Why are we so focused on scenario planning?



In a recent conversation, a potential client asked why we spent so much time talking about scenario planning as opposed to elasticities, lift coefficients, and response curves like other analytics providers. My partner explained that we can generate those kind of results for diagnostic purposes, but that the growth opportunities for the business rely on a better understanding of the options for tomorrow as opposed to yesterday’s performance. The marketer was intrigued, so we continued.


A.G. Lafley, current CEO of Procter & Gamble, and several colleagues approached this issue headfirst in their 2012 Harvard Business Review article entitled "Bring Science to the Art of Strategic Planning." They describe that marketing teams spend too much effort on understanding the issues encountered in the past. Despite all of the hours dedicated to analysis, this is actually not a scientific approach. A more realistic approach to strategic planning begins by formulating options and then asking what must be true for each of these potential choices to succeed. By assessing the likely outcome of each choice within the context of potential barriers, choosing the best strategy becomes simple. What they are describing is essentially the generation and testing of hypotheses, followed by the conclusion.

Futurist Peter Schwartz provides one of the best cases for scenario planning. He explains that we shouldn’t judge scenario planning based on how perfectly we forecast the future. Instead, the true value of these exercises is whether or not we made the best possible decision for our strategy moving forward by looking across all of the possibilities and weighing the pros and cons from a probability standpoint. This approach completely fits into the framework that Lafley and his colleagues present for moving away from overanalyzing issues and spending more time addressing future choices.

Greg Satell is another strategic marketing expert and one of the most insightful bloggers in addressing how technology is changing today’s field. In "From Hunches to Simulations," he places scenario planning into complete focus. Satell says too often big marketing ideas are linked to individuals. If your idea works, you are a hero. If it fails, you are fired. This kind of personal risk means that most big opportunities are quickly dismissed as too risky. Technology, however, is changing this. Instead of arguing the merits of a new idea in the conference room, you can actually test them in a simulated environment, leveraging real world data. By increasing the number of failures in virtual space, marketers dramatically improve their performance in the real world. This is perhaps the best description of why Middlegame is so focused on scenario planning.

To find out more about our approach to scenario planning, which helps marketers convert shopper response analytics into action, and for examples of this approach in action, visit our website at www.middlegame.com. You can also find additional commentary, observations and insights from Greg Satell at http://www.digitaltonto.com/. Some topics are controversial; most are insightful, but all of the opinions are extremely difficult to refute. We are regular readers.

Middlegame is the only ROMI consultancy of its kind that offers a holistic view of the implications of resource allocation and investment in the marketplace. Our approach to scenario-planning differs from other marketing analytics providers by addressing the anticipated outcome for every SKU (your portfolio and your competitors) in every channel. Similar to the pieces in chess, each stakeholder can now evaluate the trade-offs of potential choices and collectively apply them to create win-win results.

Contact us at: www.middlegame.com