The problem with “radical uncertainty” is how do you plan for what you do not know? Please avoid the urge to throw up your hands and act purely on gut instinct.
The most important first step is to be clear on exactly where you are. Start with the hard financials, talk to your customers and suppliers, and write it all down. The discipline of writing it down is important. At some point you will be revisiting your plan, so you will need to be clear what you believed in early January.
You could then decide that you know enough about the future to make an investment in one outcome. We did a plan recently to expand a micromobility company into Europe and the US. There are a lot of uncertainties in this embryonic market, but the biggest risk is standing still and having a first mover advantage destroyed by Chinese and American competitors who can replicate the innovation more cheaply and at scale.
The problem of having a single plan is that most of us start to believe in it. We seek confirmatory evidence and downplay anything that contradicts our view. Spreadsheets are treated as certainties, not as a best estimate given various inputs which may not materialise. Far better, and more rational, to create a spread of scenarios and work out how you handle each one.
You cannot cover everything, but you could cover the scenarios that are material for you, your suppliers, and customers. There are probably a range of things that would put you out of business and there is nothing you can do to prevent it. If that is true, then stop worrying about them and move on. And then, there are scenarios from which you could do very well. How do you make those work for you and what are the tell-tale signs that they are starting to pan out?
If you are a small business then you have three strategies – “go big”, “get agile” and “be a player”.
“Go big” means making a strategic play early. Maybe you have no choice, or maybe you can go big without taking a big risk. Think about sharing risks with a partner or having a way to cut your losses if you are wrong. Look for places where your investment pays off no matter what happens. Think hard about unprofitable divisions – what do you need to believe about the future for them to become profitable again?
In the summer of 1998, Steve Jobs said that Apple would “wait for the next big thing” – that turned out to be iTunes. While waiting, he had to make sure that Apple would be able to lead in whatever that next big thing was. This is getting agile – make sure that you can switch on the next big thing fast. Think about the skills and abilities your people have, and the flexibility of your equipment and processes. If the next big thing in your industry is something, you need a year to get started on then you are certain to be fighting an up-hill battle.
The purpose of a plan is to give direction and confidence to all your stakeholders – employees, suppliers, customers, and banks. There is no upside in a wishy-washy plan that is just “wait and see”.
Remember the quote from the Third Man – “In Italy, under the Borgias, they had warfare, terror, murder and bloodshed but they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland…they produced the cuckoo clock.”
Unfair on the Swiss and not entirely accurate, but turmoil produces creativity and opportunity. At times, we all have to embrace it.