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What is Scenario Planning?

July 27, 2017

Several new clients have asked recently for a quick summary of the whys and wherefores of scenario planning. We have produced a comprehensive round-up of what we see as the key issues and techniques in Scenario Planning – A Primer. But we thought that a quick blog to summarise some key points might be useful for those new to it or those, faced with Brexit issues, who are thinking of returning to it.

Brexit is a wonderful example of the difficult circumstances in which scenario planning can help organisations address the future. There is change ahead, but no one knows what will happen, few know how it might affect them, fewer have plans in hand to prepare themselves for change.

There are plenty of views about what might happen ranging from apocalypse to a nirvana of freedom from the shackles of foreign power. And it is likely that for each individual or organisation the impact will be different, ranging from not a lot to life changing.

The first stage of scenario planning is to identify the kind of possible key changes in the future that are likely to affect the organisation in the future. These of course are a matter of opinion, but in scenario planning the more diverse opinions the better. The process of scenario planning takes all these views, analyses them for probability and impact, groups them as similar or opposite in possible impact, and develops a number of plausible scenarios covering most of the biggest issues. These scenarios are mental models, they are qualitatively different, they present a range of possible futures. They give a framework and language that permits rational discussion about the different directions in which things may change, and what the organisation should do to prepare for whatever might be thrown at it

No narrow forecasts of what might happen, no arguments about what will happen, just consensus about the need to prepare for the future. As with other business techniques, the process itself and the participation by influential members of the organisation can be as important as the production of a plan, or plans, themselves.

If you feel the need to know more, please help yourself to an in depth read of our Scenario Planning – A Primer. Or you can see chapters of “Scenario Planning – managing for the future”, which is the standard text on MBA courses, on www.unlockingforesight.org.

Written by Nick Jackson, SAMI Principal.

The views expressed are those of the author and not necessarily of SAMI Consulting.

If you enjoyed this blog, sign up for our monthly newsletter at eSAMIsignup@samiconsulting.co.uk and/or browse our website at http://www.samiconsulting.co.uk

The Future of Europe – navigating the complexity webinar, 5 July 2017

July 26, 2017

Recently I joined a webinar about using futures thinking in organisations hosted by Unlocking Foresight and Atkins. The speaker, Francesca Lagerberg from Grant Thornton International, discussed how they had recently used some futures techniques, facilitated by SAMI Consulting, to bring futures planning to life both in Grant Thornton and with their clients. The aim was to use these techniques to help all parts of the business to engage with, and meet, the challenges of the future.

Beginning with a quote from Yoda (Star Wars – The Empire Strikes back) ‘Always in motion is the future’, she set the scene around how futures thinking techniques acted as a basis for conversations and how these enabled sharing of thoughts and perceptions about what the future might have in store both for their business and also their clients. This was very much a ‘starter for ten’ futures exercise, designed to get people talking and thinking about the future and the challenges that their various business might meet so, in the interests of time, some steps were shortened.

They were interested in the future of Europe in 2030 so, rather than start with the usual brainstorming of ideas about what they thought Europe might look like then, they used the exercise of ‘Looking Back’ first. Ethnographic studies suggest that change happens twice as fast going forward as going back so in starting by considering what has changed in the past 26 years you begin to get some indication how much faster things might happen the next 13.

Just think for a moment how things have changed in the years since 1990 – then there were no smartphones, not even really an Internet and Germany had only just begun its unification following the collapse of the Berlin Wall. If change is really going to happen faster over the next 13 years what indeed might we see!

Then, using some pre-prepared drivers for change (as time did not permit the groups to develop their own), they populated the Three Horizons model with ideas about what indicators for these drivers could be seen now and in Horizons 3 (far future) and 2 (near future). Having generated a lot of varied discussions around the various drivers and ‘Horizons’, the indicators were collated and examined in the light of possible scenarios that had, like the drivers for change, also been pre-prepared.

The scenarios were introduced through a description of the axes used. These were Globalisation vs Localisation and Economic Focus vs Social Cohesion and gave rise to four scenario stories. Different groups took different stories and, in a deep dive into their particular story, thought about what headlines might be seen or heard in the media for that scenario and how it might affect their particular business.

