Professional Documents
Culture Documents
Introduction
British Airways recently undertook its first Scenario
Planning exercise in order to develop further its stra-
tegic thinking in light of an uncertain future. The
exercise was well received within the company. In
addition to the 28 workshops commissioned by man-
agement, the stories were communicated throughout
the airline with over 20 presentations to staff, an
article in the staff newspaper and a feature in the
internal video which accompanied the financial
results. The exercise also generated considerable
interest outside the company. It was reported in the
Financial Times and was the subject of numerous
enquiries from the public and private sectors.
Much has already been written about the theory of
Strategic Planning. The objective of this paper is to: effectively to the last major recession which was pre-
cipitated by the Gulf War. So, whilst the airline indus-
• explain w h y scenarios were seen as appropriate for try as a whole lost £10billion during the period,
British Airways; which is more than its total combined profits since
• describe h o w the stories were developed and sub- commercial aviation began in 1947, British Airways
sequently used in the company; remained profitable. In the latest financial year, the
• give a flavour of the contents of the scenarios; airline produced profits (before taxes and provisions)
• share the successes and lessons learned during the of £452 million on turnover of £7177 million.
project. The airline industry is a global business. British
Airways is the world's largest international passenger
carrier, flying 36 million people to 194 scheduled des-
tinations in 82 countries in 1994. But cross-border
Background ownership and landing rights are tightly controlled
Over the past decade or so, British Airways has evol- and in order to expand its global presence, British
ved from a loss making, state-owned national carrier Airways has developed partnerships through airline
into a customer focused, publicly listed and con- investments in America, Australia, France and Ger-
sistently profitable airline. This transformation, a tes- many and through non-equity franchise links in the
tament to a clear vision and a strong management UK.
team, has been achieved against a turbulent operating Whilst recognizing that British Airways has been
environment. successful in the past, it is dangerous to assume that
The air travel business is highly sensitive to econ- current strategies will remain valid in an increasingly
omic cycles. British Airways reacted quickly and complex and changing business environment. British
Pergamon Long Range Planning, Vol. 29, No. 2, pp. 172 to 181, 1996
S0024-6301 (96)00005-2 Copyright © 1996 Elsevier Science Ltd
Printed in Great Britain. All rights reserved
0024-6301/96 $15.00+0.00
Airways is capital intensive, operating a fleet of 283 interviews were conducted by two development team
jets with long-term commitments to some 53,000 staff. members from a standard set of questions which had
Management must be able to recognize and interpret been designed in advance. Detailed notes were taken
external events so that any major shifts in the environ- on the condition that the anonymity of participants
ment which make current strategies vulnerable are would be maintained.
anticipated and possible responses formulated. The From the interview notes the development team
airline cannot rely solely on quick reactions. were able to compose a story of the 'Official Future'
Given the immediacy of the airline business, which summarized the working assumptions British
however, it is difficult for managers to tear themselves Airways managers were making about the future
away from the day-to-day running of the operation to environment and highlighted potential blind spots.
take a longer-term view. The existing planning pro- The important external issues were identified and
cesses, the budget and the business plan look at the classified into three categories: predetermined
coming year and the next 3 years respectively. They elements (such as population growth), key uncer-
tend to reinforce the assumption that the future will tainties (issues of high importance and high uncer-
not vary significantly from the present, and plans tend tainty such as airline deregulation) and driving forces
to focus on operational improvements. A process for (such as changes in information technology which
developing and testing strategies in light of future could fundamentally affect the airline business).
uncertainty was missing. The development team spent a day debating the
issues and 11 were selected for further research. It was
not obvious from the interviews what the organizing
Making it Happen issue, around which the scenarios w o u l d be built,
should be and so this was left until further research
British Airways' Chief Economist, DeAnne Julius, was completed. These findings were presented to the
proposed the use of scenarios to the Chairman's Com- Halo Group who confirmed that the Official Future
mittee in February 1994. Because the expected ben- was an accurate reflection of thinking within the com-
efits were somewhat intangible, the decision was pany and approved the preliminary research agenda.
made to treat the exercise as an 'experiment' to see if The second task was to develop challenging yet
the process was suitable for use within the company. plausible outcomes for each of the issues. This
The exercise was divided into two phases: scenario required an in-depth understanding of each issue and
development and scenario workshops. Each phase the identification of the critical events which would
was led by a senior member from the Corporate Strat- bring about each outcome. The issues were allocated
egy department. The aim was to link the scenario amongst the development team who carried out desk-
workshops to the business plan from April 1995. based research and consulted with experts to develop
the arguments. The research was condensed into a
Phase 1: Scenario Development briefing pack for each issue.
