Companies ignore strategic planning during the pandemic

 Companies ignore strategic planning during the pandemic

[Editor’s Note: Happy New Year! We hope 2022 will be great year for you and your buisiness. This recent headline in the WSJ caught my attention. We have seen some companies operate with a short-term focus and wonder, “what will be the cost of becoming too day-to-day tactical?” -dpm]

 

The Covid-19 pandemic has resulted in stresses on businesses, business owners and CEOs like never before (Note: I am very tired of the word, “unprecedented.”). Uncertainty has been the norm since March 2020: The virus, variants, safety protocols, regulations and restrictions, record levels of absenteeism, labor shortages, employee turnover, supply chain shortages, increasing input costs. Faced with this high level of uncertainty, companies have necessarily focused on short term operational issues. However, many companies have deferred strategic planning in the process. Many more have not attempted to anticipate various scenarios. Some companies that have made the time to do both scenario planning and strategic planning have been able to seize opportunities.

Are we inadvertently creating a culture of short-term focus? It takes 3 to 5 years to change a culture. During the last recession, we observed that some organizations became so cautious over the 2008-2012 period, that their culture became very risk-averse, and they were missing opportunities in 2013-2014. As we enter year 3 of the pandemic, are we in danger of doing something similar?

We cannot predict the future, but we can prepare for various scenarios. A recent article by Greg IP in the WSJ pointed out just how poorly we are in trying to predict the future in everything from inflation, to the duration of the economic impact of Covid-19, to the black swan event in 2008. Trying to predict the future is a mistake in company planning. You are guaranteed to be wrong – in one direction or the other. Scenario planning helps companies rehearse how they would react under several different circumstances – thus the management team knows how to react as events unfold in the future.

Has your company done strategic planning in 2021 to prepare for 2022-2024? Or have you kicked the can down the road and been focused on the short-term operational issues? It is not too late to get started. Most significant changes in market share occur during periods of economic disruption. Are you missing a major opportunity?

Some organizations may say scenario planning is too difficult and elect to take a simpler course.  Most organizations perform traditional business planning/ budgeting because it is comfortable and addresses a short timeframe. However, we now know that the world is uncertain and interconnected. Companies can no longer ignore uncertainty or try to assume it away.  As author H.L. Mencken is quoted, "For every complex problem, there is an answer that is clear, simple, and wrong."

 

This is your opportunityto build flexibility into your planning and adaptability into your leadership and culture. Companies that are scenario planning are examining different possibilities of the future and determining their competitive responses. They are modifying the trends and information that they monitor so that they can develop "early warning" signs.

Check out the full scenario planning article series on our website.

  

For more information on how you can take your planning process to the next level, contact me at (303) 660-8135 or meaddp@meadconsultinggroup.com   

The Mead Consulting Group has been helping clients develop and execute Strategic Growth & Execution plans for many years. Check out our website for descriptions of some client success stories.