Safm scen p_llwshop_pres_140623

Profiting from Uncertainty
A 2-day Scenario Planning workshop
Nicola Diligu – Founder, X-Fert Innovation
Scuola di Alta Formazione al Management – Turin, June 23-24, 2014
X- FERT INNOVATION © 2014 X-Fert Innovation – All rights reserved SAFM_ScenPl_Wshop_Pres_140623

Contents of the presentation
• Preliminary
– Introduction
– Objectives
– Agenda
– Methodology and rules of the game
• The shape shifting paradigm of competitive strategy
• Scenario planning – A conceptual framework (Part 1)
• Business case analysis and development (Part 1)
• Feedback and conclusion.
2

Objectives of this Workshop
• Understand the key concepts and the process of scenario thinking and
planning, with their uses in the strategy development decision making
• Fully understand the value-added of a scenario-based approach for
challenging the prediction-based dominant practice and building innovation
oriented mental models fully open to transform uncertainties into business
opportunities
• Acquire a entry-level capability of building scenarios to address future
uncertainties and risks
• Improve the quality and reliability of the decisions about the future by
avoiding strategic traps thanks to recognizing the early warning signals and
evaluating unfolding developments
3

Day 2
Program of the workshop
Strategic Implications of Scenarios
11.00
10:15
13.15
14:00
15:45
4
Day 1
Context Setting & Scenario Generation
• Introduc*on
and
overview.
• Objec*ves/Expecta*ons:
– Mee*ng
rules
• The
shape
shiAing
paradigm
of
compe**ve
strategy
–
Business
ecosystems
and
scenarios
Break
• Terms
and
defini*ons
around
scenario
planning.
• Scenario
planning
in
the
broader
strategic
context:
Lunch
• Scenario
genera*on
process:
– The
Business
Case
– The
Organizing
Ques*on
(OQ)
– Cri*cal
events
– Trajectories
and
outcomes
events
– Preliminary
scenario
iden*fica*on
– Develop
scenarios
– Formulate
strategies
•
Develop
the
Business
case
(Plenary
session)
Break
• Formulate
the
Organizing
Ques*on
(Teams)
Time
9:00
9:15
9:40
11.15
12.00
13.00
14.00
14.30
• Agenda
Review
• Iden*fy
cri*cal
events
– Individual
teamwork
(phase
1)
– Sharing
and
reassignments
of
events
• Trajectories
and
outcomes
of
events
• Preliminary
iden*fica*on
of
scenarios
(2xgroup)
– Combina*on
of
events
into
Scenario
#1
– Combina*on
of
events
into
Scenario
#2
• Narra*ve
descrip*ons
of
scenarios
Lunch
• Strategic
response
to
scenarios
– Real
op*ons
for
strategic
adaptability
• Iden*fica*on
of
robust
strategies
(Plenary
session)
• Final
remarks
1. New
insights
we
gained
about
the
company
2. How
does
the
current
strategy
shape
up
under
the
newly
formed
scenarios?
3. What
is
the
likely
ac*on
plan?
• Feedback
about
the
workshop
experience
• Final
comments
and
close
out
Time
9:00
9:30
11:00
12.00
17:00
17.40
18:00
16:00
16:15
è

Contents of the presentation
• Preliminary
– Introduction
– Objectives
– Agenda
– Methodology and rules of the game
• The shape shifting paradigm of competitive strategy
• Feedback and conclusion.
5

Competitive tunneling
The ultimate goal of Competitor Analysis is to understand the relative strengths, and strategies
of the competition in order to anticipate their next moves.
Baxter
Who
is
winning
in
our
market
and
why?
6
Compe)tor
Sector
Chart
Corporate
Sales
=
$5
billion
in
sales
(1996)
Pharmco
Braun
Fresenius
Average:
6.8%
16%
14%
12%
10%
8%
6%
4%
2%
0%
Sales
Annual
Growth
Rate
(1990-‐96)
1
0.1
0.05
Rela)ve
Size
GreenCross
McGaw
Abbof
What
are
the
apparent
strategies
of
key
compe*tors
in
the
market?
Should
we
Protect
against
par*cular
compe*tor’s
strengths?
Should
we
take
advantage
of
par*cular
compe*tor’s
weaknesses?

