Complex business environments make accurate prediction difficult, if not impossible. The best you can do is define a series of scenarios and try to evaluate their impact on your business.
- [Instructor] Predicting the future accurately…is impossible.…The world is too complex to make accurate predictions,…especially at the strategic level…and over longer periods of time than,…say, a couple of weeks,…and even then it can be extremely difficult.…Rather than focus on specific probabilities,…in other words, we believe that it's 10% likely…X in so scenario will occur.…Rafael Ramirez, who is director…of the Oxford Scenarios Programme encourages you…to focus on plausibility.…
The idea is that you don't want…to lock your decision-makers into unlikely scenarios.…For example, at the end of an exercise,…you might have a world where structural steel costs…three times as much as it does now,…and would impact a construction project.…Now, of course, that kind of price increase could happen,…it's not in violation of the laws of physics,…but it is extremely unlikely…and you want to avoid putting something like…that into the minds of your decision-makers…so that you can avoid having them anchor on it later…and think that it's something that might actually happen.…
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- Designing a scenario-planning exercise
- Estimating scenario plausibility and outcomes
- Establishing parameter value ranges
- Calculating the standard deviation of a dataset
- Indicating the probability of a scenario value occurring
- Walking through a scenario presentation
- Performing retrospective analysis using a PivotTable
- Changing PivotTable summary operations