Forecasting the Oracle and the Setting Sun

Just as Sun Microsystems emerged as a great innovator of computer hardware with a peak valuation reaching over $200 billion at the dawn of the IT boom between the 1980 and 90s, it set with Oracle's $7.4 billion acquisition in 2010 (Wade, 2012). The true irony of it all is that Sun's failure to use scenario-type planning to forecast and adapt, in contrast to "an" Oracle, its strategy from its primary focus on its hardware to one that heavily involved its software. Their inability to recognize and react to change had them eclipsed by disruptive forces from Intel or Microsoft and the open-source market of software. 

Planning and Innovation for Change

To this day, the information technology industry is extraordinarily competitive and characterized by rapid and continuous change with frequent product improvements, focusing on mass production and reflective price reductions. In the case of Sun, 1998 made light of problems emerging as their profits for their hardware had flattened, and control of their Java programming language was wavering (MBA Knowledge Base, 2010).

Planning and the innovation for change still revolve around the scientific fact that no matter the quality of a forecast made now cannot capture the future impact of a newly created and disruptive innovation. However, organizations that do question the possible scenarios and results if a disruptive new creation enters its market will be poised to respond and maintain their resilience if it should occur. In short, organizations such as Sun Microsystems must continue to ask "What If" regularly. 

Forces and Impact

Sun Microsystems' focus was more product-oriented than customer-oriented (MBA Knowledge Base, 2010). This focus made them akin to problems with their quality in marketing its products. Still, they also had a strategic disconnect with the market direction and their interest in maintaining and monetizing high-end customers over approaching the multitude of low-end customers by integrating their core software. Looking for a quick fix rather than embrace total quality management, their overall strategy kept focus and more than 50 percent of its budget for research and development on their UltraSparc workstations, whose demand kept dwindling in the wake of competing system, rather than judging the scenarios in which the Java platform could grow.

Where Sun failed was focusing on their early success and not wanting to evolve their technology, let alone their business, to cater to their customers' needs. The voice of the customer is a force that carries a high impact on anyone's success. Further market advantages are often acquired through buyouts, mergers, or strategic alliances. Ultimately it was Oracle that swallowed the "Sun" through the former, vice what could have been during Sun Microsystems' high noon success with their UNIX-based servers and workstations in 1998.

Future Use

In scenario planning, workshops involving expert opinions focus on the distant future. Therefore, scenarios are not really forecasted but possible alternate futures, with each having a small likelihood of occurrence (Derbyshire & Wright, 2017). The emphasis is on the understanding that the connections, causal processes, and logical sequences that determine how events could occur to create alternate futures will challenge conventional thinking and improve organizational decision-making and strategies. 

In contrast to the missteps of Sun Microsystems, the use of scenario planning for future innovation efforts can be tackled through three main objectives:

1. Enhance understanding of the forces of impact, their connections, and logical sequences of underlying events to envision how a future state of the world may look.
2. Challenge conventional thinking. Take deeper looks into perceptions and change the groupthink of those within organizations. 
3. Improve decision-making, and update strategies accordingly. 

Accounting for the Social Impact of Change

Had Sun followed scenario-type planning, they may have been able to account for the social impact of change by constructing various sets of cause-and-effect relationships to get them out of the groupthink forecast following their 'business-as-usual' (Derbyshire & Wright, 2017). A great candidate may have been to approach with scenario-type planning such as a 'simulation heuristic' to create several narrative scenarios about the future. With these simulations, the individuals charged with forecasting through a scenario are psychologically drawn to believe that a scenario is more likely to occur than the actual probability. That said, this heuristic, with the use of narratives that describe the distinct sets of outcomes, invokes fully-developed scenarios by the group.

 

References

Derbyshire, J., & Wright, G. (2017, 2017/01/01/). Augmenting the intuitive logics scenario planning method for a more comprehensive analysis of causation. International Journal of Forecasting, 33(1), 254-266. https://doi.org/https://doi.org/10.1016/j.ijforecast.2016.01.004 

 MBA Knowledge Base. (2010, October 2). Case study on business strategies: The downfall of sun microsystems. https://www.mbaknol.com/management-case-studies/case-study-on-business-strategies-the-downfall-of-sun-microsystems/ 

Wade, W. (2012). Scenario Planning. Wiley Professional, Reference & Trade (Wiley K&L). https://coloradotech.vitalsource.com/books/9781118237410