Period 3
MBA Program	January/February 2005

INDUSTRY FORESIGHT & SCENARIO PLANNING

Professor: Adam Gordon (Office EW 2.21, First floor of East Wing. Tel +9006)

Assistant: Dominique Auclerc (Office EW 2.14bis, First floor of East Wing. Tel +4251)

Email: adam.gordon@insead.edu

Consultation by appointment - call or email.

1.1 Course Overview

“If you think that you can run an organization in the next 10 years as you've run it in the past 10 years you're out of your mind.” – Roberto C. Goizueta, ex-CEO, Coca-Cola

As enterprises are forced to transform ever more rapidly and comprehensively in response to new technologies, shifting markets and societal pressures, the challenge of anticipating change, interpreting new opportunities and setting appropriate direction has become a key skill for business leaders. Competitive advantage goes to those who best deduce the forces acting on their industry and who most astutely adapt their businesses to profit from them. 

But nobody can predict the future. A lot rests, therefore, on a manager's superior ability to judge the course and timing of new initiatives under uncertain conditions. As insight into complexity, uncertainty and change has itself become an area of business competition, the field of industry foresight has grown up to provide theoretical and practical tools to improve this ability. These tools exist to help managers interpret the business opportunities inherent in change, and innovate accordingly, while managing uncertainty and minimising risk.

The elective is a high-level introduction to this field. The course advances the skills learned in MBA core curriculum, particularly in strategy, marketing, and entrepreneurship classes. It integrates industry foresight tools with value-innovation theory and scenario planning to provide a full introduction to the qualitative techniques for managers seeking to make better business decisions under conditions of external uncertainty.

1.2 Who should take this course?

The course will be relevant to students with an interest in the challenges of middle and senior management – setting direction and determining the path of an organization or organizational unit, or to those who consult to senior management (strategy consulting), or those with a specific interest in strategic planning or business adaptation to market and technology change. Industry foresight and scenario planning is relevant across almost every industry: health care, media-entertainment, financial services, energy, luxury goods, transportation, tourism-hospitality, etc., and is relevant to both business and non-profit industry sectors.

1.3 Objectives:

The key objectives of the course are:

(a) To expose students to the tools and methods of industry foresight, scenario planning, and value-innovation, and give them experience in using these tools in an integrated way.

(b) To develop students’ ability and confidence in using foresight and innovation strategies as a everyday management function.

(c) To develop familiarity with future-oriented industry-management challenges that face senior management, and best practices for navigating decisions at this level.

There is no statistical analysis or computer modelling in this course.

1.4 Outcomes & Take-aways

By the end of the course, students who have attended class, read the readings, and done the assignments will:

§ Have analytical frameworks and solutions for decisions whose variables are too uncertain or too long-range to be satisfactorily evaluated with core financial tools.

§ Have an enhanced, sophisticated view of change and common industry change-drivers, and their effect on businesses and business models.

§ Understand appropriate uses of business forecasting and planning, and current best practices, including a critical analysis of the limits and best uses of these tools to better interpret the competitive environment and to manage business uncertainties.

§ Understand the difference between predicting the future and managing a cone of uncertainty, and be able to evaluate the level of uncertainty in a business problem and determine the appropriate planning tools that devolve from this.

§ Have theoretical and practical experience using key methodologies of industry foresight, including systems dynamics, futures wheels horizon scanning, trend tracking, technology roadmaps, Delphi analysis, etc.

§ Have an in-depth understanding of value innovation and scenario planning, including experience with constructing scenarios, and be able to use these tools to manage important, uncertain variables for a company.

§ Be able to integrate the tools of industry foresight into the rest of the business strategy process.

§ Be able to critically assess the business forecasts of competing businesses, management consultants, or the media.

Where appropriate, students will emerge having applied the industry foresight and value innovation toolkit to their own industry and company, giving them a real-world future-management agenda to take back into their organisation’s own strategic planning process.

1.5 Format and teaching technique

The course will incorporate a variety of teaching techniques, including interactive lectures, group seminars, case discussions, role-plays and business games – blending theory models with worked examples and real-world situations. It will be pragmatic in style and approach, selecting the best materials and solutions from both academic and business sources. Where possible, participants will have the opportunity to apply the tools and frameworks to their own business or organisation.

1.6 Assignments & Evaluation

Student evaluation will be based on the following deliverables:

§ (50%) Business Foresight & Innovation Project. Create an industry foresight view, including scenarios, and a reasoned value innovation agenda for a company of your choice. Details to be discussed in class.

§ (30%) Critical Analysis of a Foresight Project or Scenario Set. Examine a existing business view(s) of the future, providing a critical assessment of both its methodological and content aspects of it, and alternative strategic implications for the organization concerned, based on your critique. This assignment is due at the beginning of Class 10.

Note: Submissions for the Industry Innovation Project and the Critical Analysis are to be made by EMAIL ONLY to adam.gordon@insead.edu. Please include a “delivery receipt request” and keep your receipt as proof of submission. If you get an email error message or you have any reason to think your email has not been successfully transmitted, please deliver your project on paper by hand to Dominique Auclerc’s office (tel. +4251) by the day and time when the assignment is due.

§ (20%) Quality of individual in-class participation.

