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Summary - Strategy Sheets
1.1 College 1: Context of Scenario Planning
Ch1: Discoveries @ Shell ( in the 60s)
Ch2: Introduction to Scenario Planning
Ch3: Three Competing Paradigms in Strategic Management.
Wat zijn de 5 ontdekkingen bij SHELL?
1. More robust decision making
2. Stretching mental models
3. Enhancing corporate perception of the environment
4. Energising management to set the context within
5. Scenarios as a tool for leadership- to influence project development down the line.
You must plan because people tend to look at the short-term: fast return.
- urgency beats importance
- unable or unwilling to delegate
- dealing with details instead of main themes
- best employee becomes chief (loss of good employee and getting an uncapable chief)
- lack of leadership capability (social and conceptual competences in stead of technical competences)
- Short term more motivating than long term.
--> Planning aims so overcome this, by taking a longer perspective
Give two examples of short term strategy
1. Addictions (short term benefits outweigh long term health/survival)
2. The share holdervalue
Give two examples of long term strategy
2. Healthy food
Long term vision structures shor term vision, strategy structures tactics, makes behavior meaningful
Give some advantage of the business strategy?
- By investing time and money there you will be better prepared for the crisis: Crisis management
The revenu in the long term is higher than the cost in the shorter term.
- The result of good planning is good learning and memory. Less repeated mistakes --> Institutional learning
Give three reasons and one example why the importance for a good business strategy rises?
- The environment changes faster
- Therefore, the future is more and more unpredictable
- Fast reactions save money
Example: Oil industry in the 60s and 70s. Delivery of oil tankers.
Recent examples: flights, banks, cars.
Scenarios as a tool for the business strategy
What are scenarios?
Equal plausible ideas about the future.
What are internal scenarios?
- Calculation of own actions (What happens if....)
What are external scenarios?
"Possibilities how the future would look like"
- Mental models of the external world
- Internal consistent and defiant(=uitdagend)
- Representing possible futures
- Wheter they will happen or not is out of sphere of influence
Which two different environments do we have?
What is the transactional environment?
The world of actors over which the strategist has influence
What is the contextual environment?
(--> Focus of SP)
The world of actors over which the strategist has no influence but which he or she needs to appreciate as it effects him or her crucially --> The contextual environment has a significant influence on the business.
Why are scenarios for the contextual environment and not the transactional environment?
- Longer term trends
- Avoidance of the daily issues
- Stretching mental models, out of the box
Why can't we weight value judgements about scenarios?
- Strategy changes all the time, and is constantly updated
- Scenarios are neither good nor bad
- For the strategist there is no worst case scenario
- The organisation has to be succesful, regardless of the kind of future
Scenario planning as a learning process has 5 stages
The five stages of learning process of scenario planning are:
1. Getting conscious about the direction, external imposed or internal developed
2. Determining organisation characteristics (distinctive competencies), among the possibility to change
3. Determining the current and future organization environment
4. Determining the fit between both (the environment and the business model)
5. Invention and development of policies to improve the fit.
6. Decisions and actions to implement the strategy.
What are the differences between scenarioplanning and other approaches of strategic planning?
- Attention for the uncertain business environment
- Strategy formulation is seen as a continuous learning process, not as problem optimizing
- Strategic planning is not only an issue for staff department, but for the board or better the whole organisation.
What are the core assumptions of scenario planning?
Core assumptions are:
- more suitable for succesful (believe too much in their success) and failing organisations (believe they will fail no matter what)
- Most suitable for teams which are (too) close (getting variation) and for teams which need teambuilding.
- Either too strict--> Maker more flexible
- Or too flexible--> Make more strict.
Which 3 paradims are there?
What contains the rationalist approach? And which crisis comes with it?
- "Predict and control" (Mintzberg)
- More problem-solving- seeking one answer
- Stating mission and deriving objectives
- Using (quantitative) forecasts, but did use sensitivities in forecasts.
- Probabilistic approach to scenario-based planning
--> Crisis of the Rationalist Approach:
- Are people rational?
- Is everything predictable? NO
What characterises the Evolutionary Approach?
- Strategy "evolves" as internal decisions and external events flow together
- Think that we have no influence on corporate survival, even by developing a strategy.
- The world is too complex to get a firm grip.
What charaterises the Processual Approach?
- Middle way- firm as a "living organism": a complex adaptive system.
- Managers can intervene in the process, in order to improve the chances of success.
- Business success cannot be codified in form of variance theory, but we can try to make the strategising process more skillful.
- Is keenly interested in internal processes.
The Kolbs Learning Loop
1. We have "Concrete Experiences"--> Evolutionary-->
2. We reflect upon these experiences--> Rationalistic-->
3. From cues to causality we form new abstract theories and concepts--> Processual
4. We test these theories in new situations-->1
What is Institutional Learning?
- When people start aligning their ideas, the firm starts exhibiting institutional behaviour
- People should work together: learn from each other and build a shared experience
1. Views are too divergent --> critical mass of consensus is not reached
2. Groupthink --> lacking diversity in ideas
What are the contributions of SP on the individual level?
1. Cognitive device
2. Perception device
3. Reflection tool
What are the contributions of SP on the group level?
1. Language provider
2. Conversation facilitation vehicle
3. Vehicle for mental model alignment
Latest added flashcards
Organisational Behaviour Management
- Strategic conversation tools
- Awareness raisers
- Question raisers
- Conceptualisation tools and elements of language
The allocation of specific responsibility to teams and individuals
The process of thinking about exploiting economies of scale and scope, planning it and ultimately exploiting it to the maximum.
- Strategic planning (the summary of al the planning stages)
- Master planning (involving the translation of the planning cycle into description of the cross-functional plans)
- Project planning (involves the translation of the strategy into business projects and action stepts)
- Budget planning (involving the overall quantification and the setting of targets)
- Appraisal and control (looking at actual performance in the light of what was intended in the plans)
- Maintaining sound and efficient relationships with all stakeholders.
- Ensuring sound and efficient business processes.
Activities that are generally seen as necessary for the proper conduct of organisational and business affairs.
A challenge scenario is to expose the flaws in conventional wisdom to the client team, as quickly as possible.
Van der Heijden: A useful technique is to produce just one challenge scenario, which through its strict internal logic exposes the flaws in the conventional wisdoem.This will trigger the client team to consider the plausibility of this development or state of affairs. If the scenario team is succesful and the client accepts that an alternative view of the environment is urgently required the discussion then needs to move on to the development of a full scenario set as a basis for an evaluation of strategies, policies and plans as currently pursued.
Challenge scenarios generally are useful if the scenario team have made a discovery that is important enough to pass on to the client team as quickly as possible.
Outside-in focus (partnerships, acquisitions etc.--> buying companies):
- vertical integration (Buying competencies that leverage the existing Business Idea upstream or downstream of current activity)
- conglomerate diversification (Buying competencies that leverage the Business Idea in new business areas).