.
Competition. The behavior of customers has changed the way we view competition. Companies are forced to do better because customers aren't going to stay around if they don't.
Speed. During the last decade, it's all been about competing through speed—being able to satisfy changing customer needs quickly, accurately, and efficiently.

Supply Chain Management transformation is a strategic imperative for any manufacturer. This new perspective, one that will continue to gain importance, sees all suppliers and customers as part of one complex supply chain network and understands that transforming that supply chain into a synchronized chain is the primary goal.
Supply chain management transformation provides fast access to relevant and accurate information. This timely supply chain information can pay off handsomely in lower costs, less inventory, improved throughput, shorter cycle times, and the highest levels of customer service. The very essence of supply chain management is effective information and material flow throughout a network of customers and suppliers. By using the Internet, companies simply have better and more far-reaching ways to speed up the information flow process and make it more effective.
For many companies, it is now clear that the supply chain that best manages the flows of both information and material can significantly differentiate itself from its competitors. As customers and suppliers band together in mutually beneficial partnerships, the need for better and better supply chain management processes and systems becomes more critical. Within the boardroom, improving supply chain management is getting lots of attention because forward-thinking management teams know it is the best strategy to increase and maintain market share while at the same time increasing profits. Experts now agree that in many industries, market share will be won and lost based on supply chain performance.
Good supply chain practitioners know that information should be passed on only to those who need to know it, when they need to know it, and in the form they need to have it in. Changes in demand information, inventory positions, order fulfillment, supply management, and a whole host of other information exchange activities will transform how we sell products, supply products, and make and receive payments for goods and services. Tomorrow’s supply chain will link customers and suppliers together seamlessly throughout the world. The higher speed of information flow itself will in turn mandate faster flows of material, which only lean manufacturing operations can generate.
Executive management is taking a good hard look at supply chains and finding a dysfunctional mix of processes, policies, systems, communications, performance measures, and organizational accountability . Some of these processes are clearly functionally divided silos; those barricaded “power pockets” of the internally focused corporate hierarchical maze that was the standard for decades. Other processes are hybrid and include everything from manual order entry to faxes and phone communications and e-mail. Still other processes reveal the current trend toward full electronic communication and collaboration throughout the supply chain, including automated order entry, delivery tracking, and inventory planning systems. Whatever the exact mix, it is clear that most companies have a long way to go before they will have fully transformed their supply chain for the twenty-first century.
The standard manufacturing supply chain shows the traditional flow of information and materials to and from the customers and the suppliers through the company. The processes within the supply chain typically have a strong correlation to the traditional silo organizational functions within a manufacturing company, including sales, engineering, manufacturing, distribution, and accounting. The business process flows across an organization, but communication, accountability, and reward systems flow vertically. This organizational and process contradiction often impedes supply chain effectiveness.
Where’s the Payoff?
Two very compelling reasons justify pursuing e-supply chain management. First, suppliers are now integrating, rather than just interfacing, with their customers.
There’s no small difference between interfacing and integrating. Whereas interfacing indicates communication through some means or other, integrating indicates a more far-reaching connection through electronic business processes. Before, a company might send a monthly report to suppliers about what orders they expect to come in that month, now it is feasible to let suppliers check your order status at any and every point during the month, including in real time. In an integrated supply chain, customers and suppliers become mutually dependent by collaborating through the shared goal of the streamlined, efficient demand and supply process. The objective is for everyone in the supply chain to increase market share through quick responses to customer needs. This can only happen when information, materials, and products flow smoothly and freely, in sync with demand. It’s a formidable task but the effort can pay big dividends, including making (or breaking) marketplace leadership.
The second reason to pursue the e-supply chain is related but different in emphasis. While the first reason emphasizes filling customers’ product needs, the second emphasizes improving the performance of manufacturing material flow and all the benefits those improvements can bring. Many companies now recognize that flow through the entire supply chain is the critical factor for success. In fact, in the future, customers will want to work only with suppliers who are consistently flexible and responsive in meeting their supply needs. The objectives for improved supply chain management are twofold, affecting both the cost and revenue sides of the business equation. The goals are:
•   Gain a competitive advantage and increase market share by being more flexible, quicker, more dependable, and less costly.