Strategy, in its essence
“Seeing the big picture and figuring out what to
do about it.”
7
“Thinking ahead.”
“Think in anticipation, today for tomorrow, and
indeed for many days. The greatest providence is
to have forethought for what comes.”
Baltasar Gracián, Spanish Jesuit, 1601-1658

1980
1985
2013
★
★
★
2014
•
The resistible Porter-driven theory of
Sustainable Competitive
Advantage J
The business theory of the
sustainable competitive advantage
is strongly correlated with M. E.
Porter’s school of thought.
He observed observed that “excess
profits were real and persistent” in
some companies and industries.
The substance of the competitive
dilemma is reduced to positioning
the business so that structural
barriers ensured endless, above-average
profits.
In the end, the essence of strategy
is coping with competition and
finding a safe heaven to protect the
business from the destructive forces
of competition.
In November 2012, Monitor Group
was unable to pay its bills and was
forced to file for bankruptcy
protection.
Many thanks to the Ngram viewer!
X- FERT INNOVATION © 2014 X-Fert Innovation – All rights reserved SAFM_ScenPl_Wshop_Pres_140623 8

Surprised by future: Incumbent = Succumbent (1 of 3)
The “incumbents” are more often and unexpectedly turned into succumbents from the
amazing innovation capabilities of the "renegades"
A 600 m$ Deal.
Reason for IBM to protest:
Their price was 51 m$ lower than Amazon’s!
Starring on a
Business Week
cover page!

Surprised by future (2 of 3)
Just an example of what the busy “continuators” lose in favor of "dis-continuators”.

Pocket Printer
Surprised by future (2 of 3)
The 4-inch-square portable printer you simply place
on a piece of paper.
Innovators: Tuvia Elbaum and Matan Caspi Age: Both 29
Founders of startup Zuta Labs in Jerusalem, launche in
January after a about a year in an accelerator.
Form and function: A wheeled, 4-inch-square, teardrop-shaped
inkjet printer drives itaself across sheets of paper to
print documents and images.
Google buys solar-powered drone
company Titan Aerospace
Just a month after word came that Facebook was
interested in the 20-person drone maker, Google
snatches it up for an undisclosed sum.

MILLIONS OF PEOPLE that bent the curve of human history like nothing before or since.
Here’s the graph, with total worldwide human population graphed
over time along with social development; as you can see, the two
lines are nearly identical:
Human social development curve: 8000 BCE-2010 CE
According to Ian Morris and numerically speaking most human history looks pretty boring.
800
700
600
500
400
300
200
100
7,000
VUCA
Era
é
6,000
5,000
4,000
3,000
2,000
1,000
FIGURE 1.1 Numerically Speaking, Most of Human History Is Boring.
B-‐VUCA
Era
WORLDWIDE HUMAN POPULATION—right-hand scale—
HUMAN SOCIAL DEVELOPMENT—left-hand scale—
é
Ÿ
1775
0 0
8000 BCE
6000 BCE
4000 BCE
2000 BCE
2000 CE
0 CE
HUMAN SOCIAL DEVELOPMENT INDEX
t ion) , organizat ion (the size of the larges t ci t y) , war-mak ing capaci t y (num-b
Source: Ian Morris
Only 240 years
ago, a huge
bomb detonated
after a long
unaltered
balance.

In the very end …
The only way
to get safe is
to be insecure.
Benjamin Franklin
13

No competitive advantage is sustainable!
Invention
Expedition
14 Innovation

From “competitive” to “intelligence” advantage
Taken by their business focus, companies fail to become knowledgeable about the
changing business environment and to co-evolve intelligently with the new conditions.
Competitive
sustainibile advantage
Threat of new
entrants
Internal Rivalry
Threat of
substitutes
Competitive
Intensity
Suppliers'
bargaining
power
Customers'
bargaining
power
Predators and Prey:
A New Ecology of Competition
by James F. Moore
For most companies today, the only truly sustainable
advantage comes from out-innovating the competition.
Successful businesses are those that evolve rapidly
and effectively. Yet innovative businesses can’t
evolve in a vacuum. They must attract resources of
all sorts, drawing in capital, partners, suppliers, and
customers to create cooperative networks.
Much has been written about such networks, un-der
the rubric of strategic alliances, virtual organi-zations,
and the like. But these frameworks provide
little systematic assistance for managers who seek
to understand the underlying strategic logic of
change. Even fewer of these theories help execu-tives
anticipate the managerial challenges of nur-turing
the complex business communities that
bring innovations to market.
How is it that a company can create an entirely
new business community – like IBM in personal
computers – and then lose control and profitability
in that same business? Is there a stable structure of
community leadership that matches fast-changing
conditions? And how can companies develop lead-ership
that successfully adapts to continual waves
of innovation and change? These questions remain
unanswered because most managers still frame the
DRAWING BY TRAIAN FILIP Copyright © 1993 by the President and Fellows of Harvard College. All rights reserved.
Government
organization/agencies
Core
Business
15
Business
ecosystems
• Originator: Michael E. Porter (1980) • Originator: James F. Moore (1995)
1. Industry Group
2. Raise/Use of barriers
1. Business Ecosystem
2. Signals Intelligence
problem in the old way: companies go head-to-head
in an industry, battling for market share. But events
of the last decade, particularly in high-technology
businesses, amply illustrate the limits of that un-derstanding.
In essence, executives must develop new ideas
and tools for strategizing, tools for making tough
choices when it comes to innovations, business al-liances,
and leadership of customers and suppliers.
Anthropologist Gregory Bateson’s definition of co-evolution
in both natural and social systems pro-vides
a useful starting place. In his book Mind and
Nature, Bateson describes co-evolution as a process
in which interdependent species evolve in an end-less
reciprocal cycle – in which “changes in species
A set the stage for the natural selection of changes
in species B” – and vice versa. Consider predators
and their prey, for instance, or flowering plants and
their pollinators.
James F. Moore is president of GeoPartners Research
Inc., a management consulting firm in Cambridge, Mas-sachusetts
that specializes in issues of business strategy
and implementation.
Extended Enterprise
Business
Ecosystem
Competitors with
shared assets
Suppliers/
Their Suppliers
Customers/
Their Cust.
Stakeholders
Predator (investors, owners, unions, trade ass.)
Competitive
Cooperative
Parasitic

