The rise of the pandemic in 2019 injected uncertainty into business across the entire world
Planning for the impact of COVID-19 was enabled by the business’s ability to analyse and compare investment opportunities under multivariate sets of value measures to determine their relative contribution to business value under pandemic and non-pandemic conditions.
Having the capacity to apply multiple value measure hierarchies to potential initiatives allowed the user to set up “what if” scenarios, testing potential investments individually and collectively to identify the set that is of most value under each scenario, identifying those that are of value under all scenarios, and those that should be instigated under an individual scenario, such as COVID-19.
But COVID-19 was an extreme circumstance, or was it? We are seeing the explosion of artificial intelligence, we see many businesses forcibly disrupting industries and markets, we see changes in political climates, legislation and regulation, we see increased resistance to globalisation, and we are currently seeing the rise of the far right across the globe. There is no doubt the world is moving faster, forcing organisations to be more flexible and more agile.
Strategy Development vs Strategy Delivery
Once an organisation approves an investment it is usually costly to stop, and stopping usually ensures only negative direct outcomes such as opportunity cost. However, if market conditions change it is often less costly to stop an initiative prior to delivery than invest further for limited/no/negative gain. Thus, businesses are forced to monitor the market and take management action.
Strategy development is usually very labour intensive, consuming highly skilled specialist resources, which is why it is only executed once per annum, which is neither flexible nor agile. Occasionally, a comparative evaluation or even a strategic audit is performed as an attempt to ensure that the agreed strategy is still relevant, also sub-optimal.
As market pressure increases, and market disruption activity becomes more frequent businesses will be forced to look for ways to reduce the effort involved in strategy delivery and shorten the strategy delivery cycle.
Using scenario planning with portfolio optimisation tools like APO, allows for an unlimited view of the alternatives, comparing the outcomes of proposed strategies against existing strategies in days, not months, and allowing the strategy development cycle to be ramped up, possibly equivalent to a monthly strategic audit while consuming extremely limited resources.
Also, when the level of diligence shown in taking a business decision is imperative and possibly open to public scrutiny, scenario planning using tools like APO can deliver the evidence to see you clear through any audit.
Want to make strategy development both flexible and agile? Want to be able to shrug off market disruptions? Want to sail through any audit or freedom of information request? Call the experts at Kepa Software and get scenario planning on your side.
