Scenario Thinking in Industrial
Innovation
Ian Osborne
Principal, Osborne Associates
www.osborneassociates.com
10/2/2004
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Agenda
• Two case studies drawn from personal
experience at HP/Agilent Technologies
• Demonstrate the power of Scenario
Analysis in strategic planning
• Technology Strategy
• Business Strategy
• Beneficial side-effects
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Industrial Innovation and Strategy
• Innovation is a renewable source of competitive
advantage
• Hewlett-Packard differentiates itself and creates
value through innovation
– Product
– Process
• The ability to innovate reflects an understanding
of customer needs, technology and markets
• The development of markets is not easily
predicted
10/2/2004
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HP Corporate Research &
Development
• HP Labs charged with leading
technological innovation
• Legacy of breakthroughs:
Atomic Clock; Laser & Inkjet
Printers; HP-PA; Itanium;
Navigator Chip
• Develop technology for transfer
to operating divisions for
commercialisation
• Maintain technological
competencies in key areas of
HP business.
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• Key tasks:
– Assess technology needs of
company businesses
– Align research areas to
those of high uncertainty
and greatest benefit
– Develop forward looking
view of technology and
market
– Identify key areas of
uncertainty/opportunity
– Address key points of
influence
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Pervasive Computing
• Initiative pursued over
several years
• Looking at convergence of
computing,
communications and
information
• At heart of future of HP
computer business
• Key questions:
– What will happen when?
How?
– What are the opportunities
that are presented?
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• Inputs required:
– technology roadmaps
– understanding of evolution
of user needs
– potential for innovation
• Reasoned about future of
computer “packaging” in
connected world
–
–
–
–
Information Utility
Information Appliance
Smart packaging
“Everyone is connected”
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Formulating Strategy
• Emphasis on incorporating
“expert” inputs and
perspectives
• Use scenario analysis to
formulate and test
breakthrough ideas
– I.e. In this context what
happens to this idea?
• More organic and
exploratory than
practically focused
• Process can lead to
breakthrough thinking
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• For example:
– What if you could walk up
to any device and
communicate with it?
– What if your car is able to
monitor its operation and
advise the garage of an
emerging problem?
– What if you buy processing
capacity by the unit in realtime?
– What if you could order up
a video link for the lowest
cost over your phone line in
real time?
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Results
• Formulated strategies to underpin:
–
–
–
–
Move to Internet based communications
Move to information appliances (e.g. PDA)
Move to infra-red inter device communication
Move to digital imaging
• Understanding of breakthroughs required to realise
potential in:
– Wearable computing (e.g. Virtual Reality)
– Personal area networks (e.g. Blue Tooth)
• Developed a long term strategic competence at heart of HP
Research & Development
– Influence present today in product successes.
10/2/2004
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Telecom Systems Division,
Agilent Technologies Ltd.
• HP/Agilent Operating Division
– commercial business unit
• Focus: Operational Support
Systems in Telecoms
• Market comprises:
– Fixed and Mobile
– Incumbent and Competitive
Suppliers
– Government Regulated
• Organisation:
– R&D, Marketing,
Manufacturing
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• Key Tasks:
– Market Analysis
– Product Definition
– Product Development
– Operations
– Sales/Delivery partner
management
– Services Support
• Product:
– Large, distributed systems
– Hardware, software and
services
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1999 Scenario Planning Exercise
• Objectives:
– Assess impact of Mobile
and Internet technologies on
traditional telecom market
– Identify opportunities and
threats emerging
– Revise strategies for
addressing opportunities
– Embrace new management
team in division and
representatives from partner
organisations
– Lay foundations for
FY2000-03 Business Plan
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• Programme
– Solid preparation led by
Marketing Manager and me
– Engaged strategic
marketing team from
Business Unit
– Substantial engagement
with facilitation team
– preparation on process and
content
– 2 day offsite event
including dinner exercise
– Broad representation from
senior/middle management,
plus selected experts
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Results
• Energetic and enthusiastic
meeting, helped by pleasant
surroundings, good facilitation
• Good team work, many new
players
• Opportunities and threats
assessed – partitioned
• Foundations laid for broader
understanding of business
• Identified major areas of
uncertainty, i.e. When? How
fast? On what basis?
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• Realisation that business plan
vulnerable to changes in
underlying technology and
business patterns
• Developed a new strand of
business aimed at Internet based
telecommunications (e.g. VoIP)
• Encouraged team to explore
these changes with customers
• Identified triggers : enabled
scanning for evidence of trends
emerging
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Scenario Analysis
• Essential Tool in process of planning
• Build and sustain a capability for the organisation
to imagine the future …
• and the paths that might lead there.
• Structured and disciplined methods available
• Developing the competence takes careful
preparation and sustained activity
• Benefits from a diversity of inputs
– Customer, Supplier, Technologist, Marketer, …
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Thank you!
10/2/2004
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