When a company is performing well, one of the key challenges for its leader is to get everyone sufficiently motivated to look to the future and to innovate.

Despite the best intentions and encouragement, everyone’s focus often remains on current operations. Any efforts to innovate may be limited to process improvement and to taking cost out without adversely affecting the value proposition.

However, scenario planning is a tool that can play a key role in getting teams motivated for innovation.

Scenario planning does this by helping teams to identify what the future environment within which the business might operate could look like. In this way, the scenario planning process can help to identify any storm clouds on the horizon - or threats. A threat is of course just another word for an innovation opportunity!

With a much better understanding of future threats the motivation to innovate to address those threats can increase dramatically.

Many players in the nightclub sector may be regretting having focused on the current operation for too long. The nineties were the heyday of the super clubs, and the good times extended into the noughties. However, In recent times major players in the sector including Soho Clubs and Bars, Regent Inns, Summit Clubs and bigger individual clubs like The End, Turnmills and Fabric have gone into administration. Now Luminar –  star player in the nineties is also in serious trouble.

The trends and factors that have led to rapid and acute decline of large club businesses are many and include, the introduction of the smoking ban, growing youth unemployment, cheap supermarket booze, computer games revolution, more affordable satellite TV, heavy weight promotions in pubs and bars, late night opening of bars, increased interest in ‘small events’, growing increase in ‘one off’ and special events and the growth of social networking media.... phew!

It’s easy with hindsight to question why the large club owners didn’t see this coming. Surely they had an eye on the trends?

Well yes, trend watching is important in monitoring any market. However, a sympathetic observer could perhaps dismiss many individual trends on the above long list as minor and likely to have marginal effect on the overall clubs businesses.

But trend watching is not enough! Not in the 21^st century when markets change rapidly. It can be argued it is too passive an activity and can lull its devotees into a false sense of security.

When markets grow or decline rapidly it is rarely down to a single driver. Rather it is multiple factors in combination with each other.

This is where scenario planning is a powerful tool. It is much more sophisticated and effective than trend watching.

So What Is Scenario Planning?

Scenario planning is a tool that can help organizations plan for success over the long term.

The inputs are a scenario planning process, market data and creative thinking and the output is scenarios or views of the future. These scenarios are a blend of what is known and that which has been imagined.

 A good scenario is internally consistent and good scenario planning requires the organisation to create scenarios that span a very wide range of possibilities.

Managers often discover when they undertake scenario planning that when they consider certain factors in isolation from each other, those factors may not be deemed to be key drivers of change in the organization’s environment. However, when the managers consider these factors in combination with each other , they can learn that the factors could magnify the impact of each other or even increase the likelihood of the other factor happening.

The Benefits Of Scenario Planning?

When teams undertake scenario planning  they think the unthinkable. Then they are able to prepare for it.

Scenario planning also affects the mindset and behaviours of the team who took part in the scenario planning exercise. Once the process is completed, the team will carry multiple alternative futures in their minds. This means that going forward they can be more alert; looking for clues in their environment as to which way things may go.

By contrast, if corporate strategy for the organization is focused around only one type of future, there is a risk that the team will believe that this is the future and take it as ‘certain’. They could be less alert to changes in their environment.

Effective scenario planning by the big club operators might have helped them identify the size and scope of the threats their businesses were facing and motivated the team to start innovating.

It is likely that there would have been opportunities to innovate in their product.

Rather than just respond to individual trends – innovating in their space by opening up smaller ‘rooms’ or innovating in their marketing to respond to what the pub operators were doing, scenario planning might have helped to bring to life the new world of 2010 for young people. This would have helped them to identify brand new innovation platforms – possibly around flexible room sizes and mobile events. They would have been truly innovating rather than reacting tactically.

Successful innovation takes time. Such time is only available to those business owners who regularly look far enough into the future so that they can truly accept that their market will change and that they will need to plan their response.

For those businesses which struggle to wrest their hypnotic focus off the current operation, scenario planning is a key tool to enable teams to realize that innovation time. By taking a good look at the future or futures up close, the need to act can suddenly become much more pressing!

Read more about the challenges the big club operators are facing.