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Using scenarios in decision making 385
conditions within which the airplane must be able to fly. Under some
wind conditions the airplane may be harder to keep airborne than others
but, essentially, its airframe (i.e. business idea) must be robust.
The second way to utilize the scenarios in a decision process is to evaluate
lower-level strategies or decisions. In the business school example,
this might be an evaluation of a decision option to focus R&D investment
in producing CD ROM versions of course materials. In the semiconductor
manufacturing company example, it might be the decision option of
maintaining or increasing investment in new ceramic packaging production
technology. Essentially, a current strategy, a contemplated strategy,
or a range of alternative strategies can be evaluated for robustness
against constructed scenarios. Figure 15.7 gives a matrix representation
of this evaluation process.
Often no one strategy performs well against the whole range of
constructed scenarios. If you consider strategies 1, 2 and 3 it can be seen
that strategy 1 maximizes the minimum payoff (cf. the maximin criterion
which we discussed in Chapter 5). Given a simple choice between
strategies 1, 2 and 3, then strategy 1 would seem the most robust choice if
we felt it was not possible to say that one scenario was more likely than
another – recall that this is an explicit assumption underpinning scenario
STRATEGY 1
STRATEGY 2
STRATEGY 3
NEW STRATEGY
SCENARIO 1 SCENARIO 2 SCENARIO 3
Figure 15.7 – Testing the robustness of strategies against scenarios