Scenario Planning and Traditional Forecasting

 

Scenario Planning and Traditional Forecasting

 

Since starting this course, I have discovered that Futuring is a vast and exciting thinking process. Life is about continuous changes. As scholar-practitioners or business people, we should be as prepared and ready as possible for the future instead of just reacting to future changes (Wade, 2014). Listed below are two contrasts for being future-ready.

Scenario Planning

Scenario planning is a tool that allows us to structure an approach that is logical and creative for the future landscape (Wade, 2014). According to Wade (2014), the key to scenario planning is asking questions about the trends that will have an impact. The focus is on the trends related to our business or research focus. The trends that have the most significant effect fall into political, economic, societal, and technological categories. We can determine factors to watch for effective scenario planning by evaluating these trends and their driving forces. Scenario planning is helpful at many different levels. Scenario planning is most impactful if used at the most strategic level (Wade, 2014).

Traditional Forecasting

Traditional forecasting uses historical observations to estimate future business metrics such as inventory requirements, budgets, projected revenue, and the asset performance (DSPanel, 2018). Three traditional forecasting methods are (1) survey, (2) collective opinion, and (3) market experiment (Bluepi, 2019). For the most accurate results, these three methods should include statistical measurements (Bluepi, 2019).

The survey method conducted with customers, point of sale owners, and market experts are suitable for short-term forecasts (Bluepi, 2019). The survey method focuses on customer intention, trends, or price determination.

The collective opinion method is simple, although the accuracy can vary significantly (Bluepi, 2019). The focus is to estimate future category demands within a region.

The market experiment method uses samples, surveys, and experiments using new product features, customers, and demography (Bluepi, 2019). This method collects demand based on price changes by product feature and their demand impact.

Comparison and Conclusion

Scenario planning is a method of seeing things not there as a step in planning for the future. Scenario planning is relevant whether planning for your individual life (Wade, 2014), business venture, or where to focus your research.

In contrast, forecasting uses historical data to predict relevant future decisions or objectives. Forecasting requires little change in current business processes (DSPanel, 2018). Conversely, forecasting may require significant change if applied to one's individual life or research focus.

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References

 

Bluepi. (2019). Traditional Forecasting Methods. https://www.bluepiit.com/blog/traditional-forecasting-methods/

 

DSPanel. (2018). Live Forecasting vs Traditional Forecasting vs Rolling Forecasting. performance.com. https://www.performancecanvas.com/live-vs-rolling-vs-traditional-forecasting/

 

Wade, W. (2014). Woody Wade: "Scenario Planning" - Thinking Differently about Future Innovation [2014 September 3] https://www.youtube.com/watch?v=MKhUKHzE8hk