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For better or for worse: It’s time to rethink planning scenarios

Apr 26, 2020

Without the help of a crystal ball, few strategists can foresee the impact of potential crises or disasters. The best we can do is evaluate past events that might reoccur and assess other incidents that could have similar repercussions. This allows the creation of narratives describing possible outcomes and planning for each of those scenarios.

Sketching out a company’s best- and worst-case scenarios is vital to minimizing risks and better positioning a firm to take advantage of opportunities down the road. But as many grapple with the unprecedented impact of the COVID-19 pandemic resulting from shutdowns of cities, transport and borders, it’s time to rewrite those forward-looking scenarios.

Consider these four points when planning for the future:

1. Complex situations

Strategists book-end their planning with the best- and worst-case scenarios but tend to emphasize the most likely outcomes as they put their business continuity and disaster recovery plans to the test.  Developing plans for the most-likely, while having thought through the best- and worst-case, is often a more efficient way to approach planning around scenarios. We consider the three scenarios but develop plans for the one most likely to affect us.     

But as the COVID-19 pandemic plays out, even those worst-case scenarios may need to be modified. Instead of focusing on relatively common threats such as storms, data outages or regulation changes, scenarios now need to account for more complex events. International crises that impact global trade, travel and transport all need to be considered as companies look to future-proof themselves.

2. The long game

There’s plenty of historical data to show how businesses are hit by short-lived disasters such as floods or fires, but little to show the effect of long-term shutdowns and economic crises. Leaders often lead well in short-lived disasters, but have trouble shifting from reactive to proactive planning.

Make sure scenarios consider how your company would keep running if sales suddenly dried up. How many weeks could you afford to pay your staff before difficult decisions had to be made? When it comes to paying the bills, what’s the chance of extending lines of credit or tapping into emergency loans to stay afloat?

Always remember to rehearse and stress-test plans to see if they’re fit for purpose. A straightforward, table-top walk through of a plan can reveal missed considerations or additional possible outcomes. Taking a “red team” approach; where a group acts to poke as many holes as possible in a strategy, often leads to a much stronger, more realistic strategy.

3. Best-case scenarios

Plan for the good times as well as the bad, and strategize how to prepare for best-case scenarios, where the planets align to open up a wealth of opportunities. There are often opportunities intermingled in the impacts of a change, walking through best-case scenarios can reveal these hidden gems.

For example, forecast how quickly you could get new suppliers and distributors lined up if demand for your products skyrockets. Calculate how long it would take to hire and train new staff to meet an increase in demand and determine how your internal systems would cope. 

Even in a crisis, some companies are set to benefit from increased opportunities if they can quickly ramp up to meet them.

4. People planning

In every eventuality, a company’s employees play a central role and need to be written into each scenario. And as COVID-19 has shown, companies need to better plan for situations where employees are forced to relocate or work from home on a long-term basis.

Because strong, thoughtful leadership is crucial to guiding a company through difficult times, scenarios should consider who would take the helm if a chief executive was unable to work. Clear succession plans for other key roles in the firm should also be addressed. Identify critical functions and be certain there is a backup plan or an outsourcing partner identified, should something occur to the people in those roles.

Similarly, companies that rely heavily on third parties for critical functions, such as data processing or transport, need to have backup plans in place in the event those providers are temporarily out of action. A firm may be in the role of providing critical services to other companies and should have clear communication and update functions defined to let their clients know of any pending interruption in service or product.

Scenario planning will never be fool proof, but serious consideration of even the most unlikely situations will better position your company for whatever the future holds.

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Author(s)

Kling_Deron
Deron J. Kling
Senior Manager
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