Planning for uncertainty

A key planning tool for any business is a PESTLE analysis.  At the moment, however, the analysis for many companies looks something like this:

  • Political: uncertain.  New PM, new cabinet, soon to be new shadow cabinet
  • Economic: uncertain.  Post Brexit negotiations have yet to be started
  • Sociological: uncertain.  What effect will changes to EU migration have on supply and demand?
  • Technological; uncertain.  All we know for sure about technology is it is fast-changing
  • Legal; uncertain.  Will the new government increase or decrease red tape?
  • Environmental: uncertain.  Electricity demand is likely to outstrip supply this winter. Rationing? power cuts?

Pondering the futureAll in all, it is what you might describe as a perfect storm of uncertainty.  It would be very easy to conclude, then, that companies should batten down the hatches and take shelter – concentrating on core products and waiting for new markets to emerge.  In fact, the world’s most successful businesses have often become successful through expanding or developing new products in uncertain times.  These companies view uncertainty as an opportunity: a time to create and exploit market shifts; a time to lead rather than to follow.

What is the worst that can happen?

One way to plan for uncertainty is to ask yourself: “What is the worst that can happen?”.  Ask this for each of your products and services and each of your markets.  Now plan how you would continue to grow your business even if that does happen.   It may be that the answer is to diversify so that, if one product begins to fail, other products can compensate for that loss.  Alternatively the answer may be to specialise so that you can ride on the growth of a niche market even when the general market is falling.  By putting plans in place to cover even the very worst case scenarios, you are building the foundations of a business that will not easily be knocked down.

Planning for uncertainty, not planning to fail

Some people feel that planning for the worst case is, somehow, planning to fail.  Nothing could be further from the truth.  In fact, it is well known that failing to plan is planning to fail.  Planning for uncertainty, on the other hand, is your umbrella on a murky day.  Carry your umbrella and it will be dry; leave it behind and the storm of uncertainty will not be far away from you.