Firm’s capabilities vs. ecosystem’s resilience
Capability-based strategy Ecosystem-based strategy
Company efforts directed to leverage its
resources and competencies to achieve
sustainable competitive advantage.
Competitive advantage is the root of value
creation. It is achieved and sustained by scarce,
inimitable company’s assets.
Concentrates on creating value for investors by
enhancing firm’s stock of assets and
capabilities.
Relationships are long-term and collaborative
out of interdependence. Their nature is
deterministic but non linear and dynamic.
Boundary keepers as network and bridge
builders. All firm’s employee empowered to
promote innovation just working on the fringes.
17
Market
conditions
Strategic
purpose
Competitive
advantage
Stakeholders’
Focus
Economic system in equilibrium with changes
promoted by incumbents to reinforce their
competitive positions.
n Level 1
– Level 2
Time
Horizon
Source
of influence
Nature
of relationship
Boundary
roles
Strategy calendars reflect market and product
life cycles. Long term planning horizon seen as
both desirable and feasible.
Controlling superior resources or creating a safe
haven for business, looking for superior
resource combinations and capabilities.
Relationships are built around power derived
from control, protection and appropriability of
resources and assets.
Boundary keepers act as police, shielding
resources and guarding the firm’s borders from
inappropriate breaches.
Marketplace conditions are exposed to complex
chains of forces and reactions. No single firm
can change or manage market conditions.
Success comes from reciprocal, mutually
beneficial relationships. Strategy directed to
provide and nurture network-based resilience.
It is related to firm’s potential relative to the
network. Mirrors firm’s contribution to the
systemic enterprise and it attractor’s role.
The business ecosystem community is the
dominant stakeholder, whose role is to ensure
healthy and well-nurtured ecosystem.
Time horizon results of cumulative effects of life-cycles
across the networks of products,
technologies and industries.
Relies on shaping system architecture and on
serving as a catalyst for attractors and
processes, while understanding patterns.
n Level 1
– Level 2

Recombinant innovation
Institutional Memory: The progressive mental narrowing that eventually leaves individuals and
organizations unable to think outside the bounds of their experience
18
• Forget
• Borrow
• Learn

The Innovation Ecosystem Architecture
The two fundamental activities that companies must cultivate assiduously to qualify for the future
are: Ideation and Innovation.
19
Concept
Development
Business
Ecosystem
Ideation
User
Needs
Competitors
Growth
Platform
Invention
Factory
Customer
Lab Innovation

Scenario Planning in the Web 2.0 era
The “wisdom of crowds is forcing companies to practice and excel in crowdsourcing in order to
power a high-performing future thinking “machines”.
20
?

Invention
21
Innovation
CoP vs. Technology Innovation Webinar
Nodal
Company
Community-of-Practice
Innovation Webinar
• New technology value
• New solutions to redefine
the Price/value Ratio
• Market/client knowledge
• New, more and more
advanced solutions
Customer
Lab
Invention
Factory

The “Future Contests”
A “Future Contest” is a whole company challenge to explore/articulate a synthetic understanding
of an emerging business space, its plausible transformations and upcoming opportunities.
Future-scoping Roadmap
Business
Design
Enablers
22
Major Goals
• Point-of-View on the technologies that will
play a major role in the explored environment
• Preliminary identification of the growth
platforms
• Communicate to related “worlds”
visionary and inventive organization
Implementation Challenges
• Forget • Borrow • Learn
• A logical framework (blueprint)
• Process steps
• Tool and templates
• Measures and control system
Management
Model
Cognitive
Capabilities
Organization
Architecture

A “mindful house” concept?

