How to plan for explosive and unpredictable mobile commerce growth

Todd Huseby

By Todd Huseby, partner, A.T. Kearney's Digital Business Forum

Helpful and credible estimates from a major investment bank target $298B in m-commerce sales (excluding travel and digital goods such as music and apps) in 2015. That's a forecast, and will be, by definition, wrong. It's also irrelevant.

It's irrelevant because the aggregate number is really only useful as a way to raise awareness.  

Everyone who has been paying attention will acknowledge that next year's mobile commerce will be materially bigger than this year's. And that trend will continue for quite some time, potentially forever.  

It seems certain.

But what if it didn't happen?

For those industries and sectors that are making big bets on mobile commerce, they should consider scenario planning exercises to test whether their business strategies could tolerate high-impact, highly uncertain scenarios. For example, U.S. retailers who are counting on growth in connected consumerism and building sophisticated digital marketing programs, social commerce programs, and easing mobile commercial transactions might test their strategies with relevant high-impact, highly uncertain scenarios.

Here's how it works: Define a wide number of industry/sector forces underway – I suggest drafting them as statements. With a cross-functional team, critically examine each force, debating whether it is highly certain, a toss-up, or highly uncertain to occur. You'll likely find that most of those forces are considered pretty certain (like mobile commerce growth). Then categorize each force as high-, medium- or low-impact to your business.

Here, you'll likely find that most forces are low-impact. For the few forces that are both high-impact and highly uncertain, discern what the underlying drivers are.

With drivers identified, articulate contrasting end-points for each (I'd encourage you to be quite extreme). For example, if as retailers, we had defined a driver as "cyber-crime" then we might depict one end point as "rare cyber intrusions" and the other end point as "constant barrage of public cyber crime." Another retail driver example could be consumer discretionary spending – minimal discretionary spending (picture perpetual and growing unemployment) vs. robust discretionary spending (picture strong and sustained economic and employment growth).  

Now select two of the drivers and build a 2x2, laying out four scenarios. Using the aforementioned examples, you could imagine a rosy scenario of rare cyber crime and robust consumer spending.  

Meanwhile, you'd also see perpetual cyber crime and minimal discretionary spending (and two other scenarios in between).  

For each scenario, the cross-functional team should challenge itself to "live" in that scenario, creating a narrative that brings it to life. Be extreme. Life is. Once immersed in a narrative, critically consider a strategic question such as, "How would we maximize revenue?" Consider further strategic implications, such as competitors' and/or new entrants' actions.  

Ultimately, the team should consider how well the current strategy survives in such a scenario. Find vulnerabilities. See if they exist in all four scenarios. If so, then address such liabilities in your strategy.  

If not, take note and monitor that vulnerability to see if it's emerging in the years ahead.

Now back to mobile commerce as a way to maximize revenue. Imagine frequent cyber-crime and low consumer spending. Mobile commerce availability won't much matter if consumers are too budget constrained or too afraid to spend online. Is that a prediction? No. But it is a plausible scenario. And omnichannel retailers investing in m-commerce capabilities would be better prepared than pure e-commerce retailers in such a scenario.

Retailers banking on m-commerce will likely see strong growth in 2015 – conceivably 50 percent of aggregate e-commerce traffic will be mobile; conceivably 30 percent of aggregate e-commerce transactions will occur on mobile. It will vary significantly by sector and category, which means each sector needs to forecast its own future.  

But whatever forecasts a company accepts for 2015 and beyond, companies in every industry need scenario planning. Futures are rarely exactly what we expect—but for unexpected reasons.  

Todd Huseby is one of the founders of A.T. Kearney's Digital Business Forum, a think tank that analyzes the migration of businesses to digital, and is a partner in the firm's strategic IT practice. He can be reached at [email protected]. A.T. Kearney is a global strategy and management consulting firm.

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