Scenario planning, Delphi Method, Trends

16. June 2008 – 16:27

Delphi Method

Delphi Method is a group decision process about the likelihood that certain events will occur. Today it is used for environmental, marketing and sales forecasting. The Delphi Method makes use of a panel of experts, selected based on the areas of expertise required. The notion is that well-informed individuals, calling on their insights and experience, are better equipped to predict the future than theoretical approaches. Their responses to a series of questionnaires are anonymous, and they are provided with a summary of options before answering the next questionnaire. It is believed that the group will converge toward the best response through this score. The median will move toward the “correct” answer.

Advantage: experts never need to be brought together physically, could reside anywhere in the world. Pitfalls of ego, domineering personalities and the halo effect in responses are all avoided.

Get the most out of scenario planning

Start with one or two critical strategic decisions on the immediate horizon. Think of an important decision you will have to live with because it will have long-term consequences for your company. Your questions should be clearly framed.

Sample decisions:

  • What if we lost our largest customer?
  • Should we acquire one or more competitiors?
  • What new services should we offer to grow profits?
  • Should we make an acquisition in a new industry?
  • What should we charge customers on a fee for service basis?
  • Should we expand our operations interntionally?

Some of these questions are tactical, while others are more strategic. Keep in mind that scenarios should not revolve around events that are entirely controllable by your company. Instead, scenarios help your company develop alterntive views of the external business environment.

Trends, forces of change

Scenarios can help to transform the chaos of today from a liability into a source of competitive advantage.

A classic example of the role of scenarios comes from Royal Dutch/Shell, the British oil company that pioneered scenario planning in the early 1970s. In 1984 the price of oil was $28 per barrel. The planning group at Shell developed a scenario that talked about a $15 barrel of oil. When the price actually dropped two years later, Shell took advantage of the uncertainty by purchasing oil reserves at a low price from companies that had been unprepared for the unexpected price drop.

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