Scenarios of processes in environment
Scenarios are a tool used to provide alternative routes for the development of possible events in the future and point to their logical consequences.
Scenarios of environmental processes is an extended version of the scenarios of environmental states. As the name suggests they focus in particular on the key processes that can strongly influence the organization and its continued operation in the future.
Five steps of creating scenarios of processes in environment
- The first step is the identification of two types of processes occurring in the environment of the organization:
- Key processes - the processes that have a strong impact on the organization, and their probability of occurrence is very high,
- Discontinuous change processes - their influence is as strong as in the case of key processes, with the difference that the probability of their occurrence is lower.
- The second step is to identify phenomena that shape previously identified processes and examine them carefully. These phenomena can be divided into:
- Qualitative - i.e.: changes in fashion, new social trends, place in hierarchy of needs of customers,
- Quantitative - i.e.: income, population size, income spent on various products.
- The third step involves creating a variants of processes. It is primarily used to identify and assess the degree of change in the intensity of the various phenomena. It provides minimum and maximum values of processes, estimate their size, interpret trends and ultimately determine their likelihood and possible consequences.
- The fourth step is to identify relationships between most important processes (effects of which will be most noticeable for the organization). Thanks to this operation it will be possible to also determine the direction of these effects and most affected areas of the organization. This knowledge will help managers in early adaptation to changes.
Advantages and disadvantages
Method of scenarios of processes in environment work well especially in crisis situations. It collect information on key processes and then examine them carefully for evidence of possible options. It allows managers to build an early warning system for the organization. The purpose of such scenarios is to prepare the organization for the consequences posed by future events and adaptation to them. It can even allow to utilize the dangerous trends in favour of the company.
In practice there are many pitfalls associated with this method. One of them is a situation in which building of the scenarios is handed down to external experts. This can result in lack of consistency between the scenario and the organization's strategic decisions. Another problem is analysing too many trends and focus solely on the threat environment. In such situation it is difficult to formulate the effective strategy of the organization. Another problem is the long time needed to prepare good scenarios.
- Postma, T. J., & Liebl, F. (2005). How to improve scenario analysis as a strategic management tool?. Technological Forecasting and Social Change, 72(2), 161-173.