Management Strategy: Building Resilience Through Effective Planning
I’ve been thinking a lot recently about how best to build resilience into operating models. Over the past year, we have seen incredible levels of volatility across nearly every dimension of business building. When making critical business decisions, it is almost axiomatic that good quality planning leads to more effective outcomes.
However, what exactly is ‘good quality’ planning and how should that be applied in practice? I have noted down three major items that I keep circling back to, especially as global funding circumstances reduce the margin of error to achieve positive economic outcomes for complex organizations.
Figuring out your “state of play”
Each organization exists in its own particular universe, with the actions of various different actors (customers, competitors, partners, regulators etc.) affecting its eventual outcomes. An attempt to paper over the nuances inherent in each business or creating a ‘one size fits all’ policy. A critical attempt must be made to understand the motivations, behaviour patterns and incentives of each actor, both at the present point in time and the implications that their actions will have on future states of play. As Simon Sinek states, business is an ‘infinite’ multi-period, multi-player game and therefore, an attempt to understand the drivers of, and ultimately forecast the moves that can be made in the future is necessary for success.
Pay close attention to macroeconomic and structural drivers
Often, an understanding of macroeconomic or industry drivers is given lip service or largely ignored when undergoing business planning. However, we are in an environment where structural changes are taking place very rapidly and economic orthodoxy is being challenged at every turn, performing scenario analysis with different economic variables in mind is extremely important. This is the case for most industries. Even industries that have a high contribution of revenue coming from contracted earnings like software are not immune. It is precisely at times of macroeconomic stress that executive decisions around consolidation of vendors happen or concessions around structural pricing are forced to take place. Being proactive and mapping out future scenarios, especially edge cases that may have a low probability of coming through but a high level of impact, will prevent reactive decisions from taking place.
Build strong capabilities within your teams
Capability mapping at an individual and team level is often overlooked when growth is easy to come by. However, when uncertainty rears its ugly head, I have found it is extremely important to truly understand the level of flexibility (or conversely, brittleness) that is embedded within a team structure. Capabilities are specific areas that an individual excels in and which are somewhat removed from their particular area of functional expertise. I have found that these can be decomposed into eight major areas that together form a mutually exclusive and completely exhaustive picture:
Qualitative analysis
Quantitative analysis
Business understanding (business model familiarity)
Industry knowledge
Idea generation
Problem solving
Narrative building and storytelling
Insights and communicating ideas effectively
Creating a map of an individual allows you to determine where their sources of flexibility may lie with respect to different operating situations. Similarly, creating a map of a team against these capabilities can show where the weak areas are that need to be compensated against by upskilling people internally or hiring effectively.