Pulp Innovation Chapter LXX: What if the Scenario is Wrong?

By: Jeffrey Phillips

When concerns are raised that Accipiter’s scenarios might be wrong or perhaps placing too much emphasis on the wrong market, Marlow must step in to provide encouragement. The point of scenarios isn’t necessarily to be able to predict the actual future, but to identify discontinuities and anticipate them, and bring new needs or opportunities to light.

While I’d never compared it to digging ditches, real thinking work is hard work, exhausting work.  I’ve heard that the brain is basically a leech, sucking all the energy and nutrients from the rest of the body, but after a full day of scenario planning I had to believe it.  I was drained. Wiped out from a full eight hour day in a Herman Miller Aeron chair in a comfy conference room.

We’d finally managed to agree on our strategic scope and had started collecting market information, industry trends and other information we felt would be helpful in building scenarios.  One of the biggest challenges was to extend our line of sight beyond one or two years.  It seems that no one in the aerospace group (and I suspect no one in Accipiter) had done any long range thinking for years.  And by long range, I mean three years out.  So we had quite the battle royal over creating scenarios that were more than five years into the future.

“The future much past three or four years is almost unknowable” Greg said.  “We don’t know enough about that timeframe to predict it effectively.”

Greg had a point, but it didn’t hold water with me.

“Do you plan to be in business three to five years from now?”

“Well, of course.”

“What products and services will be important to customers in five years?  What can you effectively and profitably deliver?  What key needs will those customers have?”

“I think they’ll have many of the same needs as they have today.  As for the changes that may take place, we can’t know what those are, and building products or services based on hunches is risky.”

“We don’t work on hunches, we work on educated guesses based on trends and their likely outcomes.  For example, we can see already that the Asian economies are rebounding faster from the downturn than the US and Western European economies, yes?”

He nodded, not wanting to commit much more.

“Ok, if that’s true, and if Asia depends on air traffic to move people around and air freight to move goods around more than these other economies, we can predict that there will be an uptick in demand for new planes and for replacement parts in Asia in the next two to three years at a minimum, and if their economies grow more rapidly than ours over the next five to seven years, the demand there will far outstrip demand here.”

There were nods all around the table now.

Greg shrugged.  “OK, but what do we do with that insight?”

“All we’ve done so far is begin to create a scenario that suggests that the Asian economies come out of the downturn faster, and we’ve begun to identify implications of that scenario.  If they grow faster and maintain a higher growth rate than Western Europe and the US, the demand on air traffic will increase dramatically.  That was already the fastest growing market for air travel, especially long range air travel and air freight.  If we predict those markets to grow rapidly, we should begin to identify new products and services we need to create to support that growth and win market share.  We also need to think about how our services are structured and where we have people on the ground.  It may make sense to start shifting resources to Taiwan and Singapore, since we already have operations there.”

“But what if that scenario is wrong?  What if we’ve placed too much emphasis on Asian market growth?”

“That’s why we create several competing scenarios about the future.”  I noticed that Greg no longer seemed to have as great a concern about the timeframe.  Now he was worried about chasing the wrong story, rather than the length of the story. “We need to create another scenario based on other trends that we’ve collected.  Perhaps we have a set of trends that suggests that there will be a significant reduction in military spending since we’ll reduce wars in Iraq and Afghanistan, and the world is eager for a “peace dividend” again.  In that case, governmental spending on aircraft and maintenance will plunge.  That’s a realistic scenario based on the trends we’ve captured, and would have a huge impact on Accipiter unless we find ways to deliver new services.  Perhaps in that scenario Accipiter takes on the role of mothballing and maintaining planes in the desert.”

Greg shook his head.  “That’s all interesting but almost too much to wrap my head around.”

“The point of scenarios isn’t necessarily to be able to predict the actual future, but to identify discontinuities and anticipate them, and bring new needs or opportunities to light.  None of these scenarios is exactly right, and several of them overlap or intersect.  It’s just as likely that our Asian scenario and “peace dividend” scenario are partially right.  If so, we need to either change our government services or exit those and move our focus to Asia.”

Everyone on the team had their eyes glued on Greg.  If he bought in, they were mostly on board.  If he rejected the approach or timeframe, Susan and I had a lot of work to do to get the team back on board with our approach.

“We can either assume the future will look a lot like today, and plan new products and services based on the needs and demands we believe are valid now, or we can try to understand what the potential futures are and anticipate those needs.  That’s innovation” I said.

Greg nodded.  “OK, let’s finish the Asian growth scenario and flesh out the “peace dividend” scenario.  I think there are one or two other scenarios to consider. One question – why three to five years?”

“What’s your product development cycle time?  How long does it take from the decision to make a new product until that product is in the marketplace?”

“Depends, but anywhere from 18 months to three years or more.  A good portion of that depends on safety testing, and the ability to get our products designed in by aircraft manufacturers.”

“OK, if we conjured up a perfect idea today to solve a current need, we couldn’t get that product into the market for approximately two years, correct?”

“Well, more or less.”

“OK.  Do we want to identify problems and opportunities with enough lead time so we can get our new products and services into the market as the market unfolds, or do you want to constantly introduce new products that are late to the market?”

“So you are saying that by examining futures three to five years out we are looking for emerging opportunities that we can address and hopefully reach before the rest of the market does, or becomes aware of the opportunity?”

I didn’t have to say anything.  Every head nodding in the room was doing my talking for me.

With that we were off and running into the future.

By Jeffrey Phillips