This last exercise, which enables people and businesses to look for the indicators of change, is a key part of the value of scenario planning. When groups of people are alerted to such indicators then it becomes easier to identify the likely future issues that may impact your business as soon as they appear.

Using these processes, both within an organisation and also with clients, provides a very helpful framework to navigate the future and helps to develop collaboration by encouraging people to work together and gain a shared understanding.

Gaining a sense of direction of where to start looking for indicators of the future helps you make some educated guesses about future direction and enables you to ask the ‘right’ questions.

The slides used and the webinar recording are available via Slideshare at https://www.slideshare.net/secret/BiDp5jEyQABrsn

Written by Cathy Dunn, SAMI Principal.

The views expressed are those of the author and not necessarily of SAMI Consulting.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter at eSAMIsignup@samiconsulting.co.uk and/or browse our website at http://www.samiconsulting.co.uk

Analysis: The Taylor Review of Modern Working Practices

July 19, 2017

The Taylor Review of Modern Working Practices is an ambitious attempt to address changes in the UK economy where more and more people are no longer employed in the traditional way.

This poses a direct challenge to Government policy development and also to protection insurers and advisers and of course to individuals themselves.

As the Report says, many people like the flexibility of working atypically – and we must not lose this.

However, “flexibility must not be one-way with individuals absorbing all of the risk.

“For many, not knowing when work will be offered, or whether they are entitled to protections like sick pay or holiday pay mean they are unable to make informed choices, book a holiday or even arrange a hospital appointment. This is wrong.”

Wherever possible, people should know who they are working for, how much they will earn and what rights they have – including sick pay.

This should be developed further to ensure it is relevant to “dependent contractors” (agency workers etc).

As we know, many “traditionally employed” workers have little idea of their sick pay entitlement either – so the proposal that the Government should specify the format of the written statement so that information is transparent, in plain English, and accessible is very welcome as people will then know to what extent they need to cover themselves in the event of sickness absence.

The insurance industry has been advocating the provision of such information for some time and the publication of the Report gives added impetus to this demand.

Moving from “traditionally employed and dependent contractors”, chapter 10 of the Report recommends a new deal for the self-employed – the Government should focus on encouraging self-employed people to plan for the future, reducing the potential that the taxpayer has to pick up additional costs associated with ill health or inadequate retirement saving.

The Report points out that all self-employed people are not the same.

Like those who are employed, the experiences and vulnerabilities of this group range from billionaire entrepreneurs to taxi drivers working 90 hours a week simply to pay their bills and includes many people who are gaining income from self-employed activity alongside their main job.

While many self-employed people would not expect sick pay, paid annual leave or automatic enrolment to a pension, for others, the availability of this safety net is essential to make sure they can pay their rent, put food on the table or plan for the future.

This can lead to the same levels of anxiety and illness that are experienced by those employed on casual contracts.

So what could be done to address these anxieties?

Here we see some innovative thinking. “Portable Benefits Platforms” provide ways for people who are self-employed or engaging in other non-traditional labour market activity to gain access to a range of benefits and protections.

They also present an opportunity to ‘nudge’ people who are self-employed to set aside money for the long term, e.g. for retirement, in case of injury, or to pursue personal development and training opportunities to further their career.

These are not statutory employment protections. Instead they could allow individuals to move freely between platforms because benefits accrued while working on one platform could be retained and topped up if the individual started working on another platform instead or even simultaneously.

The Report includes an interesting case study. The Black Car Fund is a benefits platform for limousine and black car drivers in New York. It is a not-for-profit insurance provider that provides compensation for drivers that are injured while working.

A 2.5% surcharge is added to passenger’s fares for drivers that are in the scheme, and this entitles the drivers to claim, in case of injury. The Fund also offers safety training for drivers in the scheme.

Although this platform is not portable, it has led to some initial calls for Portable Benefit Platforms for those working in the sharing economy.

Portable benefit platforms can also be third-party vehicles supporting gig economy businesses to make payments on behalf of an individual working through them.

This might cover benefits such as sick leave, holiday leave, occupational illness or injury, pension plans, and further training.

