Gilberto Montibeller, Haidee Gummer, and Daniele Tumidei (2006), in their article entitled “Combining Scenario Planning and Multi-Criteria Decision Analysis in Practice,” provides a practical application of the combination of scenario planning and multi-criteria decision analysis in scenarios that require decision support in strategic decisions. In line with this, what follows is an elucidation and analysis of the argument expounded by Montibeller, Gummer, and Tumidei in the aforementioned article.The argument forwarded by the following authors is as follows: The combination of scenario planning and multi-criteria decision analysis, based on the Goodwin and Wright’s approach, is helpful in the decision making process involved in scenarios that require strategic decisions (Montibeller, Gummer & Tumidei, 2006, p.
5-19). Montibeller, Gummer & Tumidei’s argument is based upon three assumptions.First, scenario planning enables support for strategic decision making procedures as it “employs the use of imaginary future scenarios to help decision makers think about the main uncertainties they face, and device strategies to cope with those uncertainties” (Montibeller, Gummer & Tumidei, 2006, p. 5). Second, multi-criteria decision analysis enables the evaluation of a decision makers options in the process of evaluating how these options fit within the decision maker’s objectives as it “provides a strong framework for supporting the design of better and more robust options” (Montibeller, Gummer & Tumidei, 2006, p.
5).Lastly, the use of both scenario planning and multi-criteria decision analysis in scenarios that require strategic decisions leads to the optimization of the benefits of both methods as the later method compensates for the deficiencies of the former and as the former method compensates for the deficiencies of the later (Montibeller, Gummer & Tumidei, 2006, p. 5). Given the existence of various approaches as to how both methods may optimize the decision making process involved in strategic decision scenarios, the authors chose to focus on Goodwin and Wright’s approach.According to Montibeller, Gummer, & Tumidei, the reason for this lies in both authors formation of a “mathematically simple multi-criteria method…that avoid(s) a sophisticated mathematical analysis … (and the process) of integrating performances from different scenarios” which is the main pitfall of the scenario planning method (Montibeller, Gummer & Tumidei, 2006, p. 6).
As opposed to merely presenting hypothetical scenarios, in the same manner as Goodwin and Wright, the importance of Montibeller, Gummer, & Tumidei’s article may be attributed to a number of factors.First, their application of Goodwin and Wright’s approach to two actual cases characterized by different strategic problems and second, their extension of Goodwin and Wright’s initial approach. Their application of Goodwin and Wright’s approach took the form of an inductive approach using the Action-Research method, the aims of which are as follows: “(To) establish whether the method could feasibly be employed in practice; to identify any difficulties encountered in applying the method; (and) to find if decision-makers perceived the method to be useful as a form of decision support” (Montibeller, Gummer, & Tumidei, 2006, p.7).As was mentioned above, the authors used Goodwin and Wright’s approach to two case studies. The case studies were mainly divided into three parts: (1) decision problem, (2) decision model, and (3) reflection of the intervention (Montibeller, Gummer, & Tumidei, 2006, p.
7-12). The initial case study, entitled “The English provincial broker’s future,” applied the said approach to SIB’s retiring directors’ inability to create a long-term plan in terms of ensuring their company’s future after their retirement.The decision problem is as follows: Given that both SIB directors were near retirement, in addition to the implementation of the Financial Services Authority’s implementation of new rules for independent brokers, the lack of strategy for the company’s future leads the company to a potential problem evident in the possible loss of “4-18% of their annual turnover” (Montibeller, Gummer & Tumidei, 2006, p. 8).The decision model implemented by the authors involved a combination of the company’s objectives and the three possible scenarios that may characterize the company’s future-Direct Future, Symbiotic Future, and Network-based Future (Montibeller, Gummer, & Tumidei, 2006, p. 8-9).
According to Montibeller, Gummer, & Tumidei, the case of the SIB Company proved that Goodwin and Wright’s approach has extra- theoretical use however the application of the approach proved to be difficult as a result of the participants’ initial inability to understand the ‘problem structuring and model building’ process (Montibeller, Gummer, & Tumidei, 2006, p. 9).As opposed to the initial case study, the second case study, entitled “The Warehouse Development in Casemurate, Italy,” showed that although Goodman and Wright’s approach may be used in different decision making processes, there are several issues that that their approach is unable to address which includes instances wherein the decision maker opts for different objectives in the different case scenarios presented in the decision model (Montibeller, Gummer, & Tumidei, 2006, p. 12).
The decision problem in the second case study is determined by the ACT Director’s inability to formulate a decision as a result of his inability to “attach probabilities to the possibility of planning permission” to the land that their company is planning to develop (Montibeller, Gummer, & Tumidei, 2006, p. 10-11). This case also used the decision model of the initial case in the sense that it combined the company’s objectives with the possible scenarios that may result after addressing the issue-‘No change of destination or change of destination’ (Montibeller, Gummer, & Tumidei, 2006, p. 11).
The difference of their decision model merely lies on the additional use of Ansoff’s box thereby leading to the creation of five strategies-Withdrawal, Penetration, Consolidation, Use of existing competencies, and Use of new competencies (Montibeller, Gummer, & Tumidei, 2006, p. 11). As was mentioned above, the use of Goodman and Wright’s approach was not sufficient to solve the problem in this case. The authors state, “The decision-maker found the results quite unhelpful…Even more worrisome, he mentioned the need for addressing different priorities under different scenarios.These concerns were issues that the Goodwin & Wright approach could not address” (Montibeller, Gummer, & Tumidei, 2006, p.
12). In order to address these issues Montibeller, Gummer, & Tumidei created additional tools that may be incorporated to the Goodwin and Wright approach. These tools deal with the following factors: The need of addressing different organisation’s priorities in distinctive scenarios…, (the need of) reducing the cognitive burden involved in eliciting performances of strategies, and (the need of) assessing risk and robustness of options in order to devise improved strategies.The necessity of these tools was proven by the authors as they provided a solution for the Casemurate case. They state, These extra tools had enabled him (the ACT Director) to better understand the problem, appraise the risk and robustness of his company’s strategic options and in devising a better, more robust, strategy.
He also became more and more convinced that the possibility of obtaining the planning permission was small, therefore, favouring options that scored high in the no change of destination scenario.In line with this, the authors concluded their article by claiming that the Goodwin and Wright approach’s effectiveness lies in its ability to provide the decision maker with the necessary tools for the ‘structuring and appraisal’ of their decision strategies however the approach also requires the addition of other factors that will enable the decision maker to create a more robust decision strategy based upon his full awareness of the decision problem at hand (Montibeller, Gummer & Tumidei, 2006, p. 19).In addition to this, the authors also suggested other areas of study regarding the combination of scenario planning and multi-criteria decision analysis which includes “comparing different approaches (between the two), contrasting the two with traditional decision analysis, and dealing with complex policies” (Montibeller, Gummer & Tumidei, 2006, p. 19).
Given this information, in the end, one may state that the importance of their article lies in its ability to show how the application of theoretical approaches may further the development of approaches that aim to combine scenario planning and multi-criteria decision analysis in practice.
