Case Study of Music Industry Employing Forecasting Only

 

Discussion will surround the foundational knowledge of the eight-step scenario planning process.  This will be followed by an example of an organization that only employed forecasting methods and ended up being disrupted by technology which, interestingly, initially was a mutually beneficial partnership.  Lastly, the discussion will touch on the author's rationale for the future use of the eight-step scenario planning process in future innovation ventures.

Scenario-type Planning

Scenario planning is made up of numerous scenarios, which potential substitute prospects may occur based on today's decisions.  Typically, two to five scenarios containing adequate detail to determine the probability of success or failure of distinct strategic choices will suffice.  The scenario's aim is an important aspect that must be considered and customization to a specific context.  The scenario planning process is a systematic eight-step process consisting of 1. Issue focus, 2. Key factors, 3. Consideration of external forces, 4. Critical uncertainties are discussed, 5. Generation of scenario logics, 6. Scenarios are generated with their narratives, 7. Appraise implications of each scenario and strategic options that go with them, 8. Discover early indicators which differentiate scenarios from each other (Ogilvy, 2015).

A representative model that provides a visual display of the eight-step process is shown above.

Music Industry

The music industry enjoyed a total vertically integrated ecosystem that controlled all facets of production internally, which spanned from the 1950s through to its peak in 1997, resulting in the industry's belief that their forecasting methods didn't need any alteration (Hracs, 2012).  Along the way, there was a mutually beneficial relationship between the music industry and technology, resulting in higher profits as each turn of the technological evolution occurred.  This relationship came to an end in 1997 when MP3 came onto the scene.  No longer was special or expensive equipment required to produce or copy music; a personal computer and an internet connection were all that is needed (Hracs, 2012).  The file-sharing entities such as Napster and Kazaa came along, allowing for greater sharing of music, which circumvented copyright and laws. "The music industry's lack of technological foresight, strategic planning, and its inability to implement an effective response plunged the industry into an unprecedented economic crisis" (Hracs, 2012, p. 446).  

 Going Forward

The use of scenario planning for future innovation efforts will mainly surround Ogilvy's (2015) structured framework.  The structure provided by the eight-step scenario planning process allows for the avoidance of hindrances such as 'analysis paralysis' and deviations from the topic that can occur when multiple parties involved at times get sidetracked.  The consideration of social impact would be addressed in step 3, external forces.  Social impact is an external force at work, affecting the potential scenarios of the innovation under review.

 

References

Hracs, B. J. (2012). A creative industry in transition: the rise of digitally driven independent music production. Growth and Change, 43(3), 442-461.

Ogilvy, J. (2015, January 8). Scenario Planning and Strategic Forecasting. Retrieved from Forbes: https://www.forbes.com/sites/stratfor/2015/01/08/scenario-planning-and-strategic-forecasting/?sh=5e817e1b411a