The first phase of the project was led by the Chief In mid-June 1994, the development team spent
Economist. The development team included eight 2 days sharing their findings and exploring inter-
staff from the Corporate Strategy, Government Affairs connections between the issues. A decision was made
and Marketing departments and an external consult- to focus on the relationship between growth and
ant. Work began in mid-March 1994 and was com- governance as the organizing issue and to develop
pleted by the end of October 1994. Individuals' time two stories, each covering a 10-year time horizon.
spent on the project varied, with no-one working full Outputs from the 2 days, together with the briefing
time. An equivalent of 2 man years was expended. packs, formed the basis from which the stories were
In an effort to gain top level support and guidance written.
for the project, a 'Halo Group' was established. This Story writing began in July 1994. A full outline was
group of 14 directors and senior managers represented drawn up by three members of the development team.
the major departments in the company. Their advice Draft scenario stories and presentation slides, which
was solicited following the completion of each of the showed the main points pictorially rather than as text,
main tasks in the project. were produced. These went through several refine-
The first task was to determine the significant exter- ments as they were tested on fellow team members
nal issues which are facing the airline. Over 40 indi- and other experts, and included a presentation to the
vidual interviews with managers throughout British Chairman's Committee to secure their approval. To
Airways were conducted, each lasting between I and ensure a consistent style, the final version of the
2 hours. Five group interviews were held with staff stories were drafted by the external consultant and
specialists covering topics such as information tech- finalized by the Chief Economist. Writing was com-
nology and air transport regulation. Several inter- pleted by mid-September 1994 and approved by the
views with academics, government officials and Halo Group.
aircraft manufacturers were also completed. Most Whilst the stories were being written, the numerical
Information Revolution
Education
Economic Restructuring
World trade
Global Competition
World finance
data on economic growth, passenger traffic and air- cation, world trade and finance over the past 50 years,
craft supply data was produced. Historical data was and that the pace of change has increased as these
retrieved, and models were built to determine h o w four elements reinforce each other (see Figure 1 ). The
the data w o u l d be affected by the events in each story. emergence of a new generation of leaders who lack
It was decided that at the end of the 10-year period the personal experience of the World Wars and their
overall world economic growth levels w o u l d be simi- search for n e w models of external growth and govern-
lar in both scenarios. This was to avoid a high case- ance structures was taken as the organizing issue or
low case dichotomy which the team felt w o u l d not 'fork' between the two scenarios (see Figure 2).
stretch thinking. However, the 'boom and bust' econ- In 'Wild Gardens' global integration goes so far that
omic cycles in one scenario w o u l d lead to much it is impossible to build lasting new structures of
higher passenger traffic demand than the slow, steady governance to replace the old, crumbling structures.
economic growth and increased product substitution In this world it is the Darwinian battle of winners and
of the second scenario. losers which shapes the future (see Figure 3 ). In 'New
A booklet of the stories was produced. The devel- Structures', however, shared values and n e w ways of
opment team was responsible for the text and pictures organizing are found which enable growth to continue
and a professional designer assisted with the layout in a manageable, rather than in a socially disruptive,
and cover design. The cost was just under £10,000 for way (see Figure 4).
the design and printing of 2000 copies. A fireworks
party for the development team commemorated the
completion of the first phase of the project. Phase 2: Scenario Workshops
The scenario workshop phase was led by Rod
Muddle, Head of Planning, who represented Cor-
The Scenarios porate Strategy in the company's business planning
The scenarios took as their starting point the fact that process. A team of five facilitators was responsible for
enormous changes have occurred in technology, edu- designing and managing the workshop phase. Work
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began on the design and marketing of the workshops within the client group, was responsible for ensuring
in June 1994. Training took place during August and actions were taken. Feedback was gathered at the end
September 1994, followed by four trial workshops in of each workshop. This was used to improve the pro-
October 1994. The equivalent of 2 m a n m o n t h s was cess and provide information about how the work-
spent on design, marketing and training. shops were progressing.
The purpose of the workshops was to provide an The minimum time required to complete the entire
opportunity for participants to hear and discuss the process, including breaks, was about 8 hours.
scenarios, and to provide a structured framework for However, the process was designed to be flexible. If,
developing n e w strategies and test existing ones (see for example, the client was looking for n e w ideas,
Figure 5 ). After hearing presentations of the scenarios, the section on current strategies could be omitted.
brainstorming and creativity techniques were used to Alternatively, the client could use the stories to test
generate n e w strategic ideas for each scenario. The their current strategies. In either case, if the pres-
most valuable ideas were then developed and sum- entations were also shortened and the participants
marized into strategic statements. In order to test told to read the scenario booklet beforehand, then a
robustness, new strategies developed in one scenario half-day workshop was feasible.
