Why Today’s Leaders Must Assume Continuous Discontinuity
Two-hundred and fifty years ago, Founding Father Benjamin Franklin warned us, “Fail to plan, and you plan to fail.” Today, long-term planning is an essential part of any business strategy. There are one-year plans. Five-year plans. Even 10-year-plans. Yet as Franklin’s contemporary, Scottish poet Robert Burns, noted, “The best laid plans of mice and men do often go awry.”
This is why stubbornly adhering to plans, however well considered, is a losing business strategy. While tomorrow’s leaders must plan—and plan wisely—they must also be flexible enough to adjust those plans when circumstances dictate.
In this article, the first of two, we shall explore how organizations can better prepare for continuous uncertainty. In Part Two, we will explore the traits leaders need to develop to help them better navigate through a constantly shifting business landscape.
The Proverbial Monkey Wrench
When developing a business plan, it is prudent to consider the many factors that can throw a proverbial monkey wrench into the works. Events that can seriously impact even the most carefully crafted business plan include:
Sudden Economic Downturns. In just this century alone, we’ve seen two seismic disruptions to the U.S. and world economies, neither of which most business leaders saw coming. The first was The Great Recession of 2007-2009, triggered principally by the collapse of the over-leveraged U.S. real estate market. The second was the 2020 recession caused by the COVID-19 pandemic. These global shocks affected everything from labor markets to interest rates, all of which can have major effects on businesses large and small. Like major earthquakes, rest assured that such crippling downturns will occur again. We just can’t predict when. And speaking of earthquakes…
Natural Calamities. Business activity of all kinds can be severely disrupted by natural disasters ranging from earthquakes to blizzards, from floods to tornadoes, and from hurricanes to wildfires. The consequences of natural disasters can last for months—even years— especially when a company’s physical location is impacted.
Tax and regulation changes. Shifts in presidential administrations can lead to sweeping changes in how businesses are taxed and regulated, sometimes for good and sometimes for ill. Such changes can also occur at the state and even the county level, all dependent on how the political winds are blowing in a given year.
Data breach. Informational security is very much like a Great Powers Arms Race, with each new security measure being countered by an even more insidious hacking technology. The theft of proprietary info or even outright stealing can devastate a company’s long-term operations. And despite best efforts, the problem is only getting worse every year.
Lawsuits. There are many ways in which a company can find itself embroiled in litigation. These include personal injury suits, discrimination suits, intellectual property suits, etc. And even if you win your case or settle out of court, the high cost of just litigating these matters can throw your cashflow projections into chaos.
Loss of a major client/customer. Many smaller companies rely heavily on serving one or two large clients/customers. This is a dangerous situation to be in as the sudden loss of such a client/customer can be crippling, if not fatal. Still, it happens, and leaders must prepare for such an eventuality.
Death of a principal. This is arguably the most uncomfortable topic, but one we all must consider. Whether by accident or illness, death can leave a major leadership position vacant literally overnight, plunging an unprepared organization into chaos.
How to Prepare for the Unexpected
If surprises are, by definition, unexpected, how can business leaders prepare for them? The solution lies in creating a company culture that can malleably bend without breaking, one that can adapt to changing conditions without losing sight of ultimate objectives.
Such long-term planning strategies include:
Wargaming. Every day, deep within the bowels of the Pentagon, military and political science experts explore how American global interests can be threatened and what the possible outcomes of any number of U.S. military responses might be. These war games help the government prepare for eventualities ranging from the likely (another Houthi attack on commercial ships in the Red Sea) to the highly unlikely (an alien invasion). Businesses must take this same approach. Wargaming—also called scenario planning—involves running simulations of possible shocks to the company business plan and considering the efficacy of possible responses. The last thing you want your company to suffer is a “failure of imagination.”
Perform Regular SWOT Analyses. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Your leadership must consider all four areas on a regular basis, identifying and shoring up vulnerabilities while exploiting natural advantages. Remember, not all surprises are bad ones! Sometimes events can go unexpectedly well.
Invest in Security, Including Insurance. Keeping up with the latest in cybersecurity is essential. So is having sufficient financial security. This means having adequate insurance to cover losses due to fire, flood, and other natural disasters as well as coverage for lawsuits. So-called “key person insurance” can also keep companies afloat if one or more top executives—or even the business owner(s)—should suddenly pass.
Stay focused on Your Mission. Leaders need to clearly define organizational values/mission and communicate these to everyone down to the bottom of the org chart. When crises come, trust your people to react and do what’s best for your organization based upon having a solid culture.
Ultimately, to prepare for the unexpected, organizational plans and strategies must be thought of in terms of “and,” not “or”. Moving forward during deeply challenging times requires leaders—and non-leaders—to consider multiple possibilities and realities.
It’s also best to move from top-down orientation to asking team members how they feel. There are times when orders must be given and things must happen quickly, but as much as possible, it’s best to include people across the org chart in problem solving. Your staff can be a wonderful source of ideas, especially when it comes to weathering business shocks.
For support in preparing your company to deal with a wide range of contingencies, please contact me at Laura@conoverconsulting.com. With years of experience in business culture and compensation, I have the knowledge and expertise to prepare your organization for whatever the fates may throw at it.