By Stuart Harman, Partner at Oliver Wight Asia Pacific
As COVID-19 continues to have a significant impact around the world, the uncertainties it has created for individuals, organisations and governments are not going away. In geographies where infection rates are dropping, concerns remain about a second wave, whilst governments struggle to restart or kick-start economies that have slid into recession.
So, faced with unprecedented levels of global uncertainty how should businesses be preparing themselves for the future? Scenario and Contingency Action Planning is a powerful methodology that when robustly applied can get an organisation ready to respond to multiple potential futures and deliver competitive advantage. Here are six tips to make your organisation response ready:
- Identify the situations that would have the highest impact
Benjamin Franklin was famously quoted as saying “By failing to prepare you are preparing to fail”, but what should you be preparing for? If you are going to put effort and resources into preparing for the future it is logical to focus on potential future situations that will have the biggest impact on the success of your business, both positive and negative.
- Identify the situations that are most uncertain
If something in the future is known and reasonably certain, scenario plans are not required. Actions can be supported with a degree of certainty of the future outcome. Scenario planning is most powerful when applied to future situations that are most uncertain. This is when contingency plans become worth their weight in gold!
- Identify the extremes associated with the future critical uncertainties
The future situations that have the highest impact on the business and are most uncertain are the critical uncertainties. Identifying the extreme outcomes associated with each critical uncertainty provides the basis for the scenarios about the future that you should create contingency plans for. A current example is the uncertainty about when Australians will be able to undertake business travel to New Zealand. One extreme is that this could recommence in July 2020 as “trans-Tasman travel bubble” is established. The other extreme is that international borders between Australia and New Zealand effectively remain closed to business travel until 2021.
- Create Contingency Plans to deal with the scenarios
Contingency action plans are the element that makes an organisation ‘Ready to Respond’ to the scenarios should they become a reality in the future. Ensuring that Contingency Action Plans include executive owners, lead times, resource requirements, and clear accountabilities will enable them to be successfully operationalised.
- Identify the Triggers that will indicate that a scenario is likely to become the future
Identifying the indicators that will trigger a contingency plan is essential to provide sufficient lead time for execution. Defining the process for scanning the environment for those indicators and allocating responsibility for it is key to making it happen. Who will define, look for and report on the indicators? Who will make the decision to trigger the execution of the contingency plan?
- Prepare your organisation to execute the Contingency Action Plans excellently
Effectively preparing your organisation to execute the Contingency Action Plan will unlock competitive advantage. A Contingency Action Plan that sits on a shelf gathering dust risks being a surprise to those tasked to execute it when it is triggered. A plan that has been kept current, has been briefed to, and is understood by those who must execute it, and has been practised or rehearsed, will be executed more effectively.
In our experience, very few organisations invest time and effort in making sure their contingency action plans are understood and have been rehearsed. Given the value at stake, this is surprising, to say the least.
Is your organisation ‘Ready to Respond’?
About Oliver Wight Asia Pacific
Stuart Harman is a Partner at Oliver Wight Asia Pacific, a world-leading business transformation specialist with over 50 years of experience working with organisations to transform their supply chain processes and reach and sustain excellent business performance. As pioneers of Sales and Operations Planning and originators of the fundamentals behind supply chain planning, Oliver Wight professionals are the acknowledged industry thought leaders for Integrated Business Planning (IBP).