were evaluated in the other scenario and existing stra- Directors and senior mangers with responsibilities
tegies were evaluated against both scenarios and rep- for the major components of the business plan were
resented visually using a 2 x 2 matrix (see Figure 6). targeted as potential workshop clients. The facili-
This was followed by a discussion about whether any tation team met with these individuals, described the
of the strategies could be modified to improve their process, explained the benefits and offered to organ-
robustness. The final stages of the process focused ize a workshop. The facilitation team's policy was
on making the strategy work: what capabilities were that workshops were available to anyone in the
required; what actions needed to take place; and who, airline, on request, with the only proviso that target
/
• Need for flexibility
\
• No clear direction
• E u r o p e w i d e n s t o 24
• Fickle voters and customers
• Party splits and strange coalitions
/
• EU/Nafta and APEC liberalization
• Slot protection eroded
• Niche players flourish
• New entrants and exits
• Shifting alliances
• Commodity market behaviour
customers had priority over others. The client was more detail on aircraft supply. If possible, a different
involved in planning the objectives. They selected presenter told each story as it helped participants to
the participants, paid for the event (room hire, lunch distinguish between the two. The interview notes and
etc.) and had ownership of the content (i.e. the stra- briefing packs put together in the development phase
tegies and actions). were used by both the presenters and facilitators in
A facilitator took responsibility for managing all preparing for individual workshops.
aspects of a client's workshop. This included meeting The output of the workshops was confidential to
the client to plan and agree the objectives; assisting the participants. All notes were typed up and sent out
the client to articulate his/her current strategy; send- within 1week of the workshop. As the workshops
ing invitations, organizing the venue, co-ordinating progressed, the facilitators drew out common themes
the other scenario team members; co-facilitating the of corporate importance. These were presented, dis-
workshop (time management, challenging existing cussed, prioritized and actioned at the Group Man-
thinking, encouraging open discussion, recording aging Director's quarterly strategy meetings. This
ideas etc.) and, about 1month after the workshop, process ensured that corporate strategic initiatives
meeting with the client to obtain further feedback and were co-ordinated and linked into the business plan-
discuss whether any actions had occurred. ning process.
The stories were presented by the scenario devel- The Halo Group continued to play an important
opment team who had the detailed background role in the workshop phase of the project. They agreed
knowledge. They were responsible for adjusting the the workshop process and the list of target clients,
core presentation to match the client's focus and received feedback about how the workshops were
responsibility. A presentation for the Americas progressing and acted as champions of the exercise.
Region, for example, would provide more detail on Indeed, many of the Halo Group members were early
geopolitical events in that region, whilst a pres- clients, sponsoring a workshop in their area and
entation to the Purchasing department might go into recommending it to colleagues.
\
• Europe grows strongly • Inner-directed values lead
• S e t b a c k s in A s i a a n d L D C s • Euro-enthusiasts d e e p e n EU
• C l i n t o n / G o r e v i s i o n in U S
• Asia focuses on security
• S u b s i d i e s e n d in E u r o p e
• European mergers and JVs
• Large, powerful distributors
• Higher environmental costs
• Airport constraints slow growth
• HS t r a i n s a n d v i d e o c o n f e r e n c i n g take off
The scenario workshops were available from Nov- opment and design processes which contributed to
ember 1994 and were expected to run until the end of delivering this high-quality product.
May 1995. In fact, they continue to be run, at the rate The Chief Economist and the external consultant
of about one per month, up until the time of writing had extensive experience in developing and
in November 1995. Each workshop took a required 4 - implementing scenarios. Together they provided a
5 man days of effort, including preparation and writ- clear definition of the project, assigned responsi-
ing up, from the workshop team. bilities, set deadlines and held progress meetings
every 2weeks to ensure that the project plan was
being followed faithfully. Their expertise gave credi-
bility to the project within the company, and the pres-
Successes
ence of a team member with experience meant the
The stories themselves were substantive and chal- Chief Economist was able to manage other responsi-
lenging. They captured the attention of even the more bilities and maintain support for the project at higher
cynical audiences, and there was enough depth of levels.
analysis to draw upon w h e n questions were asked. The team members worked well together. All had
Participants' feedback consistently praised the pro- volunteered for the project and by getting together as
fessionalism of the facilitators and presenters, the a group to agree the key decisions, they became a
high quality of the presentation material, the booklets highly motivated and enthusiastic team. A continuity
and the write-up of the day. The workshop team ran existed between the scenario development and work-
28 workshops and over 20 presentations with only shop phases. The team responsible for the design and
two clients from the target list of 20 not sponsoring a implementation of the workshops were all involved,
workshop. There were several factors from the devel- in varying degrees, in the scenario development
(external worldl
(,internal world)
I Review current Generate new
I objectives and strategies strategic options
Capabilities needed
References
1. P. Wack, Scenarios: shooting the rapids, Harvard Business Review, November-December
(1985).