1.5 Course Outline

Session 1	Introduction to industry foresight. Understanding business failure and success. Recognizing and managing societal and technology trends. Issues in foresight, opportunities assessment and innovation. Perils of prediction. Implications for business planning. Students should bring a story of business or organizational failure (that affected a large, going concern) that they have experienced or know about	Readings: § Van der Heijden, K. et al., The Sixth Sense, Wiley & Sons, UK, 2002., from Chapter 1. § Watkins, M. & Bazerman M., “Predictable Surprises”, Harvard Business Review, March 2003
Session 2	Introduction to industry foresight toolbox (1): horizon scanning, trend tracking Students should bring a copy of that morning’s daily newspaper	§ Case: Encyclopaedia Britannica § “Futures Methods”, Local Government Association, UK, 1999 § Defra’s Horizon Scanning Strategy,” Defra Science Strategy Team, 2002
Session 3	Industry foresight toolbox (2): Technology roadmaps, Delphi technique, Predictive markets, Cross-impact analysis, Futures wheels. Case study.	§ Case: Boeing vs Airbus § Cuhls, K., “Foresight with Delphi Surveys in Japan,” Technology Analysis & Strategic Management, Vol. 13, No. 4, 2001
Session 4	Industry foresight toolbox (3): Systems dynamics.	§ Kirkwood, C., “Systems Behavior & Causal Loop Diagrams”, System Dynamics Methods: A Quick Introduction., ASU § Braun. W., “The System Archetypes” 2002
Session 5	Value Innovation Introduction, Strategy canvas, value curves, Four-action framework	§ Case: Cirq de Soleil § Chan Kim, W & Mauborgne, R. “Value Innovation: The Strategic Logic of High Growth” HBR, 1997
Session 6	Diffusion of Innovation	§ Case: Yamaha § Rogers, E. Diffusion of Innovations, Free Press, 2003. Chapter 1.
Session 7	Scenario planning: uses, origins, history, evolution, and lessons learned. Methodology part 1: from horizon scanning to a scenario matrix.	§ Wack, P., “Unchartered Waters Ahead” HBR, 1985 § Kleiner, A., “Doing Scenario Work,” Whole Early Quarterly, 1999
Session 8	Scenario planning methodology, part 2: from a matrix to plausible stories defining the cone of uncertainty.	§ Flower, J., Spinning the Future, 1997 § “Scenarios: An Explorer’s Guide”, Shell Global Business Environment 2003, pp 6-86
Session 9	Scenario planning methodology, part 3. Normative scenarios.	§ Destino Columbia, Deeper News, Vol. 9, No 1. § “The Mont Fleur Scenarios”, Deeper News, Vol. 7, No 1. (pp 9-22 only)
Session 10	Critical discussion and analysis of a scenario set.	§ “Europe Beyond the Millennium,” 2001-2008., Accenture, 2000
Session 11	Case study: Determining levels of uncertainty. Building a scenario set.	§ Courtney, H. et al., “Strategy Under Uncertainty”, HBR, Nov/Dec 1997 § “Window on the Future: A Scenario Planning Primer.” South Wind Research, 2001.
Session 12	Building a scenario set, cont.	§ Case: Novo Nordisk § Schoemaker, P., "Scenario Planning: A Tool for Strategic Thinking", Sloan Management Review, Winter 1995
Session 13	From scenarios to business strategy. Rebuilding organizational planning. Integration with value innovation.	§ Schoemaker, P., Profiting from Uncertainty, Free Press, 2002. pp92-138 § Mintzberg, H., “The Fall and Rise of Strategic Planning.” HBR, 1992
Session 14	Capstone case study.	§ Case: Fiat Auto
Session 15	Presentations of group projects.
Session 16	Presentations of group projects. Wrap-up & evaluation.

1.7 Reading

The readings for each session are in the course pack. There is no prescribed book for this course. However it is highly recommended that students read:

§ Schoemaker, P., Profiting from Uncertainty, Free Press, 2002.

Additional readings, including many examples of scenarios, are posted on the website. http://faculty.insead.edu/gordona/sp/index.htm

Further highly recommended reading:

§ Hamel G. and Prahalad C., Competing for the Future, HBS Press, 1996

§ Courtney H., 20/20 Foresight, HBS Press, 2001

§ Schoemaker P., Profiting from Uncertainty, Free Press, 2002.

§ Van Der Heijden K., The Sixth Sense, Wiley & Sons, 2002

§ Van Der Heijden K., Scenarios: The Art of Strategic Conversation, Wiley & Sons, 2005

§ Kelley T., The Art of Innovation Harper Collins Business, 2001

§ De Geus A., The Living Company, HBS Press, 1997

§ Bell W., Foundations of Futures Studies, Transaction, 1996

§ Weiner E. & Brown A., An Insider’s Guide to the Future, WEB, 1997

§ Weiner E. & Brown, A., Future Think, Prentice Hall, 2005

§ Lowell B. et al., Race for the World, HBS Press, 1999

§ Schwartz P., The Art of the Long View, Doubleday, 1991

§ Senge P. et al., The Dance of Change, Doubleday/Currency, 1999

§ Rogers, E. Diffusion of Innovations, Free Press, 2003.

1.8 Lecturer, Vitae