“Uncertainty in the economy, society, politics, has become so great as to render futile, if not counterproductive, the kind of planning most companies still practice forecasting based on probabilities.” -Peter Drucker, 1995.
It has been one year since we wrote the original piece on this topic. Today we are seeing a shift in the strategic planning process with adaptable, middle market companies.
- Companies now examine multiple possible scenarios, rank their probability of occurrence, and identify tipping points.
- Companies and other organizations that tolerate ambiguity are moving ahead faster than those bogged down in process rather than thinking.
- Agile leaders emerge with focus on practical thinking to what can be controlled versus what needs to be endured.
These companies have improved their performance through working more diligently on prediction. Our predictions from one year ago fit into more than one of the expected scenarios except one; the vaccine arrived much faster than anticipated.
The ability to predict next actions is based on understanding your operational status, determining the direct impact of events, and segmenting those events into categories of controllable and not controllable. Effective leadership will communicate to their teams which events are which. Teams can then focus on actions aimed at controlling possible events and develop “work arounds” for those uncontrollable happenings.
The most successful leaders slow down and seek outside advice in this situation to assure their teams that survival is highly likely. Personal accountability and allowing the culture to become more flexible will lead to faster alignment of thinking within teams. Most people today realize they need more flexibility in their planning in both business and their personal lives. In the last year we have seen pandemic, weather caused disasters, political unrest, and increasing family stress.
The process of recovery is a “dial” rather than a “switch.” Here are suggestions for the journey that have worked in the last year:
- List the issues you face in order of impact on revenue, costs, cash flow and staffing.
- Then segment them into what can be controlled and what cannot. Examples are reaching out to customers and suppliers to assure them that you are operating (controllable). Local government restrictions on people movement and capacity restriction (not controllable).
- Determine changes in process or policy to address controllable issues with the thought of slowly tweaking your operations as if on a dial. Think of work arounds for non-controllable events where you can lessen the impact. Examples include how quickly you bring employees back as your revenue returns versus how to work around a restriction on service levels by local government decree.
- Look forward to devise multiple scenarios of operations that will help you prepare for the “next-normal.” This helps in identifying tipping points where you must adapt again and give some insight into what next steps may be.
We are helping many companies and non-profit organizations with getting through this environment. We have successfully navigated multiple crisis over the last 25 years; offering experienced insights and analysis. C Squared Solutions Partners are experts in planning and financial modeling.
We can help you think through multiple scenarios through our Guided Discovery Process. Call us today.
