Planning Scenarios at SDA Bocconi!

I’m excited to share a transformative experience from my time at SDA Bocconi in Milan, where I had the privilege to dive deep into the art and science of Scenario Planning with help from Guia Pirotti , one of the most empathetic and strategic professors at the school. It’s a discipline that blends creativity with analytical rigor, and it’s already reshaping how I think about strategic decision-making.

So, What is Scenario Planning?

At its core, Scenario Planning is about preparing for the unknown. It allows organizations to navigate uncertainty in a systematic and reliable way. By visualizing 2, 3, or even 4 potential future developments, organizations can proactively prepare their responses, rather than react in panic when change arrives.

This approach was pioneered by 壳牌 in the 1970s. Shell famously foresaw factors that would contribute to the decline in oil prices in the 1980s, and unlike many competitors, they were prepared. They used Scenario Planning to anticipate and navigate the storm, ensuring their resilience in the face of radical changes.

The 5 Steps of Scenario Planning: An Eye-Opening Framework

Our course began by breaking down the steps involved in Scenario Planning. The methodology is surprisingly straightforward yet incredibly powerful. Here’s a brief glimpse of how it works:

Step 0: Define the Strategic Question

Everything starts with a clear, strategic question. It could be as broad as “Should we enter a new market?” or “What will our main customer base look like in 10 years?” This question serves as the North Star, guiding all subsequent research and analysis.

Step 1: Research and Explore External Factors

Next, we dive into the exploration phase. This involves examining all external factors that could impact the answer to our strategic question. We analyze our experiences in the field, sector-specific reports, adjacent industry trends, and conduct open conversations and structured interviews—both inside and outside our organization. The goal? To uncover potential developments that might not even be on our radar yet!

Step 2: Identify Certain and Uncertain Factors

This step was particularly enlightening. Here, we categorize all the external factors into two buckets: “certain” and “uncertain.” For instance, regulatory changes might be certain, while technological advancements might be uncertain. This categorization is crucial because it helps us focus on what could most significantly impact our strategic direction.

Step 3: Construct the Scenario Matrix

Now comes the fun part—building the scenario matrix. We place the two most important uncertain factors on the axes of the matrix, creating four distinct quadrants. Each quadrant represents a different possible future.

Step 4: Craft Compelling Scenarios

In this step, we get creative! We describe each scenario as if they were stories or news articles, incorporating both certain and uncertain factors. This storytelling aspect makes the scenarios vivid and relatable, providing a more profound understanding of potential future landscapes.

Step 5: Identify Strategic Options for Each Scenario

Finally, we map out strategic options for each scenario. What should the organization do if Scenario A becomes reality? How about Scenario B or C? This exercise forces us to think beyond the obvious and prepares us for any curveball the future might throw.

Implementing the Framework

Our coursework after the workshop began by breaking down the steps involved in Scenario Planning. The methodology is surprisingly straightforward yet incredibly powerful. We were asked to design scenarios for any company in the world, come up with a strategic question and plan scenarios that can help them with strategic decision-making. Since we had an aviation enthusiast in the team, we went ahead with Boeing !

Our Group Exercise: Scenario Planning for Boeing

Applying the aforementioned steps, we formulated four unique scenarios to explore Boeing's future:

1. The Ambush: A highly competitive market with low consumer trust, where Boeing needs to focus on safety audits, enhanced innovation, and strategic alliances to rebuild trust and maintain its market position.
2. The Last Supper: A scenario where Boeing enjoys consumer trust but faces many competitors, requiring investment in operational efficiency, sustainability, and aggressive market differentiation to stay ahead.
3. The Surrender of Breda: Boeing chooses minimal investment, retaining its existing market position but risks being outpaced by competitors in innovation and consumer engagement.
4. Battle of San Romano: Boeing fully invests in an operational overhaul, emphasizing sustainability, innovation, and customer service, leading to long-term gains despite short-term financial pressures.

Strategic Outcomes for Boeing

Based on these scenarios, our team concluded that Boeing should focus on differentiating itself through innovation, investing in sustainable materials, and enhancing operational processes. We outlined a phased strategy for Boeing to:

• Build a foundation through market analysis and R&D (Years 1-2).
• Develop and implement new technologies and partnerships (Years 3-5).
• Scale and optimize operations globally (Years 6-8).
• Consolidate its leadership by setting industry standards in sustainability and innovation (Years 9-10).

Implications and Driving Forces

Our analysis identified several critical implications and driving forces for Boeing’s future:

• Social and Cultural Shifts: Demand for cheaper travel continues to grow, driven by low-cost carriers. However, Boeing must also address changing consumer expectations for safety, comfort, and sustainability.
• Economic and Environmental Factors: Increasing regulatory scrutiny and the push towards net-zero carbon emissions are creating pressures to innovate in sustainable aviation fuels (SAFs) and other green technologies. At the same time, aggressive cost competition could impact both safety and innovation.
• Technological Advancements: Developments in fuel-efficient engines, electric vertical takeoff and landing (eVTOL) aircraft, and next-generation aircraft models require significant investments in R&D and pilot training, pushing Boeing to adapt quickly to maintain its competitive edge.
• Regulatory and Competitive Landscape: Lengthy certification processes, increased oversight, and the rise of competitors from China, Brazil, and Russia pose challenges to Boeing’s market dominance. The company must navigate these regulatory hurdles while balancing cost efficiency and safety.

What’s Next for Me?

After this course (and all thanks to Prof. Guia for her guidance throughout the process) I feel empowered to apply Scenario Planning in real-world situations, whether it’s exploring new markets, deciding on a major investment, or understanding the evolving needs of future customers. I’m excited to use this method to help organizations not just survive but thrive in an unpredictable world.

If you’re intrigued by the idea of navigating uncertainty and preparing for multiple futures, I highly recommend exploring Scenario Planning. It’s a skill that could make all the difference in your career and your organization’s strategic journey.

For those interested in a deeper dive, here’s a link to our group presentation on Scenario Planning for Boeing. Feel free to check it out here and share your thoughts.

Until next time, keep challenging the status quo and planning for the unplannable!

Cheers,

Joohee