April 8, 2009
Always have an escape route... I live in California, a place of beauty with mountains, oceans, and a nearly ideal climate. Yet, it's also home to earthquakes and wildfires. Being prepared for these uncertainties is essential. Having a disaster kit and at least one alternate escape route is an important element of being ready. Planning ahead for your business means having an escape route, too.
Nothing is more certain in today's business environment than uncertainty. That's why contingency or scenario planning is so important. Flexibility is key. The strategic planning horizon is no longer 5 or 10 years. Who can possibly know with any amount of certainty what will happen in the next 6 months, let alone the next decade? Creating parallel paths, with trigger points, should be part of every planning effort.
A trigger point - the time/event/situation - that will cause us to change direction requires data. What are the key indicators in the economy for our business? What are our customers, competitors, and suppliers doing? How are they adjusting their business or purchase models in the current environment? Such indicators need to be identified, tracked and acted upon.
This means being willing to quickly pursue a new or altered course of action when a trigger point is reached. As the McKinsey Quarterly recently noted, "Companies must now take a more flexible approach to planning...[developing] several coherent, multipronged strategic-action plans, not just one. Every plan should embrace all of the functions, business units, and geographies of a company and show how it can make the most of a specific economic environment. These plans can’t be academic exercises; executives must be ready to pursue any of them—quickly—as the future unfolds."
Do you know where your escape route is?