Uncertain times

Strategic planning can involve different degrees of forecast change – from radical changes in the market environment and an organisation’s response to continuing a successful strategy in a stable environment. Often it’s somewhere on the spectrum in between – with some market change and several initiatives designed to make the organisation more successful, be it in product or service development or improving its ability to compete.  

However, many organisations have been accustomed to relatively mature, stable markets - yes, there have been changes and uncertainties, but not usually of a fundamentally radical nature. So the current economic volatility is a shock to the system – the organisations’ DNAs have equipped them to consider the future as a largely continuation of the present: markets will grow or decline by x%, share will change by y, and business volumes by z%.

In the current turbulence such approaches are more likely than ever to be wrong! (Forecasts are always wrong – it’s a matter of by how much!) So, a different approach is needed. What steps can you take to plan effectively in such circumstances?

·          Recognise the limitations of forecasting the future. Be realistic - accept that any forecast has a probability level, there are ranges of likely outcomes. Some forecasts are less firm than others – you might have to work on a wider range, or at a higher level only

·          What time horizon makes sense? What is needed for the organisation to be able to respond, to make changes if the actual differs from the predicted? It could be that the organisation needs to monitor data and revise its plans more frequently than the traditional annual planning cycle or quarterly review

·          Understand what are the fundamental drivers of change in each market. What are the key ‘triggers’ that indicate that a different trajectory is more likely? Focus the organisation’s antennae on these triggers, on detecting changes early, so allowing more time to adapt and respond

·          Consider different scenarios. Developing a series of ‘what if....’ pictures of possible futures is a powerful exercise – it encourages people to think outside of their ‘linear’ projections of the future, and it prepares the organisation to respond more confidently to changes

·          Decision-making needs to be quicker, and choices contingent on clear criteria. ‘If A happens, and B confirms the trend, then we know we need to choose path C.’ 

·          Become agile! An organisation that learns how to adapt, how to respond rapidly to changes – or prepare for possible changes- is much more likely to succeed in a volatile environment than one that continues its traditional approach to planning and implementation.

The biggest challenge is to realise that more uncertain times require a different approach, and to learn how to adjust to the new reality. Success – even survival – might depend on overcoming inertia and adopting a different pulse within the organisation. Strategising and planning remain just as vital activities as ever – but the thinking is perhaps sharper, more challenging, decisions more responsive, and implementation more rapid than might have been the case in more comfortable times.