•   Achieve better cost efficiency through high-speed information and material flows with lower inventories and decreased overhead activity costs.
Recognize the difficulty of change
Most corporate change programs do a much better job of designing new operating processes and technology tools than of fostering appropriate attitudes and behaviors in the people who are essential to making the change program
work. People resist change, especially in companies with a history of "change-of- the-month" programs. People in any organization have trouble coping with the
uncertainty of change, especially the real possibility that their skills will not fit the new environment.

Implementing the seven principles of supply chain management will mean significant change for most companies. The best prescription for ensuring success and minimizing resistance is extensive, visible participation and
communication by senior executives. This means championing the cause and removing the managerial obstacles that typically present the greatest barriers to success, while linking change with overall business strategy.
Many progressive companies have realized that the traditionally fragmented responsibility for managing supply chain activities will no longer do. Some have even elevated supply chain management to a strategic position and established
a senior executive position such as vice president-supply chain (or the equivalent) reporting directly to the COO or CEO. This role ignores traditional product, functional, and geographic boundaries that can interfere with delivering
to customers what they want, when and where they want it.
The executive recruited for this role must have some very special attributes—the breadth of vision needed to understand and manage activities from receipt of order through delivery; the flexibility required to experiment and make mid-
course corrections, coupled with the patience demanded by an inherently long-term effort; the superior communication and leadership skills essential to winning and sustaining commitment to the effort at every level of the
organization, including the translation of intellectual commitment into financial commitment.

scenario planning or scenario thinking is done
1.   Decide on the key question to be answered by the analysis. By doing this, it is possible to assess whether scenario planning is preferred over the other methods. If the question is based on small changes or a very small number of elements, other more formalized methods may be more useful.
2.   Set the time and scope of the analysis. Take into consideration how quickly changes have happened in the past, and try to assess to what degree it is possible to predict common trends in demographics, product life cycles. A usual timeframe can be five to 10 years.
3.   Identify major stakeholders. Decide who will be affected and have an interest in the possible outcomes. Identify their current interests, whether and why these interests have changed over time in the past.
4.   Map basic trends and driving forces. This includes industry, economic, political, technological, legal, and societal trends. Assess to what degree these trends will affect your research question. Describe each trend, how and why it will affect the organisation. In this step of the process, brainstorming is commonly used, where all trends that can be thought of are presented before they are assessed, to capture possible group thinking and tunnel vision.
5.   Find key uncertainties. Map the driving forces on two axes, assessing each force on an uncertain/(relatively) predictable and important/unimportant scale. All driving forces that are considered unimportant are discarded. Important driving forces that are relatively predictable (ex. demographics) can be included in any scenario, so the scenarios should not be based on these. This leaves you with a number of important and unpredictable driving forces. At this point, it is also useful to assess whether any linkages between driving forces exist, and rule out any "impossible" scenarios (ex. full employment and zero inflation).
6.   Check for the possibility to group the linked forces and if possible, reduce the forces to the two most important. (To allow the scenarios to be presented in a neat xy-diagram)
7.   Identify the extremes of the possible outcomes of the two driving forces and check the dimensions for consistency and plausibility. Three key points should be assessed:
1.   Time frame: are the trends compatible within the time frame in question?
2.   Internal consistency: do the forces describe uncertainties that can construct probable scenarios.
3.   Vs the stakeholders: are any stakeholders currently in disequilibrium compared to their preferred situation, and will this evolve the scenario? Is it possible to create probable scenarios when considering the stakeholders? This is most important when creating macro-scenarios where governments, large organisations et al. will try to influence the outcome.
