CS875 Unit 3 Discussion Board Primary Posting - Scenario Planning and Traditional Forecasting

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CS875 Unit 3 Discussion Board Primary Posting

For this assignment, we address the similarities and differences between scenario planning and forecasting as used traditionally.
As illustrated in the example presented by Frum (2013), scenario planning involved the assembly of recognized industry experts for their projections regarding the state of the newspaper publishing industry ten years into the future. This scenario planning approach was very closely aligned with the principles used in a SWOT analysis (strengths, weaknesses, opportunities, and threats), and sought to determine the impacts of innovation on the newspaper publishing industry (Frum, 2013). Krajanowski (2017) argues that a SWOT analysis is focused more on short-term implications rather than the longer-term - at least ten years in the future. Scenario planning forces organizations to consider the “what if” and “why” questions (Krajanowski, 2017). It is reasonable to ask how many businesses of any type anticipated the impact of COVID-19 during the first half of 2020. Those that did anticipate this scenario and prepared for it were lightyears ahead of the majority that had not. Scenario planning is an inexact science but rather a SWAG (Scientific Wild Guess) based on current thinking and future anticipation of events and innovation.
Traditional forecasting methods, as used in many industries, rely on history and the ability to derive trends from available data and extrapolate that towards projections of results (Bradford, 2017). Bradford (2017) posits that it is human nature to selectively use “facts” that support the hypotheses and conclusions that we have already adopted. I have been directly responsible for preparing revenue forecasts, both as an independent analyst and as an employee of an organization. I have used the tangible results from prior years, extrapolated growth rates, considering the variability of the days in a month, and seasonal trends. These have led to generally successful forecasts and projections. There are a variety of forecasting methods that are in use. These include trend extrapolation as mentioned above, regression and simulation models, and marketing projections (Tidd & Bessant, 2018)
Both scenario planning and traditional forecasting seek to make sense of available information and create acceptable goals and objectives. However, that is where the similarities appear to end. Traditional forecasting is looking at one, three, and five years into the future, with the emphasis primarily on the short-term (Krajanowski, 2017). Scenario planning is focused more on the longer-term, including a ten-year horizon. What can change that requires anticipation and possible action in the short term to be prepared for such eventualities? The Delphi technique resembles scenario planning (Tidd & Bessant, 2018). Also, traditional forecasting incorporates innate human biases. Our projections provide organizational leadership with data for managing the business. They need to show consistent growth and provide a clear graphic representation of success. The one absolute certainty, however, is that the forecast is wrong. Performing as predicted is nearly impossible. Scenario planning, on the other hand, does not seek perfection. It seeks to anticipate. That anticipation would allow for preparation for catastrophic events or implementation of game-changing innovations - even if the precise occasion were unanticipated.

References

Bradford, W. E. (2017). The Future of FORECASTING: In this age of disruption, insurers can no longer rely on traditional methods of predicting risk. Best's Review, 117(10), 32.
Frum, R. (2013). World Association of Newspapers Scenario Planning. Retrieved from http://personalexpertsystem.blogspot.com/2013/08/world-association-of-newspapers.html
Krajanowski, D. (2017). Scenario Planning "The New Strategic Plan". Orange County Business Journal, 40(17), B-29.
Tidd, J., & Bessant, J. (2018). Managing Innovation (Vol. 6th Edition). Hoboken: Wiley.


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