Dynamic Scenario Modeling

In industries undergoing major disruptions, by definition it’s no longer business as usual.  Decision makers find their strategic visibility is more limited than ever…at the very time when they need it most. Scenario modeling goes beyond predicting the future; it's a way of framing, capturing, and monitoring the dynamics that will produce the future.

What are scenarios?

Scenarios are detailed descriptions of alternative feasible versions of the future.  They're not 'futuristic' science fiction, but rather evidence-based descriptions of how a competitive landscape is likely to evolve.  At best, they're dynamic, and reflect likely changes in competitive market conditions.

When are scenarios most effective?

Scenarios are closely related to forecasts, but differ in key ways (summarized in the table below). When you have a defined set of quantitative input and output variables, forecasting is typically the more productive approach. However, sometimes you face irreducible uncertainty—directional signals that contradict each other and forecasts, even those from experts, that diverge widely. This condition typefies periods of extreme change in the business environment.

That’s where scenarios work best, since they allow you the flexibility of a less deterministic, more dynamic, sense-and-respond oriented model.

How we work

TKA builds a scenario engine to model potential inputs, outputs, and outcomes in a specific competitive market situation:
  • Inputs consist of macro competitive drivers — for example, the overall size, growth rate, and attractiveness of a market
  • Outputs consist of responses by key players in that market — for example, consumers and distribution channels
  • Outcomes consist of individual competitor responses within the context of the other factors
This creates such a clear picture of the trends and dynamics of a strategic challenge that decision-makers are suddenly able to ‘see’ what's happening—and to make more informed decisions that anticipate potential future conditions.

Questions we answer

  • How is the overall market likely to evolve?
  • What are the key macro drivers of this?
  • How are specific rivals likely to react?  What new companies are likely to enter the market?
  • Are the rules of competition likely to change?  How?
  • Whom will these changes favor? Whom will they leave at a disadvantage?
  • How well is your organization prepared to compete under the new rules?
  • What, if anything, can you do to influence which scenario actually develops?