8.   Define the scenarios, plotting them on a grid if possible. Usually, two to four scenarios are constructed. The current situation does not need to be in the middle of the diagram (inflation may already be low), and possible scenarios may keep one (or more) of the forces relatively constant, especially if using three or more driving forces. One approach can be to create all positive elements into one scenario and all negative elements (relative to the current situation) in another scenario, then refining these. In the end, try to avoid pure best-case and worst-case scenarios.
9.   Write out the scenarios. Narrate what has happened and what the reasons can be for the proposed situation. Try to include good reasons why the changes have occurred as this helps the further analysis. Finally, give each scenario a descriptive (and catchy) name to ease later reference.
10.   Assess the scenarios. Are they relevant for the goal? Are they internally consistent? Are they archetypical? Do they represent relatively stable outcome situations?
11.   Identify research needs. Based on the scenarios, assess where more information is needed. Where needed, obtain more information on the motivations of stakeholders, possible innovations that may occur in the industry and so on.
12.   Develop quantitative methods. If possible, develop models to help quantify consequences of the various scenarios, such as growth rate, cash flow etc. This step does of course require a significant amount of work compared to the others, and may be left out in back-of-the-envelope-analyses.
13.   Converge towards decision scenarios. Retrace the steps above in an iterative process until you reach scenarios which address the fundamental issues facing the organization. Try to assess upsides and downsides of the possible scenarios.

Use of scenario planning by managers
The basic concepts of the process are relatively simple. In terms of the overall approach to forecasting, they can be divided into three main groups of activities (which are, generally speaking, common to all long range forecasting processes):
1.   Environmental analysis
2.   Scenario planning
3.   Corporate strategy
The first of these groups quite simply comprises the normal environmental analysis. This is almost exactly the same as that which should be undertaken as the first stage of any serious long-range planning. However, the quality of this analysis is especially important in the context of scenario planning.
The central part represents the specific techniques - covered here - which differentiate the scenario forecasting process from the others in long-range planning.
The final group represents all the subsequent processes which go towards producing the corporate strategy and plans. Again, the requirements are slightly different but in general they follow all the rules of sound long-range planning.
The part of the overall process which is radically different from most other forms of long-range planning is the central section, the actual production of the scenarios. Even this, though, is relatively simple, at its most basic level. As derived from the approach most commonly used by Shell, it follows six steps:
1.   Decide drivers for change/assumptions
2.   Bring drivers together into a viable framework
3.   Produce 7-9 initial mini-scenarios
4.   Reduce to 2-3 scenarios
5.   Draft the scenarios
6.   Identify the issues arising
Step 1 - decide assumptions/drivers for change
The first stage is to examine the results of environmental analysis to determine which are the most important factors that will decide the nature of the future environment within which the organisation operates. These factors are sometimes called 'variables' (because they will vary over the time being investigated, though the terminology may confuse scientists who use it in a more rigorous manner). Users tend to prefer the term 'drivers' (for change), since this terminology is not laden with quasi-scientific connotations and reinforces the participant's commitment to search for those forces which will act to change the future. Whatever the nomenclature, the main requirement is that these will be informed assumptions.
This is partly a process of analysis, needed to recognise what these 'forces' might be. However, it is likely that some work on this element will already have taken place during the preceding environmental analysis. By the time the formal scenario planning stage has been reached, the participants may have already decided - probably in their sub-conscious rather than formally - what the main forces are.
In the ideal approach, the first stage should be to carefully decide the overall assumptions on which the scenarios will be based. Only then, as a second stage, should the various drivers be specifically defined. Participants, though, seem to have problems in separating these stages.
Perhaps the most difficult aspect though, is freeing the participants from the preconceptions they take into the process with them. In particular, most participants will want to look at the medium term, five to ten years ahead rather than the required longer-term, ten or more years ahead. However, a time horizon of anything less than ten years often leads participants to extrapolate from present trends, rather than consider the alternatives which might face them. When, however, they are asked to consider timescales in excess of ten years they almost all seem to accept the logic of the scenario planning process, and no longer fall back on that of extrapolation. There is a similar problem with expanding participants horizons to include the whole external environment.
