Benjamin Franklin once said, “By failing to prepare, you are preparing to fail” (Raje, 2008). Today organizations must be proactive and make difficult decisions in how they go about addressing planning or risk catastrophic outcomes (Hagel, 2014). Blockbuster Video may have benefited from scenario-type planning when competing with Netflix and others.
Scenario-Type Planning Supports Planning and Innovation for Change
Scenario planning is designed to make the decision-making process more in-depth by analyzing how a situation can play out under different circumstances (Ogilvey, 2015). Applying common sense with skilled resources Blockbuster could have avoided costly mistakes that sometimes lead to complete business failure (Ogilvey, 2015). The challenge requires that proper technology, resources, and time are available for scenario-type planning to be effective (Hagel, 2014). To use scenario planning an eight-step process is recommended that entails defining the focal issue, key factors, external forces, critical uncertainties, scenario logics, scenarios, implications and options, and early indicators (Ogilvey, 2015).
Forces and Impacts of Scenario-Type Planning
In the case of Blockbuster Video, there was a significant technology force changing the video rental landscape being driven by Netflix with their streaming business. Blockbuster was aware of these changes and tried to act, but in doing so, forgot what brought people to the video chain to rent movies (Laurent, 2017). Blockbuster lacked the technology infrastructure and needed to produce a streaming service to the caliber of Netflix (Friesen, 2005). Project issues led to multiple delays in relaunching the Blockbuster online experience and required bringing in new consultants from Accenture, which took 12 to 18 more months than initially expected (Friesen, 2005).
Economic changes were another force that impacted Blockbuster’s ability to survive. Netflix offered a mail order service at a monthly subscription base price less than renting just a few videos a month from the retail store (Gandel, 2010). Adding to this was another competitor Redbox entering the market with DVD rental kiosks at $1 per night throughout a variety of retail locations in the U.S. (Gandel, 2010). Netflix and Redbox provided customers more value for their money during a period when saving money was an essential societal value.
Had Blockbuster considered scenario-type planning, they may have been able to understand the changing market space. Scenario-type planning could have helped avoid the costly mistake of playing catch up in the mail order and streaming offerings. Scenario-type planning provides leaders to see new possibilities that could change their long-held internal beliefs (Mietzner, Dana, Reger, & Guido, 2005). Blockbuster’s leaders felt they could simply squash their competitors by offering the same services based on their size. Scenario-type planning may have shown the need for a culture change leading to a new view on their theories instead of trying to compete directly (Mietzner et al., 2019).
Using Scenario Planning in Future Innovation Efforts
In learning about scenario planning, one can quickly see the value that it brings to the decision-making process. Using a scenario in practice can be applied when it comes to further advancement of an organization’s digital strategy. Scenario-type planning will provide the opportunity to understand how to prioritize what initiatives should be worked on by the project team next. The process will first focus on the focal issue of improving customer service through digitization. The next step will establish several key factors and forces around the self-service needs of customers, competitors, and what technology capabilities exist in the organization. Critical uncertainties would be the next piece to evaluate, and this is likely to stem around the adoption of new technologies not yet considered in the industry, such as voice-controlled devices. Moving forward would then require planning out the scenario logic and working through the chosen scenarios (Ogilvy, 2015). The review of implications and options to find out what early indicators exist would be the last part of the process before defining a strategy (Ogilvy, 2015).
Social Impact of Change with Scenario Planning
Understanding human behavior impacts on technical engagements can bring to light interactions that occur between the social environment and the adoption of technological innovations (Hayashi & Baranauskas, 2013). In the completion of a scenario plan in the example above, considering both the impacted customers and employees associated with the changes in the scenarios will be crucial. These scenarios will help plan for ensuring the resources are aware, trained, and prepared to make use of the new technology changes.
Organizational planning needs to be detailed enough to avoid pitfalls that have led companies like Blockbuster to failure. Scenario-type planning may offer a solution by producing a strategy that can deal with the complexities of rapidly changing environments, as was in the case of the video rental business (Bereznoy, 2017). Using scenario planning in innovation efforts can be extremely valuable when coupled with an understanding of potential social impacts.
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