Payments could be costed according to the number of hours worked or as a percentage of gross wages.

It seems to me that portable benefits platforms could be developed in the UK by insurers to support self-employed people and also some dependent contractors.

The vast majority of such people will never have access to group insurance schemes and income protection would form a key component of schemes over here.

There is also the potential to link these schemes to state-based welfare rights and entitlements – so people are financially encouraged to take them up – and not penalised at the point of claim.

The Report recommends that the Government should work with partners to create a Catalyst to stimulate the development of a range of such platforms in the UK.

This would allow new and emerging solutions to develop and grow, in a “sandbox environment” with a view to better supporting self-employed people.

The insurance industry should be actively involved in this innovative work.

While the Report recommends that the Government should reform Statutory Sick Pay so that it is a basic employment right for which all workers are eligible regardless of income from day 1, SSP is a very small element in meeting the range of possible needs of the self-employed and dependent contractors.

And one last point, The Report recommends that the Government should identify a set of metrics against which it will measure success in improving work, reporting annually on the quality of work on offer in the UK and that measurement of success could come in the form of more regular running of the Workplace Employment Relations Study (WERS) as well as other qualitative and quantitative measures both at a national level and across regions or specific sectors.

The Bill to set up the Single Financial Guidance Body currently going through Parliament could be amended to include such metrics that are relevant to access to guidance on financial services which can support individuals in the event of the income shocks – especially sickness.

Written by Richard Walsh, SAMI Fellow and first published in Cover magazine, July 2017.

If you enjoyed this blog, sign up for our monthly newsletter at eSAMIsignup@samiconsulting.co.uk and/or browse our website at http://www.samiconsulting.co.uk

Governance, risk and reporting

July 12, 2017

The UK Corporate Governance code, policed by the Financial Reporting Council has been revised several times since it first emerged. And in 2013 the Department of Business Innovation & Skills (BIS) was driving the agenda.

It felt that companies spent too much time reporting past success and not enough on forecasting future returns, so introduced the requirement for an explanation of business model including strategy and risk. This caused some complications for dual-listed corporations who had also to comply with the US regulator who took a different view. While the UK was encouraging corporations to talk openly and honestly about future risks, the US was much more wary of reporting any risk without some prior legal protection for the disclosing party. Jurisdiction alignment was a barrier to better reporting.

This dilemma highlights the confusion surrounding the word risk itself. The economist Frank Knight wrote on the distinction between risk and uncertainty in 1921 where he postulated that the two terms had not been adequately separated. To him risk was measurable and uncertainty immeasurable, however today we accept risk as a control function thanks largely to the way risk is seen as a threat to business continuity which demands some contingency planning. Risk as opportunity or gain tends to be eclipsed by the understanding of risk as threat. Uncertainty is a word that needs more exposure.

The dilemma also posed the uncomfortable question of the ability of auditors – whose skill lies in forensic examination of performance – to police future forecasts of strategy and risk both of which being speculative defy any comparison with ‘the right answer’. Back in 2013 the European Financial Reporting Advisory Group (EFRAG) took the view that future forecasts should have no place in accountancy practice, which must by definition be evidence based. Although the BIS has since been renamed BEIS, adding ‘Enterprise’ to its remit, it still struggles to ‘boldly go’ into the risk debate.

This brings me to the two remaining questions: what is the purpose of risk reporting and who determines what is a significant or principal risk? Let’s tackle the purpose first as this is marginally the easier of the two. This is the warning to investors that they may lose as well as gain; it is the government’s ‘caveat emptor’ requirement. The purpose of risk reporting is to aid the decision process. It is not to list every possible known eventuality, history shows that crises were always absent from risk registers, catastrophes are always termed ‘unimaginable’ or ‘exceptional’. Good risk reporting within the FRC is articulating future uncertainty with clarity and candour.

Reporting risk to a regulator is not the same as reporting risk to an investor, their appetites are different, what is attractive to one is repellent to the other. This becomes a challenge like a juicy bone thrown to Corporate Communications, or passed between Investor Relations and Compliance. In a stakeholder aware corporation messages need to be adjusted to suit audience expectations, but risk is a topic that comes with baggage. This of course is if it ever leaves the board room with a consensus in the first place. Every director will bring their own perspective to the table about what constitutes a risk and whether it is acceptable or not.

