Scenario-type planning enables professionals, the public, or organizations to dynamically respond to unknown future events. It is the process of thinking in advance to have a more responsive, resilient, and effective solution. (Scenario planning. (n.d)) It is common in scenario-type planning to ask “What if?”. The scenarios that are discussed in this type of plan should not be considered predictions but rather hypotheses. (Scenario planning. (n.d)) Some examples of external issues are future political environments, social attitude, and the economy and regulations. These issues are considered “driving forces” in scenario-type planning and can have major impacts if not considered. (Scenario planning. (n.d)) The two guiding principles of scenario-type planning are long-term views of demands or needs and an outside-in view where look at what you can control as well as what you cannot control. (Scenario planning. (n.d))
Blockbuster video is an example of how scenario-type planning was not used and relied heavily on standard forecasting. Blockbuster actually went through many leadership changes that had huge effects on the outcome of the company. Netflix, the streaming service many of us use today on a daily basis, approached Blockbuster and proposed a merger. Their terms were Blockbuster buy Netflix for 50 million and let Netflix run their online services. Blockbuster turned them away and did not consider them a threat. A few years later Redbox and Netflix were threatening Blockbuster business, so the decision to make changes and invest in online services was made. Shortly after the decision was revoked as leadership changed again and began to rely on the “old” business models. This eventually led to Blockbuster’s demise.
Blockbuster’s demise was its inability to adapt to technological and social change. People were no longer interested in renting cassette videos but DVD’s and eventually streaming their entertainment. Blockbuster believed their model was future proof, that people will still want to come in person to rent entertainment and no one would want to be part of a subscription program. A good amount of Blockbuster’s revenue also came from late fees. (Davis, T., & Higgins, J. (2013)) Netflix had no late fees but followed a subscription-based service where members were allowed to keep their movies as long as they wanted as long as they remained members(subscribed). When Blockbuster attempted to remove their late fees and attempted to adapt and “catch up” to Netflix, it began to bleed and lose money rapidly. Blockbuster’s revenue was built upon and relied on “outdated” practices and could not adapt to the changes taking place even when it tried. (Davis, T., & Higgins, J. (2013)) Blockbuster would have to be rebuilt from the ground up in order for it to adapt and catch up, simply it could not afford it. The power of a social and technological driving force is evident.
Scenario-based planning could partially account for social and technological impact. It is sometimes difficult to predict social changes since “trends” could shift the social direction back and forth quickly. If we look at what COVID-19 did to many businesses, it is something that is difficult to prepare for and there are many different aspects you can look at. For example, streaming services spiked because of that stay-at-home orders. Some companies might not have been ready to take on the increase bandwidth that was now being demanded.
Scenario planning is important and one of the greatest tools an organization can use. In order to personally use this type of planning, you can follow a 5-step process and it is the process I would use for future innovation efforts.
• Step 1: Clarify the issues and identify the driving forces.
• Step 2: Synthesize the driving forces and implications.
• Step 3: Prioritize the driving forces by the degree of importance and degree of uncertainty.
• Step 4: Make a ‘scenario matrix’ based on two driving forces. What happens in each scenario? What options are available? What is needed to prepare?
• Step 5: Reflect on the scenarios and discuss the implications.
Wageningen (n.d)
In conclusion, scenario-based planning is important and should be utilized by professionals, organizations, and even the general public. It is a practice that can reduce negative impact in the case of any arising implications. Many industries like the newspaper and video rental industry relied too much on their ongoing practices and did not make necessary changes to adapt and continue to be competitive. This is something that will keep occurring in our world, we can see it happening with the investment of green energy. One day leading industries that we have today could disappear
References
Ashok, D., Challa, P. R., Sirsala, R. V., Ghanta, S., & Gorrepati, V. (2017, February 12). Blockbuster videos – Failure case study v4.0. Share and Discover Knowledge on
SlideShare. https://www.slideshare.net/RaghuVamsySirasala/blockbuster-videos-failure-case-study-v40
Davis, T., & Higgins, J. (2013). A Blockbuster Failure: How an Outdated Business Model Destroyed a Giant. Trace: Tennessee Research and Creative Exchange | University of Tennessee, Knoxville Research. https://trace.tennessee.edu/cgi/viewcontent.cgi?article=1010&context=utk_studlawbankruptcy
Satell, G. (2014). Forbes. https://www.forbes.com/sites/gregsatell/2014/09/05/a-look-back-at-why-blockbuster-really-failed-and-why-it-didnt-have-to/?sh=1a13e57d1d64
Scenario planning. (n.d.). American Planning Association. https://www.planning.org/knowledgebase/scenarioplanning/
Wageningen.https://www.mspguide.org/sites/default/files/tool/36msp_tools_scenario_planning_36.pdf
Kevin Tepas 