Abstract of paper
This paper proposes that relating scenario planning with early warning scanning provides firms with synergic capabilities that help frame top management attention on possible future contexts and how they might unfold. The research is based on two case studies and makes two scholarly contributions: it discusses cognitive aspects in sensing by analyzing scenario planning and early warning scanning as dynamic capabilities; and it provides an exploration of the synergies between both. The paper may also help reflective scenario planners and competitive intelligence professionals to better connect their work.
In the paper “Scenarios and early warnings as dynamic capabilities to frame managerial attention” by Rafael Ramírez, Riku Österman and Daniel Grönquist, the authors describe how Statoil and Nokia, supported by NormannPartners consultants, completed pioneering work coupling competitive intelligence and Early Warning Systems (EWS) with Scenario Planning (SP) to enhance usability and extend lifetimes of such exercises.
At Statoil, Dr. Rafael Ramirez and Daniel Grönquist acted as Scenario Planning and Early Warning System consultants for more than three years, working closely with Head of Corporate Strategy and Head of Corporate Planning, amongst others. At Nokia, Riku Österman was Head of Competitive Intelligence, then Head of Services Intelligence, and acted as a scenario facilitator. He is now an Associate at NormannPartners. Both companies had a several-year history of deploying Scenario Planning exercises episodically, and both gradually integrated Early Warning Systems to support the exercises.
Early Warning Systems, such as the tabloid style Market Alert Newsletter and Blog employed by Nokia, scans for and highlights new trends and ideas which may prove to be important to the company. Insights from EWS can be woven into the creation of scenarios, or placed within a framework of a previously created scenario set. This can aid reframing managerial attention and improve the longevity of a set of scenarios.
A key learning outcome was an understanding of how demanding it is to develop good scenarios and how it helps to have the users invent the scenarios, that is, pattern their ideas into communicable stories.
Coupling of SP with EWS productively informed the strategic decision making at Statoil. A specific area that was highlighted by the SP – EWS work is climate change. Here the firm’s monitoring of climate change and climate policy-making emerging trends led to the 2007 decision to develop the Statoil climate strategy, focusing on major greenhouse gas sources and dealing with the point emissions sources that caused the greatest impacts. The Statoil top management team was highly influenced by their scenarios set when they planned and executed the very successful merger with Norsk Hydro, which by 2009 had produced annual cost improvements of approximately NOK 5.5 billion.
Nokia is a more complicated case, as although the company successfully used SP – EWS for a period to positively influence its strategy, it failed in its execution in the rapidly changing business environment of mobile telecommunications. For example, Nokia saw the importance of the mobile web and touch screens very early on. It installed web browsers in its smart-phones in 2002, and released its first touch-screen phone – the Nokia 7710 – to the market in 2004, well in advance of Apple and the iPhone. However, it failed to leverage this strategic lead, culminating in the sale of its handset division to Microsoft in 2014.
Summary written by Kamran Lamb
Prof. Rafael Ramírez