Quantitative Method Stands as the Most Preferred Method for Scenario Planning - GoodFirms Survey 2022
WASHINGTON, Nov. 14, 2022 /PRNewswire/ -- GoodFirms, a globally renowned research, ratings, and reviews platform, recently released its new research report, "Scenario Planning - Objectives, Benefits, and Methods of Application". It attempts to identify and analyze the objectives, benefits, types, application methods, and challenges in scenario planning. The research aims to explore a range of possible future probabilities to help organizations make more informed strategic decisions and upskill their scenario planning initiatives.
The study highlights how scenario planning helps forecast future scenarios and gauge the scenario's effect on businesses. It also discloses how it assists business leaders in drawing up a plan and preparing for business adversities that may arise due to changes in the current scenario.
Scenario planning integrates a range of factors, from government stability, commodity prices, federal interest rates, and pace of technology to consumer trends, population growth, etc. The research reveals that scenario planning and forecasting differ in how they are executed, approached, and communicated.
GoodFirms surveyed global organizations regarding the objectives of their scenario planning initiatives. Uncertainty mitigation (81.4%) was the top reported objective of scenario planning. The other reported objectives are accurate budget and resources allocation (57.5%), competitive advantage (44.1%), better future forecast (34.2%), enhanced decision-making (33.6%), unhampered organizational performance (27.8%), and continued growth (19.1%).
The research also unveils the need for scenario planning to simulate possible future scenarios- in context with TUNA (Turbulence, Uncertainty, Novelty, Ambiguity). It also disclosed the benefits of scenario planning, such as: driving strategic thinking/practice, gauging the possibilities, enhancing decision-making, and improving knowledge about the organization and its future growth.
Research also reveals the different methods of scenario planning used by organizations depending on their goals. 1.3% of the surveyees mentioned Quantitative scenario as the most widely used scenario planning method. Other methods include strategic management plans(47.8%), operational scenario(32.5%), 4 Archetypes (31.1%), shell method (27.8%), 2X2 matrix (17.5%), Interactive management (15.5%) , and normative scenario (14.5%) .
Further, the research identifies the benefits achieved from the scenario planning initiative, such as minimized supply chain issues, optimal operating expenses, balanced headcount in the company, protection from government scrutiny/regulatory penalties, and increased margins and revenues. Other benefits include: Identifying the drivers of change in the environment, developing a flexible strategy, communicating effectively, and identifying opportunities for improvement.
The research also analyzes the adverse situations addressed in scenario planning strategy of organizations like 75.7% of organizations are prepared for any data loss/corruption situation. 62.7% are ready for insider threats, 61.2% can handle supply chain disruption, 56.5% have included ransomware threat situations in their scenario plans.
In addition, the research explores the biases of scenario planning, where 67.1% of businesses completely neglect low-probability scenarios. About 25.4% of surveyed organizations suffer from stability bias and assume that the future will look like the past only. Identifying high-priority scenarios and allocating adequate resources for them are top challenges in scenario planning reported by global leaders.
GoodFirms concludes that businesses can approach scenario planning to understand the range of potential future outcomes by tracing all underlying business models and thrive during uncertain circumstances by developing differently.
- 14.5% of organizations take a longer view for their scenario planning and review it after five years.
- CEOs and their subordinates are responsible for scenario planning in 61.5% of organizations.
- In 32.1% of organizations, the Board of Management is responsible for scenario planning.
- 47.8% of surveyed organizations use the strategic management plan method to conduct scenario planning.
- 32.5% of surveyed organizations use the operational scenario method.
- 32.1% of organizations deploy 4 Archetype methods for scenario planning.
- 44.2% of C-suite executives claim that scenario planning has minimized supply chain issues.
- Scenario planning helped 31.1% of organizations in lowering their operating costs.
- 31.9% of businesses put too much emphasis on situations that are unlikely to happen
- 25.4% of businesses assume the future will look like the past.
GoodFirms Survey-"Scenario Planning - Objectives, Benefits, and Methods of Application" was conducted between 15th Sept 2022 and 21st Sept 2022. The survey queried selected organizations across the world on their scenario planning initiatives, methods, experience, and challenges. A total of 210 responses were collected.
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GoodFirms is a Washington, D.C -based research firm that aligns its efforts in identifying the most prominent and efficient companies that deliver results to their clients. GoodFirms research is a confluence of new-age consumer reference processes and conventional industry-wide reviews & rankings that help service seekers leap further and multiply their industry-wide value and credibility.
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Rachael Ray
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SOURCE GoodFirms
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