Oxford study: Statoil and Nokia benefit from scenario work and early warning scanning

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Companies and organisations that combine early warning scanning about potential problems with scenario planning can increase the effectiveness of both tools, according to a recent research article by Rafael Ramírez of Saïd Business School, Riku Österman of Itäpaja Ltd and Daniel Grönquist of NormannPartners AB.

Both Nokia and Statoil provide evidence that combining early warning scanning and scenario planning dynamically draws top management attention to issues that had been considered peripheral

Saї New research shows companies benefit by combining early warning scanning with scenario planning. Companies and organisations that combine early warning scanning about potential problems with scenario planning can increase the effectiveness of both tools, according to a recent research article by Rafael Ramírez of Saïd Business School, Riku Österman of Itäpaja Ltd and Daniel Grönquist of NormannPartners AB.

Ramírez and his co-authors had privileged access to conduct intensive research between 1994 and 2008 at the Norwegian oil company Statoil and the Finnish mobile telephone group Nokia. The authors found that the two companies reaped tangible rewards from taking a dynamic, combined approach to scenario work and early warning scanning.

During the research period, both companies gradually integrated early warning scanning into their scenario planning. At Statoil, the main issues considered in early rounds of scenario work were rising oil prices and growing concerns about climate change. Later, the company also used scenario planning and early warning scanning to achieve a deeper understanding of the unreliability of long-term forecasts. Over the same period, Nokia applied both scenario planning and early warning scanning to such issues as the future of the mobile phone industry and the need to remain attentive to new market trends.

‘Both Nokia and Statoil provide evidence that combining early warning scanning and scenario planning dynamically draws top management attention to issues that had been considered peripheral,’ explains Ramírez , Director of the Oxford Scenarios Programme. ‘At Statoil, management was alerted at an early stage to the significance of climate change concerns; at Nokia, the discontinuities in data communications evolution were better understood.’

Both companies benefitted from taking a dynamic, combined approach to scenario work and early warning scanning. For instance, Statoil’s top management team was ‘highly influenced’ by their scenarios when they worked on the 2007 merger with Norsk Hydro, which by 2009 had produced large annual cost savings. Scenario work at Statoil also helped ‘frame’ the context for early warning scanning on the company’s Canadian Oil Sands Initiative. The early signals identified by the scenarios as critical to determining whether oil sands production was acceptable, included expected oil price movements and public awareness. ‘Considering scenario planning and early warning scanning as dynamic, related capabilities prevents them from becoming overly institutionalised and bureaucratic,’ says Ramírez.

The authors also found that Nokia management could anticipate the emergence of new mobile phone ‘ecosystems’, well before Apple launched its AppStore in mid-2008, even if this insight did not guarantee Nokia’s ability to fully respond to Apple’s hugely successful launch.

As the article notes, some government ministries in Europe and Asia are currently developing dynamic capabilities in scenario work. ‘We believe that their use will grow in future as a way to redirect management attention more effectively in turbulent political and economic environments,’ Ramírez concludes.

Professor Rafael Ramírez is available to comment on these issues and on the findings of this research.

For further information or to speak with Rafael Ramírez, please contact the Press Office:

Clare Fisher, Head of Public Relations,
Mobile: +44 (0) 7912 771090; Tel: 01865 288968
Email: clare(dot)fisher(at)sbs(dot)ox(dot)ac(dot)uk

Josie Powell, PR Coordinator,
Mobile +44 (0)7711 387215; Tel: +44 (0) 1865 288403
Email: josie(dot)powell(at)sbs(dot)ox(dot)ac(dot)uk or pressoffice(at)sbs(dot)ox(dot)ac(dot)uk

Notes to editors

About Saїd Business School

Established in 1996 the Saïd Business School is one of Europe’s youngest and most entrepreneurial business schools with a reputation for innovative business education. An integral part of Oxford University, the School embodies the academic rigour and forward thinking that has made Oxford a world leader in education and research. The School has an established reputation for research in a wide range of areas, including finance and accounting, organisational analysis, international management, strategy and operations management. The School is dedicated to developing a new generation of business leaders and entrepreneurs and conducting research not only into the nature of business, but the connections between business and the wider world. In the Financial Times European Business School ranking (Dec 2012) Saïd is ranked 12th. It is ranked number one in the UK (7th worldwide) in the FT’s combined ranking of Executive Education programmes (May 2012) and 24th in the world in the FT ranking of MBA programmes (Jan 2013). The Oxford MSc in Financial Economics is ranked 4th in the world in the FT ranking of Masters in Finance programmes (June 2012). In the UK university league tables it is ranked first of all UK universities for undergraduate business and management in The Guardian (May 2012) and has ranked first in eight of the last nine years in The Times. For more information, see http://www.sbs.ox.ac.uk/.

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Kate Richards
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