Businesspeople hate uncertainty. Things go more smoothly when they are completely predictable and reliable.
Unfortunately, that’s not how the world works — some degree of uncertainty is always with us. And while recent days may feel murkier than ever, many of the rules for dealing with uncertainty still apply.
Some future events can be anticipated and planned for. For example, I started my first post-college job in the supermarket industry, soon after the famous New England blizzard of 1978. What everyone remembers most about that time is how eggs, milk, and bread sold out immediately; shelves were empty for days afterward. Since then, any threat of even a minor storm in New England puts instant pressure on those items. So the markets have learned to pay attention to weather forecasts and plan ahead.
Other things are much harder to predict. Few people were expecting the eruption of Iceland’s
Eyjafjallajokull volcano in April of 2010. But when it happened, the cloud of volcanic ash shut down flights from several European countries for weeks.
So while it isn’t reasonable to have plans for every possible eventuality, it is important to understand where you are vulnerable to significant interruption and take steps — now — to mitigate the impact. Three suggestions…
1. Think carefully about your organization’s interdependencies.
Consider your supply chain, for example. Are there key resources that come from a distance? These days, just crossing a border can be risky. Do you have an alternative source? Or, can you afford to maintain a bit of extra “safety stock” instead?
Early in my career, when I was building and running an in-store bakery division, I had two distributors as assurance of continuous supply. Further, I required that each of them also had alternative suppliers for any critical ingredients they provided. The slight additional cost was offset by the knowledge we were avoiding lost sales due to unavailable product.
How about services you offer that could be disrupted by “outside events?” Universities across the world had to quickly shift to online approaches when the magnitude and duration of the pandemic upended the traditional teaching approach. Today, they all have plans for dealing with future events that could make in-person instruction difficult.
2. Develop explicit contingency plans before a negative event occurs.
Any capable coach of a team sport has contingency plans in the event a critical player is injured during the game. Typically, they have only seconds to make a replacement. Good coaches prepare in advance by making sure backup players are trained and ready.
A business corollary are the “table-top” exercises performed by cybersecurity consultants who work through possible scenarios and associated responses in the event of a hack or otherwise compromised system.
Regardless of the subject area, the worst time to plan for these events is while they are taking place. Investing the time and commitment ahead of time, even if the plans are unlikely to be needed, can be essential.
3. Track what matters.
You can’t pay close attention to everything. And while some of these disruptive events arrive suddenly, there are often “faint signals” in advance that suggest a growing possibility of a future negative occurrence.
For example, if a presidential candidate suggests during his campaign that he is likely to impose high tariffs on certain countries (hypothetically), it would be sensible to anticipate the impact that action might have and what your options would be should it occur. Waiting for the candidate to take office and implement said tariffs will almost certainly leave you with fewer, less attractive options.
Reflections
The world is full of uncertainties — some from natural causes, others man-made. Whatever the source, it is impossible to prepare for every eventuality.
It’s important, however, to spend time considering where your organization’s greatest dependencies and vulnerabilities lie, and to develop backup plans for any that are critical.
As the saying goes, “an ounce of prevention is worth a pound of cure.”
