10/2/2004Copyright Osborne Associates (Scotland) Ltd 1 Scenario Thinking in Industrial Innovation Ian Osborne Principal, Osborne Associates

10/2/2004 Copyright Osborne Associates (Scotland) Ltd

1

Scenario Thinking in Industrial Innovation

Ian Osborne

Principal, Osborne Associates

www.osborneassociates.com

http://www.osborneassociates.com/


2

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


3

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


4

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.

• 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


5

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?

• 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”


6

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

• 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 real-time?

– What if you could order up a video link for the lowest cost over your phone line in real time?


7

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.


8

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

• Key Tasks:– Market Analysis– Product Definition– Product Development– Operations– Sales/Delivery partner

management– Services Support

• Product:– Large, distributed systems– Hardware, software and

services


9

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

• 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


10

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?

• 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


11

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, …


12

Thank you!

Documents

10/2/2004Copyright Osborne Associates (Scotland) Ltd 1 Scenario Thinking in Industrial Innovation Ian Osborne Principal, Osborne Associates