Planning for the unthinkable has become the top priority. It doesn’t matter what business you’re in. If you lead a business, you’re now in the contingency business. Everyone is now a corporate strategy planner. You have to look at the things that will never happen and then provide a workable plan to survive, and potentially thrive, what no one thinks can come to pass. This means scenario planning has become your top priority.
As 2020 began, the world economy was at all-time highs. The US saw record low unemployment, record high labor force participation, record high wage growth, and skyrocketing business optimism. No one could foresee a global pandemic shutting down the economy. If you had mentioned such a thing in December of last year – “Hey, seriously, we need to think about what might happen if all of our stores had to close because of a new strain of influenza…” – you would have been laughed out of every board room on earth.
Instead, the world was caught flat-footed, out of position, and woefully unprepared. Maybe this kind of lesson only comes around once every hundred years and our grandchildren will be forced to learn these lessons all over again when it’s their turn. What is a business leader to do now?
Everyone – from 100 person firms to mega-corporations – need to be doing scenario planning right now, framing up different scenarios based on severity, likelihood, and impact. Disaster scenarios need to be articulated and prioritized. Departments need to understand their role in each. Boards and management teams need to budget for not just the planning itself, but for what will be needed to at least take options on how to remediate the worst of the worst.
We need to think about the next wave. Or the next pandemic. We need to think about crop failure or livestock pandemics like the African Swine Flu. We need to understand what happens to supply chains, oil prices, financial markets, and commodities if a hot war breaks out between China and India. Or China and Japan, Vietnam, and the Philippines. Or between India and Pakistan. We need to understand what happens to global food supplies if the Yellowstone Caldera has even a small event. Or a Tunguska event happens again, this time closer to home. We need to understand the impact of mass migration of people, of insects, of invasive species.
And thinking about these things in the abstract isn’t good enough. Just look at IT today, a team in your company that now has to do on purpose what it did by necessity a few short weeks ago. Your employees are currently accessing sensitive documents through unsecured endpoints and home routers and PC’s running Windows 95. Hackers are just too busy to get to everyone, but I’m sure they’re working on it.
Scenario planning just became job one.
We’re shaky enough as it is. Another shock that sends us back to the drawing board, as Covid-19 has, could easily do many companies – and many industries – in for good.