In any case, the brainstorming which should then take place, to ensure that the list is complete, may unearth more variables - and, in particular, the combination of factors may suggest yet others.
A very simple technique which is especially useful at this - brainstorming - stage, and in general for handling scenario planning debates is derived from use in Shell where this type of approach is often used. An especially easy approach, it only requires a conference room with a bare wall and copious supplies of 3M Post-It Notes.
The six to ten people ideally taking part in such face-to-face debates should be in a conference room environment which is isolated from outside interruptions. The only special requirement is that the conference room has at least one clear wall on which Post-It notes will stick. At the start of the meeting itself, any topics which have already been identified during the environmental analysis stage are written (preferably with a thick magic marker, so they can be read from a distance) on separate Post-It Notes. These Post-It Notes are then, at least in theory, randomly placed on the wall. In practice, even at this early stage the participants will want to cluster them in groups which seem to make sense. The only requirement (which is why Post-It Notes are ideal for this approach) is that there is no bar to taking them off again and moving them to a new cluster.
A similar technique - using 5" by 3" index cards - has also been described (as the 'Snowball Technique'), by Backoff and Nutt, for grouping and evaluating ideas in general.
As in any form of brainstorming, the initial ideas almost invariably stimulate others. Indeed, everyone should be encouraged to add their own Post-It Notes to those on the wall. However it differs from the 'rigorous' form described in 'creative thinking' texts, in that it is much slower paced and the ideas are discussed immediately. In practice, as many ideas may be removed, as not being relevant, as are added. Even so, it follows many of the same rules as normal brainstorming and typically lasts the same length of time - say, an hour or so only.
It is important that all the participants feel they 'own' the wall - and are encouraged to move the notes around themselves. The result is a very powerful form of creative decision-making for groups, which is applicable to a wide range of situations (but is especially powerful in the context of scenario planning). It also offers a very good introduction for those who are coming to the scenario process for the first time. Since the workings are largely self-evident, participants very quickly come to understand exactly what is involved.
Important and uncertain
This step is, though, also one of selection - since only the most important factors will justify a place in the scenarios. The 80:20 Rule here means that, at the end of the process, management's attention must be focused on a limited number of most important issues. Experience has proved that offering a wider range of topics merely allows them to select those few which interest them, and not necessarily those which are most important to the organisation.
In addition, as scenarios are a technique for presenting alternative futures, the factors to be included must be genuinely 'variable'. They should be subject to significant alternative outcomes. Factors whose outcome is predictable, but important, should be spelled out in the introduction to the scenarios (since they cannot be ignored). The Important Uncertainties Matrix, as reported by Kees van der Heijden of Shell, is a useful check at this stage.
At this point it is also worth pointing out that a great virtue of scenarios is that they can accommodate the input from any other form of forecasting. They may use figures, diagrams or words in any combination. No other form of forecasting offers this flexibility.
Step 2 - bring drivers together into a viable framework
The next step is to link these drivers together to provide a meaningful framework. This may be obvious, where some of the factors are clearly related to each other in one way or another. For instance, a technological factor may lead to market changes, but may be constrained by legislative factors. On the other hand, some of the 'links' (or at least the 'groupings') may need to be artificial at this stage. At a later stage more meaningful links may be found, or the factors may then be rejected from the scenarios. In the most theoretical approaches to the subject, probabilities are attached to the event strings. This is difficult to achieve, however, and generally adds little - except complexity - to the outcomes.
