rob-crowder By

Paul Chappell

Founder and Strategic Partner – Brand + Story

Brand + Story has been a member of My Business since May 2020. 

It’s hard to estimate the size of the economic scar COVID-19 will create across the globe, but the cuts are deep and global recessions seem inevitable.

This article is intended to help business owners consider how good strategy in times of uncertainty can, at the very least, help them adapt and survive. 

The Nature of Uncertainty

There is one unifying quality of uncertainty. It is not binary. Even the most complex analysis of your situation is no guarantee you can predict the future. There’s simply no black and white in uncertainty – or in uncertain times.

What does exist, perhaps in excess, is a sea of grey. Like walking through a thick fog, we must use our memory, instinct and imagination to emerge – not just out of the fog – but in the place we intended to be.

Strategy, you could argue, is easier to create in times of certainty because the opportunity to pivot is made within an environment of confidence and optimism, not pressure and fear.

When the world around you is predictable, the opportunity of achieving designed outcomes is greater. Or at least feels greater. Stability on the outside creates confidence on the inside. The worst-case scenario of implementing an unfit strategy in times of greater certainty is that it doesn’t work, and you revert to the default position.

This isn’t possible in times of global chaos. The default position becomes a liability. All things are no longer equal, the fog sets in, the darkness blinds you. Strategy is no longer about pivoting for success, it’s about pivoting for survival.

Many businesses, unprepared for these uncertain times, are left paralysed. It’s important to remember this pandemic took only three months to create an unprecedented global shut down.

Few businesses across the globe would have had a contingency plan for such a catastrophe. And for the insightful few companies that had pandemic insurance, many of them would soon learn such a policy means nothing in an actual pandemic. The world has been left trying to exist on the run. 

My own advertising agency went from sky-high success to rock bottom idleness within eight days of the Australian Government calling COVID-19 a pandemic.

In good times, my two largest clients are the envy of most other agencies: one of the most respected airlines in the world, and a global hotel network. I never imagined my client list would turn out to be my greatest liability.

Strategy Pre-Pandemic

Prior to the pandemic, business leaders around the world were grappling with key strategic decisions and strategies. It was business as usual. Businesses needed to grow, to diversify, to enter new markets, to adopt new technologies and to automate. Strategies were being developed to address all of those business needs. But a pandemic brings with it a world of new challenges to governments, industries, businesses and households.

Challenges that have no strategic benchmarks or precedents. Replace the word ‘strategy’ with more common terms like ‘coping mechanisms’, ‘immediate responses’, ‘plan b’s’ and you quickly realise the role of strategy is consistent and persistent across any sector.

In its simplest form, a strategy is really a plan for how we build as much certainty into our lives and businesses as possible.

HOW DO WE DEVELOP STRATEGIES IN TIMES OF ABSOLUTE UNCERTAINTY?

I would argue the level of uncertainty right now, across the globe, is unique to nearly every business. Where one airline holds firm, another airline goes into voluntary administration.

Where one bakery closes, another pivots and boosts business by 120%.

The level of uncertainty businesses face is contingent on many factors, but the core of these is:

1. brand health prior to COVID-19

2. financial health prior to COVID-19

3. management response and reaction time to COVID-19

4. business model flexibility during COVID-19.

This isn't to say the level of uncertainty businesses have faced is proportionate to their response to the pandemic. Some businesses are simply in no position to prepare, pivot or propagate new business opportunities during this time and have been forced to close. No strategy could have saved them.

But for businesses that still have a pulse, even a faint one, there is a chance to work your way out of the dark by developing strategies fit for your business and your context.

These might be large strategic strokes or intuitive strategic splashes. It all depends on your situation. Many strategies focus in on the thing that needs fixing. And certainly, knowing what to act upon is important. But knowing when to act is just as important.

Scenario planning is a good way to commence your strategic planning efforts. The simple fact is, regardless of what the experts are saying, nobody knows what is going to happen next.

As economies start to reopen, communities start to come back life and people start to emerge from their homes, we can hope we have suppressed the threat of COVID-19 enough to allow society to start functioning in a way that we expect it – or want it to. But we cannot be certain of that.

The long-term impact of the virus is still being created. There are, and will continue to be, many unknown unknowns. 

A four-step approach to strategy in uncertain times

This four-step approach comes from Hugh Courtney's book 20/20 Foresight: Crafting Strategy in an Uncertain World published just weeks prior to 9/11. This advice seems as relevant today as it was then. 

This is when you have a fixed number of variables with a likely (or known) outcome. Buying a house in an area of long-term growth is the example Hugh Courtney provides. There is no certainty that buying a house in the area will guarantee a high return in future years, but the data available enables a buyer to purchase with the confidence of that outcome.

This is based on the future state having a few discreet possible outcomes. Technology standards are a good example. VHS versus Beta or PlayStation versus X-Box. The outcome in terms of which technology would prevail was almost impossible to predict but the horses in the race itself were at least limited.

This is like number two but in this instance, the outcomes are impossible to predict ahead of time. Hugh Courtney provides the example of a Presidential election.

While there are a limited number of candidates vying for the presidency, the options for who the president will be can be certain but the margin of victory for the winning candidate cannot.

This is when the future simply cannot be predicted due to the number of variables. This is the rarest and most unlikely of scenarios… unless you’re in the midst of a global pandemic.

With so many unknowns at both a macro and micro level, and across economic, health, societal and individual levels that the best we can do is to do something. Idleness is not an option.

These scenarios are helpful in framing the context in which you exist right now. But they don’t offer a lot of direction in terms of what to do once you’ve identified the context.

The process of addressing the known knowns, the known unknowns and the unknown unknowns begins with mapping out what scenarios are possible within your context. Try breaking uncertainty down into pieces small enough to grapple with one at a time. 

Scenario planning 

A good framework for scenario planning can be found on SME Strategy's website. It's been broken down below. 

To begin with, you should discuss what are going to be the big shifts in society, economics, technology and politics in the future and see how it will affect your company.

Once you have identified your driving forces and made it a list, pick up only two (those that have the most impact on your business). For example, two of the most important uncertainties for agribusiness companies are food prices and consumer demand.  

The goal is now to form a kind of matrix with your two critical uncertainties as an axis (refer to framework found at SME Strategy). Depending on what direction each of the uncertainties will take, you are now able to draw four possible scenarios for the future.  

During this final step, you should discuss the various implications and impacts of each scenario and start to reconsider your strategy: set your mission and your goals while taking into account every scenario.

Even when we exist in times of chaos, uncertainty, fear and confusion, there is a place for strategy to help us contextualise our situation and to clarify what we know and what knowledge we don’t know.

This is an important step in dealing with the greater challenge of dealing with the unknown unknowns.

It may feel like you’re operating in the dark. And at times that may be the case. But uncertainty does not equate to impossibility. There is hope in times like these. And with systematic thinking and collaborative thinking, you can find your way through the darkness.

The views expressed in this article are those of the author and do not necessarily represent the views of My Business. 

rob-crowder

Paul Chappell

Founder and Strategic Partner – Brand + Story

Brand + Story is a Sydney-based branded content and entertainment consultancy working with market-leading brands across Australia including Qantas, InterContinental Hotels Group, Motor Accident Commission NT and Sustainability Victoria.