This leads me neatly on to the second question, who defines and determines a risk? Is it the Chief Risk Officer (CRO), Head of Risk & Audit Committee or some other ‘expert authority’ within the organisation? Given that the board should take collective responsibility for risk, there are still a large number of organisations where the board relies on a single individual or a department as the risk authority. Anyone around a board table can identify a risk and should argue for time to debate it, but how often does this really happen?

Risk is a topic that needs to be properly rehabilitated within boardrooms, especially in times of economic and political uncertainty. Risk aversion will not produce growth and will stifle innovation so a more positive approach to risk is urgently needed to stimulate the UK economy, especially with the Brexit negotiations breeding further uncertainty. Throughout 2017 the FRC has been looking at risk reporting within the Financial Reporting Lab and a report is due by the end of the year. The BEIS will be looking to see risk as an enabler not a limiter, so this could be very interesting.

Written by Garry Honey, Chiron Reputation Risk CEO and SAMI Associate.

The views expressed are those of the author and not necessarily of SAMI Consulting.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter at eSAMIsignup@samiconsulting.co.uk and/or browse our website at http://www.samiconsulting.co.uk

Scenario Planning – Managing for the Future: review

July 5, 2017

SAMI CEO Gill Ringland’s book “Scenario Planning” was first published back in 1998, with the most recent paperback edition in 2014. And it is still proving to be a strong favourite with readers in many fields.

GR book cover

The latest to take an interest is the Chartered Quality Institute which, in the May edition of its magazine Quality World, published a review of the book written by Alan Clark, CQP, FCQI:

“The second edition of this major work on scenario planning is a highly detailed but practical account that draws extensively on the author’s experience as well as that of other practitioners.

The book is divided into four parts, the first of which introduces scenario planning explaining its history and how it has been used as a vital element in strategic planning and decision-making. The second part covers methods and examples, and part three features 14 case studies.

The final part provides 10 examples of the ways of presenting scenarios that have been developed across widely differing fields. This book will be useful for those that have read the feature in February’s QW on using scenarios to guide your organisation through Brexit, and want to find out more.”

We have indeed found that the political upheavals of the last year are leading people to think differently about the future, and scenarios provide a way of getting to grips with such challenging times. Pundits are increasingly at a loss – “no-one knows anything”

no-one knows anything

Written by Huw Williams, SAMI Principal and based on the CQI review in Quality World, May 2017.

The views expressed are those of the author and not necessarily of SAMI Consulting.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter at eSAMIsignup@samiconsulting.co.uk and/or browse our website at http://www.samiconsulting.co.uk

Unlocking Latin America’s future: participation and foresight

June 28, 2017
IMG_8096

Quito, Ecuador ©A Bobak

As Latin America looks to compete on the global stage, it is increasingly taking a long-term perspective.

Historically the region has thought and planned only in short time frames; this is due to a complex set of reasons such as government instability, cultural factors, and policy foundations. But it is now in a situation where the public and private sectors are falling behind other regions, such as Asia, in education, technology and productivity. To keep up, and even jump ahead, a long-term outlook will be essential. Acknowledging this need is a good start, but the challenge will be to actually embed long-term thinking into all processes, working collaboratively with citizens to scale and improve the quality and effectiveness of strategic foresight.

Why Latin America needs foresight.

One important driver of the growing use of strategic foresight in Latin America is increasing uncertainty and complexity. We are in the midst of a volatility cycle unseen since 1970. This can be seen in factors such as the prices of gas and food, increasing uncertainty of economic growth, and unpredictable technological developments. This is not a phase; nations in the region are facing threats without precedent including extreme drought due to climate change, water shortages affecting hydropower energy sources, and increased job loss due to technology.

Despite the challenges ahead, continued research around trends, drivers of change and alternative futures moving forward as far as 2050 can also uncover areas of resilience and opportunity for Latin America. For instance, almost all nations in the region have or will soon have a demographic dividend, associated with a high number working-age citizens, versus a smaller number of children and elderly citizens. In many cases, this population bubble of 15-35 year-olds in the region is better educated than the generations before them. This group is equip to advance nations economically if they are employed and increasing productivity of the region; but if they are unemployed could also end up being a huge drag on the region.

