5 minute read
INDUSTRY RESEARCH
Dealernews Research
By Dr. Paul Leinberger
ROARING 20s OR A DECADE OF DISAPPOINTMENT?
New Normal Demands A New Approach
In last month’s column I posed the question “Have we hit an inflection point?” Are we headed into a sustained economic rally similar to the Roaring Twenties (as the Financial Times has suggested) or are we in the beginning stages of a “decade of disappointing growth outcomes” (as the World Bank posits)? It is an important question because the future of your dealership depends on your answer and what you do about it.
I went on to suggest that in order to answer that question you should monitor consumer optimism, the unemployment rate, and track COVID patterns. I also suggested that you should focus on the numbers that reflect how your core business is doing (in the context of the larger changes taking place in the economy).
Monitoring those numbers will give you a good sense of your short-term future, but they are not robust enough to give you the kind of knowledge you need to respond appropriately to unexpected events – like Scenario planning is a process designed to prepare you for economic uncertainty, unexpected events and disruptive innovation. It is robust and rigorous and, most importantly, it is practical and actionable.
Scenario planning is designed to help you answer the “what if” questions you need to ready for. For example: What if the economy stalls and powersports sales go back to pre-COVID levels? What if gas prices climb above five dollars and electric bikes and electric scooters take off? What if consumer spending shifts to travel, restaurants, live entertainment and fashion and away from powersports? What if new, highly restrictive regulations – sparked by a growing fear of global warming – ban powersports vehicles from state and federal lands?
Alternatively, what if a new, proprietary stability control system is introduced by a new entrant to the motorcycle industry and gains dramatic marketshare in a short period of time (ala Tesla in the auto industry)? On a smaller scale, what if a new dealer enters your market and builds a dealership twice the size of yours?
Scenario planning will give you a view of what can happen in the future and provide you with the kinds of answers you will need to not only “survive” future shocks but profit from them. Scenario planning will make you more agile, resilient and innovative.
When dealers first learn about scenario planning, their first instinct is to say: “Hey, I’m too small for such activities. Tools like scenario planning are for the big boys and the OEMs.” Au contraire. Scenario planning will benefit you no matter your size because it will give you a level of certainty about your business that you cannot get through other means (such as forecast planning and strategic planning). It will also give you a competitive advantage.
So how is it done? Scenario planning can be complex (and sometimes it needs to be if you are developing long-range plans), but at its heart it is a rather simple five-stage process:
your dealership. What are the major factors affecting how your business functions and how your customers are making decisions? These will include such things as consumer trends, the economy and market conditions, competitive pressure, regulatory changes, technological advancements and shifting demographics. Scenario planning uses the PESTLE method to identify trends and driving forces: Political, Economic, Social, Technological, Legal and Environmental.
2) Analyze the trends and driving forces. At this point you will have a long list of trends and driving forces. In step two your goal is to explain the trends and describe how they will interact with the driving forces. Once that dynamic is described and understood, the next step is to prioritize the trends. What trends are most important? What trends will be most impactful and what trends are most uncertain?
3) Create Scenarios. Using a step-by-step process, create between three and five scenarios. Be sure to include worst-case, middle-case and best-case scenarios. The goal in step three is to identify all possible outcomes, not just the most likely.
4) Evaluate & Decide. In step four, each scenario is analyzed and given an estimated probability. Then the scenario team decides which scenario or scenarios need to be incorporated into your dealership strategy and need to be planned for.
5) Act. The final step is to put your strategy into action. Doing scenario planning provides a great opportunity to bring your team together and it gives everyone a chance to express their views on the current situation and explore different perspectives and viewpoints. Everyone has a view of how the future will develop but rarely are they asked to provide it in a setting where it can become part of a dynamic and constructive process that will benefit the future of your dealership.
So set aside a half day or a day to do scenario planning. Bring in an experienced scenario planning facilitator to guide the process or become well-versed in the process and do it yourself. You will be glad you did.
We are heading into uncharted waters and the “new normal” demands a different approach. However, with the lessons of scenario planning to guide you, you can feel confident that you are ready and will be able to face whatever comes your way, preferably the Roaring Twenties that the Financial Times has predicted.
A perennial keynote speaker for the Motorcycle Industry Council's annual Communications Symposium, Dr. Paul Leinberger has become the powersports industry's de facto futurist/strategist. Dr. Leinberger is an expert in market/brand strategy and research with more than two decades of social trend forecasting, market strategy and strategic planning. Prior to joining TTD, he was Senior VP of GfK NOP, where he ran the company’s flagship consumer trend services, Roper Reports, as well as the company’s groundbreaking Global Visual Database. His client list reads like a Who’s Who of corporate America: Hewlett-Packard, Apple, Disney, Nordstrom, Microsoft, Levi Strauss, E.& J. Gallo Winery and Toyota, among many others. Prior to his global responsibilities at GfK NOP, Dr. Leinberger was the Corporate Manager in the Product Planning and Market Strategy department at Nissan North America. Dr. Leinberger holds a Ph.D. in organizational and social psychology and a Masters of Urban Planning (Highest Honors). He lives in Irvine, California, and his work can be seen at www.dennyleinbergerstrategy.com MAY 2021 29
