Scenario Planning

In previous articles I wrote about Business Intelligence and Impact Assessments.

?Business Intelligence is quantitative and qualitative data that can help you identify Profit Levers, Profit Leaders, Loss Leaders, Costly Processes, People Profitability, People Efficiency and Process Efficiency.

?Impact Assessments are performed on every possible scenario identified within your business model.

In this article we consider the use of Business Intelligence and Impact Assessments on the various scenarios that can and will unfold in any business, to facilitate informed decisions, for business growth.

South Africa’s best known scenario planner is probably Clem Sunter, who developed scenarios for his employer, Anglo American, upon which strategic decisions were taken.

My question to any critic, who advances the “analysis paralysis” argument, would be :- Why would I ignore scenario planning in my business, if large and successful businesses continue to apply these techniques to advance, grow and sustain their businesses.

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Which different scenarios can unfold in my business?

If you pay attention to the Weaknesses, Threats and Opportunities, you will build scenarios, because the Strengths will present themselves and by focusing on the other qualitative factors, you will begin to understand the potential impact of each negative factor on the strengths of your business.?????????????????????????????????????????????

Scenarios are created by mixing and matching all the various Strengths, Weaknesses, Opportunities and Threats of and to the business.

The different combinations and permutations of the Strengths, Weaknesses, Opportunities and Threats create positive and negative scenarios to be evaluated.

By bringing all the quantitative and qualitative factors together, you can create more and different scenarios and more complex scenarios.

Each scenario is a thus combination of disasters and successes.

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What will my business look like under each scenario?

Every scenario can be rated according to a Likelihood Index, which is the priority or weighting allocated to the scenario and can be multiplied by the rand value result of the scenario.

All the weighted scenarios combined provides the weighted average profit of business.

This brings one to the importance and value of Business Intelligence.

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?How can I apply Business Intelligence in Scenario Planning?

Business Intelligence is used to enhance the evaluation of each individual scenario.

Business Intelligence leverages software and services to transform data into actionable insights that inform an organization's strategic business decisions.??????????????????????????????????????????????????????????

The results generated provide quick, easy-to-digest access to insights about an organization's current state, based on available data.

Business Intelligence does not tell business users what to do or what will happen if they take a certain course of action. For this we require Data Analytics.

Data Analytics tells you what will happen if you make a certain choice. ?

Business Intelligence offers a way for people to examine data to understand trends and derive insights by streamlining the effort needed to search for, merge and query the data necessary to make sound business decisions.

Business Intelligence extends beyond the typical business performance metrics of improved sales and reduced costs.????????????????????????????????????????????????????

An example of this would be a school system, using Business Intelligence tools to examine numerous data points — from attendance rates to student performance — to improve student learning and high school graduation rates.

Business intelligence is descriptive, telling you what's happening now and what happened in the past to get us to the current state.

Business analytics, on the other hand, is an umbrella term for data analysis techniques that are predictive — that is, they can tell you what's going to happen in the future — and prescriptive — that is, they can tell you what you should be doing to create better outcomes.???????????????????????????????????

Traditional or classic Business Intelligence is where IT professionals use in-house transactional data to generate reports.

Classic Business Intelligence is used for certain types of reporting, such as regulatory or financial reports, where accuracy is paramount, and the questions and data sets used are standard and predictable.

Modern Business Intelligence is where business users interact with agile, intuitive systems to analyze data more quickly.??????????????????????????????????????????????????????

Organizations typically use modern Business Intelligence tools when business users need insight into quickly changing dynamics, such as marketing events, in which speed is valued over getting the data 100 percent correct.

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How can Business Intelligence positively impact your business?

Effective business intelligence assists you to better understand your customers by analyzing their buying patterns and creating user profiles. This helps to create better products and product experiences for your customers.

You will have better control over your business processes. You will have better visibility of what’s going on in your organization. A typical example would be a logistics company knowing where and why delays are happening and to rectify any error quickly. This also helps the business to be pro-active and not reactive.

As mentioned above, Business Intelligence provides actionable insights, which are metrics that enable you to act. Knowing the percentage of customers who abandon their calls to your call centre or abandon their carts in the shopping queues, allows you to take the necessary action to reduce the abandonment rate.

Business Intelligence improves the efficiency of your organization, which in turn positively impacts the overall revenue of your organization.

Business Intelligence systems provide real-time data, which enables you to always stay informed about the health of your business. This helps you to take data-backed decisions every time you need to make one.

Business Intelligence enables your marketing team to create better marketing campaigns that provide better Return On Investment by providing a convenient way to access data regarding the current and past campaigns. It also provides key metrics such as customer acquisition cost, cost per lead, click-through rates, and many other crucial metrics required for successful marketing campaigns.

Business Intelligence enables you to have insight into what your competitors are doing and enables you to make informed and educated decisions for plans to stay ahead of your competitors.

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Why must you take the time to perform frequent scenario planning?

The fear of losing is a negative approach that usually results in inactivity and lack of desire to consider Threats & Disruptive Risks.

Many entrepreneurs think nothing will go wrong and therefore are not prepared to consider negative scenarios.

However, the truth is that the Impact Analysis identifies negatives and turns them into positives by combating Threats.

The net result is a totally positive business with more Strengths and Opportunities than Threats and Disruptive possibilities.

A dynamically changing New Economy makes scenario planning even more imperative.

Just as investors should hedge their bets on stocks and investment opportunities, business owners should also hedge their businesses against potential negative scenarios.