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Covid-19 pandemic has unleashed unprecedented havoc across the world. The economy touched the nadir and unemployment has peaked. The economic growth has contracted in all most all the countries and business organizations trying to survive with few exceptions. A good business organization is expected to plan for the future so that it can grow and improve profits. The tyranny of present is so overwhelming that businesses all over the world is trying to survive and all future plans took back seat. Adding to that is future appears to be bleak and no one knows when this pandemic end and normal economic activity resumes, though economic activity is looking up in few countries. Uncertainty is so encompassing few acronyms were coined like TUNA (turbulent, uncertain, novel and ambiguous), while VUCA is over used, hence refraining from usage. Very few Organizations have foresight to think about long term view, as rest are focused on short term gains. It is because that CEOs jobs become temporary and compensations are linked to quarterly results. But pandemic coupled with uncertainty already prevailing has paralyzed many organizations.
The focus on efficiencies and cost cutting in present situation is justified but is it prudent, not think or plan for future? Do we really lose millions of dollars in future for lack of foresight or planning? Another catch at present is how to plan for future, past experience will be of no use. Unfortunately time is not linear or unidirectional, it’s something more than that. How good are organizations and their ability to manage the present and plan for future? Do they have magic wand or got tools? When organizations lack reference points, perhaps they can use tool which was developed by Shell corporation – Scenario planning. Scenario planning is a disciplined method for envisioning possible futures and applying to same to range of issues. Royal Dutch/Shell has used scenarios since the early 1970s as part of a process for generating and evaluating its strategic options. Shell has been consistently better in its oil forecasts than other major oil companies, few examples are prediction of Oil shock and saw the overcapacity in the tanker business and Europe’s petrochemicals.
Uncertainty is the outcome of our inability to compare present with anything that we have experienced in the past. The economist Frank Knight famously argued that uncertainty is best understood in contrast with risk. Many leaders use some amount of judgment but defining judgment is very difficult. Since uncertainty is all pervading, Organizations cannot predict future but can possibly visualize different scenarios. What are these scenarios? Managers can come out with range of scenarios and this will help them to examine each scenario. To work on these scenarios, every organization should have institutionalized mechanism. I think Organization need to develop a process, this may or may not result in solutions but it can aid organization in approaching the future with confidence.
The Process has following steps
Scope and time frame: It is important to define the scope and time frame lest organizations will not optimize their effort. If the scope is to develop scenarios for next 15 years, we should not only focus but also come out with time frame. Even though time has many factors impacting it.
Major trends with ability to future gaze: What are trends that are happening which will have impact on the organization or industry or industries as a whole, is very important, analyzing the same and how future is going to be impacted by these trends major factor in aiding success. Organizations can use STEEP (Social, Technological, Economic, Environment and Political) criteria.
Stakeholders: Identifying the major stake holders is important. All the stake holders like Shareholders, Employees, suppliers, customers, competitors, society and Government, their concerns and problems are to be taken with lot of sensitivity and addressed.
Barriers: identifying barriers is very important thing otherwise Organizations will get stuck there and I think organization should do potential problem analysis to overcome barriers.
Plausibility: Ability to identify inconsistencies and see the compatibility is one of the important steps of the success of process. Are the trends, stakeholders and other things are consistent or not, is the judgment every scenario planner has to exercise.
Shortlist decision scenarios and work on it: When Organizations finally evolve Decision Scenarios, Organizations have to play the role of devil’s advocate. Do they really work? It should meet the criteria of relevance, consistency and archetypal. If they meet the criteria, then there is possibility of success. Once the organization or managers believe this can work, company should commit resources.
The real catch is not the planning but implementation and its implications. Planning may not be resource intensive but implementation is. There are many challenges at every stage and navigating those challenges and surmounting new developments is really a tough job, who said planning for future is easy? Few questions always haunt Managers or Leaders of business organizations. Do they really work? These doubts arise because Managers doesn’t have reference points, precedents/antecedents. It will help them to think anew, will enable managers to think differently, refocus, and think critically and creatively. A mental map of how future is going to pan out will make managers to come out with new ideas which are hither to unknown and untried. Every business is associated with risk and every strategy has its risk elements. Scenario planning is no exception to that. In the absence of reference points and vast amount of uncertainty, scenario planning is a ray of hope for many managers of leaders. If organizations/Managers are totally inundated in present because of its enormity, they lose the ability to survive in future or grow thus jeopardizing the interest of stakeholders.
# Covid-19 induced paralysis
Written by: Subramanyam Degala Professor at International School of Business & Media Published