Uncertain future? That’s us.
We can’t extrapolate from other pandemics because with current medical technology and global transportation, this one is so different. We can’t look to other recessions because this one is caused by a health crisis not a financial crisis. It’s not exactly a war even though there are parallels to the bombing of London in WW2.
So what can we do? We can use a tool called Scenario Planning developed in the 1970’s at the Shell Oil company. It’s simple (though not easy) and I’ll explain how it works.
Scenario Planning is a tool for planning for the future. So before you start, make sure you’d doing all you can to keep people safe in the present. Stay home. Work from home. Use social distancing, use cloth masks. Wash your hands.
Scenario planning works like this. Knowing you can’t predict the future, you can make a number of different plans for a number of potential scenarios. The future will not happen exactly like any of them. But because you have planned for them, when the future does unfold, you’ll be ready to copy/paste different aspects of the different plans that you’ve already thought through.
You already do this unconsciously with regard to the weather. Scenario A – if it snows 2 feet, I’ll stay home. Scenario B – if it’s pouring rain I’ll bundle up and go out. You don’t know what it will do exactly but you can adapt those plans if the clouds drop freezing rain. You get the idea.
The Reference Narrative
People tend to understand risk through a concept called a “Reference Narrative” – a story which tells our expectations for the future. (This concept came from a book called Radical Uncertainty by John Kay and Mervyn King). But that narrative can blind us to other possibilities. Scenario Planning is a way to get comfortable with different narratives and then adapt them to what actually happens.
Get the right group together
This is something to do with a team, but keep it a manageable size. Invite people who are most impacted by different scenarios or have the most insight to contribute.
As you define each scenario, start by brainstorming questions before you brainstorm answers. It’s OK if you don’t have all the answers. Just asking the question opens your mind to more possibilities.
Write down your plans!
This is critical. Writing does several things.
- Clarifies your thinking
- Shows gaps in your thinking
- Preserves your thinking for use in the future.
What a Plan Looks like
Each scenario should be a separate document (or page) and have these sections:
Name
The more descriptive you name each scenario the more useful it will be.
Header
Include the scenario name, date of last revision, and the contact info for the key person in charge.
Description
Describe how you’ll know this scenario is happening. Use numbers if you can. For example, don’t say “Cash Shortfall” put how much cash on hand is considered a shortfall.
Questions
List the questions you’ll need answered as the scenario plays out.
Plan of Action
List the steps people will need to take, who will take them, what resources they’ll need, and any other info you’ll need when the time comes.
Communication
List who will need to be communicated with, what methods will be used, and how frequently you’ll communicate as the plan is adapted and put into action.
Some Scenarios to Consider
Don’t to too many. Start with just a handful. You can always add more. Not every one of these will be applicable to all of you. And feel free to share ones I haven’t considered in the comments below.
Who Can You Help?
What are some ways you can plan to help? Think of providing help to people in various concentric circles: Family, employees, customers, suppliers, etc.
Cash
As cash gets tight you might want a scenario for 2 or 3 different levels of cash on hand. This will give you a plan for how and when to cut fat, muscle or bone. Usually you cut salaries at the top. Then share the pain – for example cut hours across the board rather than lay people off. Obviously your ability to get loans, enroll in the SBA programs, and speed up collections are part of these plans.
Health
You’ll need a scenario for when someone gets sick. Maybe a couple different ones depending on who it is that’s out of commission.
The Worst Case
I hope you don’t have to shut down. But if you do it helps to have planned for it ahead of time.
The Best Case
Some companies are doing more business than ever. Others will be able to hang on and then be in a much stronger position as things turn around. You may be able to hire some great people who are newly liberated from their current jobs. You may be able to buy up a competitor at a bargain price.
Look 12 – 18 months Out
In past recessions sometimes things look very different 6, 12 or 18 month out than they do at the start. What indicators do you need to watch? How will you react?
Free Time
If you or your people have time on their hands, how can you best use that time? One way is to document the work flow and systems that you currently use. This will help you get up to speed sooner when things do turn around. Another is to improve your physical plant, your technology, or your continuity plans.
When the Future Happens
It won’t happen according to any of your scenarios. But parts of it will. Having the plans written out will allow you to call them up and implement the parts that are relevant.
Stay home & Wash Your Hands
~ JOHN
Photo by Diggity Marketing on Unsplash.com