Management 1.0
1890
Context:
• First availability of promising production technologies
• Manpower mainly made of farmers, laborers, and shepherds
• Company average size: 4 people
What is the triggering the need of the "invention" of
management? Increase productivity
What is the answer? Transform human beings into a sort of
semi-programmable robots.
1915
Results:
• New production model already launched and tested
• US Steel: 1b$ revenue
• Ford Motor Co.: more than 500k cars sold
The company as a “engine”
• Specialization
ü Work parcelization
ü Structured processes
• Standardization
• Replaceability
• Predictability
Frederick W. Taylor (1856–1915)
24
Management Model

Management 2.0
2013
Context:
• Exponential acceleration of change’s speed
• Iper-competition
• Knowledge commoditization
What is triggering the need for a "re-invention" of
Management? Increase adaptability, innovation, knowledge.
What is the answer? Transform companies to suit the
abilities and needs of human beings.
2013
Result:
• New innovative model already launched and tested
• HCL Technologies – Vineet Nayar (Flipped responsibility)
• Pfizer – “Jordan Cohen (widespread entrepreneurship)1
The company as a web”
• Openess
• Meritocracy
• Flexibility
• Collaboration
The Web is more and more?
acquiring the role of the global
operating system for innovation
1 http://www.youtube.com/watch?v=_Y9bpL9oXUc
25
Management Model

La rivoluzione dell’Online Collaboration
• I mezzi basati sulla comunicazione a due vie
non sono adatti alla creazione di un gruppo
• Gerarchia come
strumento più semplice
di riduzione della complessità
9x8
= 2 = 9P 36C
870
= 2 = 30P 30x29 435C
Text
Text
Text
• Internet nativamente dotata di capacità di formazione di gruppi
• Questa tecnologia con potenzialità eccezionali non ha ancora potuto
trasformare la società come avrebbe potuto perché i gruppi sono
naturalmente resistenti
2
=
Text
Text Text Text
Text Text Text
Text Text Text
Organization
without
“organization”

4 CAMPBELL
The “Fish-Scale” model of omniscience
this analogy a “fish scale.” Figures 1.1 and 1.2 illustrate the title. Our
only hope of a comprehensive social science or other multiscience lies
in a continuous texture of narrow specialties that overlap with other
narrow specialties. Due to the ethnocentrism of disciplines, what one
gets instead is a redundant piling up of highly similar specialties leaving
interdisciplinary gaps. Rather than trying to fill these gaps by training
scholars who have mastered two or more disciplines, we should be
Donald T. Campbell
1916-1996
Disciplines are clusters of specialties Disciplines are connected and integrated
FIG. 1.1a. Present situation: Disciplines as clusters of specialties, leaving
interdisciplinary gaps.
Ethnocentrism
of disciplines
FIG. 1.1b. Ideal situation: Fish-scale model of omniscience.
The
Fish-Scale Model
of Omniscience
Collective comprehensiveness
through overlapping patterns
of unique narrowness
Redundant piling-up
of highly similar
specialties
Inter-disciplinary
gaps
scholars who have mastered two or more disciplines, we should be
FIG. 1.1a. Present situation: Disciplines as clusters of specialties, leaving
interdisciplinary gaps.
FIG. 1.1b. Ideal situation: Fish-scale model of omniscience.

The technology-driven step change in learning
Power
of the
collective
human mind,
aided by
technology
Printing
Press Internet Cultures of
Participation
2012
Beyond the Unaided, Individual Human Mind
Reading
& Writing
Personal
Computer
2500 BC 1500 1980 1993 2008 2030
Source:
Gerhard
Fischer,
Center
for
Lifelong
Learnong
and
Design
–
University
of
Colorado,
Boulder
100%
52%
48%

Organization Architecture
Recombinant innovation requires companies to transform themselves into thinking machines
capable to aggregate internal and external talents through an organization-agnostic process.
Atom Molecule Substance
29
Solid Liquid
Integrative mechanisms
• Co-location
• Town Meetings
• Management mediators
• Boundary spanners
• Incentive systems
• Shared interpretations
• Shared ontologies
• Shared visibility
Integrative methodology
Product Tasks Organization
Domain
Mapping
Matrix
Sought-after profiles
• Imaginators
• Future day-dreamers
• Option valuators
• Dream-sellers
• Hope spreaders
• Evangelists
• Cultural fertilizer
• Luck holders!
Company
structure
Business
network

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