Forecasting and scenario planning in a chaotic environment

9.8 Forecasting and scenario planning in a chaotic environment

To forecast or predict future trends, whether or not through any of the given analytical tools, is key to successful strategic management. In the history of strategic management, a key factor post-Second World War and into the mid-1970s was the concept of the ‘one best way’ for any given organisation to work. This assumed a controllable, stable business environment. It does not require strategic analysis to reveal that the media industry is a highly volatile, highly unpredictable industry.

During the 1945–1980 period, the concept of corporate planning for the short, medium and long term were essential elements of the strategic manager’s tool kit. Today, the rate of change in the working environment has devalued central corporate planning as a strategic tool. Theories on chaos, managing in chaotic environments and planning for the unknown have become more prevalent. Current strategic management models reflect many of the changes that have shown the shift from stable and known environments to unstable and unknown working environments.

A leading exponent of chaos theory is Professor Ralph Stacey, who challenged the traditional ‘rational approach to strategic management’ 9 . Stacey argues that to succeed in uncertain environments, we need to work in different methods and learn from chaos theory. This perspective is of

Managing in the Media

particular value to the media manager, and will be referred to in a later section.

Tom Peters and Robert Waterman, in their book In Search of Excellence 10 , identified eight characteristics that were shared by 43 of the most successful companies in America in 1977. These eight well-known characteristics have become linked with what one may call the one best way for a business to function, and include:

1 A bias for action: getting on with it

2 Being close to the customer: learning from the people they serve

3 Encouraging autonomy and entrepreneurship: fostering innovation and nurturing ‘champions’

4 Achieving productivity through people; treating the rank and file as a source of quality

5 Being hands on, value driven: management showing its commitment

6 Sticking to the knitting: stay with the business you know

7 Having a simple form and lean staffing: some of the best companies have minimal headquarters staff

8 Having simultaneous loose and tighter properties: autonomy in shop floor activities plus centralised values.

It is also now well known that only 5 years after the book’s publication, two- thirds of the companies who revealed these characteristics had a range of economic and structural problems. Which leaves us with the question – is there one best way, and can we plan?

Meanwhile, during this period, companies both small and large were maintaining their strategy of producing corporate planning documents with newly defined mission statements as a means of inspiring their shareholders, staff, bank managers and potential investors. These well-researched and glossy documents sometimes found their way into the managing director’s office and were placed in a filing cabinet, never to see the light of day again.

Igor Ansoff, who wrote the seminal work Corporate Strategy 11 , said of strategic planning that remained to be implemented that businesses were often suffering from ‘paralysis by analysis’. Many of the current texts on strategy are a distillation of the work first put forward by Ansoff.

From his work, five key themes emerge:

1 There is no universal success formula for all firms

2 The driving variable that dictates the strategy required for success is the level of turbulence in the firm’s environment

Strategic management

3 A firm’s success cannot be optimised unless the aggressiveness of its strategy is aligned with the turbulence of its environment

4 A firm’s success cannot be optimised unless management capability is also aligned with the environment

5 The key internal capability variables that jointly determine a firm’s success

are cognitive, psychological, sociological, political and anthropological. You may wish to reflect on these themes, and consider them in terms of

your own experiences within a firm to date.