This is probably the most (conceptually) difficult step. It is where managers' 'intuition' - their ability to make sense of complex patterns of 'soft' data which more rigorous analysis would be unable to handle - plays an important role. There are, however, a range of techniques which can help; and again the Post-It-Notes approach is especially useful:
Thus, the participants try to arrange the drivers, which have emerged from the first stage, into groups which seem to make sense to them. Initially there may be many small groups. The intention should, therefore, be to gradually merge these (often having to reform them from new combinations of drivers to make these bigger groups work). The aim of this stage is eventually to make 6 - 8 larger groupings; 'mini-scenarios'. Here the Post-It Notes may be moved dozens of times over the length - perhaps several hours or more - of each meeting. While this process is taking place the participants will probably want to add new topics - so more Post-It Notes are added to the wall. In the opposite direction, the unimportant ones are removed (possibly to be grouped, again as an 'audit trail' on another wall). More important, the 'certain' topics are also removed from the main area of debate - in this case they must be grouped in clearly labelled area of the main wall.
As the clusters - the 'mini-scenarios' - emerge, the associated notes may be stuck to each other rather than individually to the wall; which makes it easier to move the clusters around (and is a considerable help during the final, demanding stage to reducing the scenarios to two or three).
The great benefit of using Post-It Notes is that there is no bar to participants changing their minds. If they want to rearrange the groups - or simply to go back (iterate) to an earlier stage - then they strip them off and put them in their new position.
Step 3 - produce initial mini-scenarios
The outcome of the previous step is usually between seven and nine logical groupings of drivers. This is usually easy to achieve. The 'natural' reason for this may be that it represents some form of limit as to what participants can visualise.
Having placed the factors in these groups, the next action is to work out, very approximately at this stage, what is the connection between them. What does each group of factors represent?
Step 4 - reduce to two or three scenarios
The main action, at this next stage, is to reduce the seven to nine mini-scenarios/groupings detected at the previous stage to two or three larger scenarios. The challenge in practice seems to come down to finding just two or three 'containers' into which all the topics can be sensibly fitted. This usually requires a considerable amount of debate - but in the process it typically generates as much light as it does heat. Indeed, the demanding process of developing these basic scenario frameworks often, by itself, produces fundamental insights into what are the really important (perhaps life and death) issues affecting the organisation. During this extended debate - and even before it is summarised in the final reports - the participants come to understand, by their own involvement in the debate, what the most important drivers for change may be, and (perhaps even more important) what their peers think they are. Based on this intimate understanding, they are well prepared to cope with such changes - reacting almost instinctively - when they actually do happen; even without recourse to the formal reports which are eventually produced!
There is no theoretical reason for reducing to just two or three scenarios, only a practical one. It has been found that the managers who will be asked to use the final scenarios can only cope effectively with a maximum of three versions! Shell started, more than three decades ago, by building half a dozen or more scenarios - but found that the outcome was that their managers selected just one of these to concentrate on. As a result the planners reduced the number to three, which managers could handle easily but could no longer so easily justify the selection of only one! This is the number now recommended most frequently in most of the literature.
Complementary scenarios
As used by Shell, and as favoured by a number of the academics, two scenarios should be complementary; the reason being that this helps avoid managers 'choosing' just one, 'preferred', scenario - and lapsing once more into single-track forecasting (negating the benefits of using 'alternative' scenarios to allow for alternative, uncertain futures). This is, however, a potentially difficult concept to grasp, where managers are used to looking for opposites; a good and a bad scenario, say, or an optimistic one versus a pessimistic one - and indeed this is the approach (for small businesses) advocated by Foster. In the Shell approach, the two scenarios are required to be equally likely, and between them to cover all the 'event strings'/drivers. Ideally they should not be obvious opposites, which might once again bias their acceptance by users, so the choice of 'neutral' titles is important. For example, Shell's two scenarios at the beginning of the 1990s were titled 'Sustainable World' and 'Global Mercantilism'[xv]. In practice, we found that this requirement, much to our surprise, posed few problems for the great majority, 85%, of those in the survey; who easily produced 'balanced' scenarios. The remaining 15% mainly fell into the expected trap of 'good versus bad'. We have found that our own relatively complex (OBS) scenarios can also be made complementary to each other; without any great effort needed from the teams involved; and the resulting two scenarios are both developed further by all involved, without unnecessary focusing on one or the other.