Government and the private sector need foresight to understand the future so they can prepare today. In this specific case they could use strategic planning to ensure they are prepared for different demographic phases, such as creating jobs for the demographic dividend. This is a significant task, but also a significant opportunity, and one that the continued use of strategic future planning can help realize.

Current methods of planning throughout the region are being overwhelmed by larger and non-linear challenges. Strategic foresight can help. Latin America will benefit from recognizing and integrating foresight, not as a separate activity for futurists, but as a regular part of the decision-making process.

First steps:

Based upon our experience and what we have seen work in the area, a key first step for these nations is to use participatory and collaborative conversations with citizens to construct a shared vision of the future. These conversations can help so that the long term needs, desires and concerns of citizens are understood by the all actors. This also gives citizens of the region more control, power, and buy-in and enhances the effectiveness of strategic foresight as a development tool.

This quote from Sergio Bitar, former Chilean Minister and Latin American foresight advocate encapsulates this ideal: “Foresight without participation will have less impact because it is disconnected from the wide support it needs among citizens, and even if it is connected to decision-making, it will not have the power needed to act effectively” (read more in openDemocracy).

Governments will benefit from a systematic commitment to long term strategic planning using foresight as a basic part of their planning for activities and services. Including a citizen and community participation component to this planning will ensure actions that are supported and effective. Similarly, for the private sector, foresight should be integrated into strategy and planning processes, and a commitment should be made to collaborate among sectors and industries to create a shared future.

Building a mandate for the future

At SOIF, we understand that this is not an easy challenge. Our work globally and in the region with organizations from the UN, to the US-Peruvian Chamber of Commerce has demonstrated that success often requires quite fundamental shifts in people and culture, as well as an investment in skills and programming. That being said, if Latin America wants to keep advancing, strategic foresight needs to be a part of their strategy. They are realizing this, the task now is to create a foundation for strategic foresight work, so that it is well executed.

Written by Allie Bobak, Coordinator, School of International Futures (SOIF)
School of International Futures is a non-profit foresight organization that exists to help policy-makers and business leaders make strategic choices, manage risk and create future-ready organizations www.soif.org.uk

The views expressed are those of the author and not necessarily of SAMI Consulting.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter at eSAMIsignup@samiconsulting.co.uk and/or browse our website at http://www.samiconsulting.co.uk

 

Webinar on Scenarios for Europe 2030

June 21, 2017

Want to hear some thoughts on scenarios for Europe 2030?

There’s a webinar on Wed 5 July 2017; 17:00 – 18:00 BST and you can sign up at the link below.

Register FREE here

This insightful seminar will be presented by Francesca Lagerberg, Global leader – tax services at Grant Thornton.

In “Navigating the future: Scenarios for Europe 2030” – she will discuss how Grant Thornton worked with SAMI Consulting on horizon and scenario planning to help their clients and themselves plan for uncertainty in Europe leading up to 2030.

This webinar will give you the opportunity to hear how Grant Thornton and SAMI used the metaphors of different sporting events to capture differing views of the future of Europe. And give you some insights into how your own organisation may be affected by these different possible futures.

Francesca Lagerberg is a partner in Grant Thornton UK LLP and is seconded to Grant Thornton International Ltd, where she sits on the Global Leadership Team. She has worked in tax for more than 20 years and is now helping the Grant Thornton network grow its tax practices, drive the global tax strategy and attract, retain and develop talent. Tax has been the fastest growing service line in the network in the last two years, and now accounts for over $1 billion of the organisation’s revenue.

Francesca has regional responsibility for European Member Firms, which covers 44 countries and includes supporting growth and sharing best practice in all operational areas.

Her community involvement includes:

  • Trustee for TaxAid, a UK charity that helps those on low incomes
  • Trustee for the Global Fund for Children, a grass-roots charity helping vulnerable children

Register FREE here

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter at eSAMIsignup@samiconsulting.co.uk and/or browse our website at http://www.samiconsulting.co.uk

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