Having grouped the factors into these two scenarios, the next step is to test them, again, for viability. Do they make sense to the participants? This may be in terms of logical analysis, but it may also be in terms of intuitive 'gut-feel'. Once more, intuition often may offer a useful - if academically less respectable - vehicle for reacting to the complex and ill-defined issues typically involved. If the scenarios do not intuitively 'hang together', why not? The usual problem is that one or more of the assumptions turns out to be unrealistic in terms of how the participants see their world. If this is the case then you need to return to the first step - the whole scenario planning process is above all an iterative one (returning to its beginnings a number of times until the final outcome makes the best sense).
Step 5 - write the scenarios
The scenarios are then 'written up' in the most suitable form. The flexibility of this step often confuses participants, for they are used to forecasting processes which have a fixed format. The rule, though, is that you should produce the scenarios in the form most suitable for use by the managers who are going to base their strategy on them. Less obviously, the managers who are going to implement this strategy should also be taken into account. They will also be exposed to the scenarios, and will need to believe in these. This is essentially a 'marketing' decision, since it will be very necessary to 'sell' the final results to the users. On the other hand, a not inconsiderable consideration may be to use the form the author also finds most comfortable. If the form is alien to him or her the chances are that the resulting scenarios will carry little conviction when it comes to the 'sale'.
Most scenarios will, perhaps, be written in word form (almost as a series of alternative essays about the future); especially where they will almost inevitably be qualitative which is hardly surprising where managers, and their audience, will probably use this in their day to day communications. Some, though use an expanded series of lists and some enliven their reports by adding some fictional 'character' to the material - perhaps taking literally the idea that they are stories about the future - though they are still clearly intended to be factual. On the other hand, they may include numeric data and/or diagrams - as those of Shell do (and in the process gain by the acid test of more measurable 'predictions').
Step 6 - identify issues arising
The final stage of the process is to examine these scenarios to determine what are the most critical outcomes; the 'branching points' relating to the 'issues' which will have the greatest impact (potentially generating 'crises') on the future of the organisation. The subsequent strategy will have to address these - since the normal approach to strategy deriving from scenarios is one which aims to minimise risk by being 'robust' (that is it will safely cope with all the alternative outcomes of these 'life and death' issues) rather than aiming for performance (profit) maximisation by gambling on one outcome.
Use of scenarios
It is important to note that scenarios may be used in a number of ways:
a) Containers for the drivers/event strings
Most basically, they are a logical device, an artificial framework, for presenting the individual factors/topics (or coherent groups of these) so that these are made easily available for managers' use - as useful ideas about future developments in their own right - without reference to the rest of the scenario. It should be stressed that no factors should be dropped, or even given lower priority, as a result of producing the scenarios. In this context, which scenario contains which topic (driver), or issue about the future, is irrelevant.
b) Tests for consistency
At every stage it is necessary to iterate, to check that the contents are viable and make any necessary changes to ensure that they are; here the main test is to see if the scenarios seem to be internally consistent - if they are not then the writer must loop back to earlier stages to correct the problem. Though it has been mentioned previously, it is important to stress once again that scenario building is ideally an iterative process. It usually does not just happen in one meeting - though even one attempt is better than none - but takes place over a number of meetings as the participants gradually refine their ideas.
c) Positive perspectives
Perhaps the main benefit deriving from scenarios, however, comes from the alternative 'flavours' of the future their different perspectives offer. It is a common experience, when the scenarios finally emerge, for the participants to be startled by the insight they offer - as to what the general shape of the future might be - at this stage it no longer is a theoretical exercise but becomes a genuine framework (or rather set of alternative frameworks) for dealing with that.

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Leo Lingham


management consulting process, management consulting career, management development, human resource planning and development, strategic planning in human resources, marketing, careers in management, product management etc


18 years working managerial experience covering business planning, strategic planning, corporate planning, management service, organization development, marketing, sales management etc


24 years in management consulting which includes business planning, strategic planning, marketing , product management,
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