It seems like an elegant problem – achieving more, faster, better than you expected. Yet too much success too fast can cause all sorts of unexpected problems. This is why you always need to have back-up plans for unexpected downsides and unexpected upsides.
Many of the best run organizations develop strategic plans to guide their efforts over the long and mid-term, and then operating plans for the next year. The expectation is that people will think things through, do what they say they are going to do, deliver on their commitments, and achieve their objectives and goals.
The most effective organizations have learned the importance of adaptability, adjusting tactics in the face of changing circumstances to deliver their objectives. Ideally those organizations will have thought through possible changes in their customers, collaborators, competitors, or conditions and prepared contingency plans to make it easier to adjust to those changes.
When things go wrong, people do gap analyses. They look at what they expected, what actually happened, and then craft plans to reallocate resources to bridge those gaps.
It’s harder with upside gaps.
The trigger for this particular article was the surprise, rapid fall of Assad in Syria. The rebels have been fighting the government for over a decade. Then, after Assad’s two main supporters, Russia and Iran, turned their attention to the Ukraine and Israel, the rebels’ latest offensive toppled Assad in eleven days. The rebel leaders look like the dog that caught the car, scrambling for a plan for what to do next. It’s really complicated and really important. It’s also way out of my swim lane. I’m not going to begin to suggest a way forward for them. But it did make me think about how to help others that surprise themselves by catching cars they never thought they could actually catch.
Think about Scholastic Publishing and Harry Potter. Scholastic’s initial print run on the first Harry Potter book in the United States was 50,000 copies. That book sold 11.5 million copies in its first 10 days. This required a complete revamp of Scholastic’s printing and manufacturing, distribution and logistics, retail partnerships, and marketing and promotion. They made the changes and have enjoyed 25 years of success.
Basic Framework
At its most basic, bracket every plan with a contingency plan for under-delivery AND one for over-delivery.
- Look at the implications of possible changes in customers, collaborators, competitors, and conditions.
- Think through the impact of those on your operations, finance, and organization.
- Think through contingency plans to deal with those impacts.
Downside risks
The downside risks are things like:
- Customers not buying as much as you expected.
- Collaborators not delivering what you expected (like Russia and Iran in Syria)
- Competitors doing better than you expected
- Conditions changing in a way that negatively impact you.
When those happen, you’ll need to be ready to:
- Shrink your operational footprint in light of lower volumes and revenue
- Manage your cash flow in light of lower revenue
- Re-tool your organization.
Upside risks
The main point of this article is that there are risks to overdelivering. These come from things like:
- Customers buying more than you expected.
- Collaborators delivering more than you expected
- Competitors doing less well than you expected.
When those happen, you’ll need to be ready to:
- Expand your operational footprint to deal with higher volumes
- Manage your cash flow in light of higher revenue. This is a huge risk. Rapidly expanding organizations find themselves needing a lot more cash as their working inventory grows.
- Re-tool your organization.
Mindset change
The important message is not the specifics of the risks, implications, and actions. The important message is about the mindset change. The odds of your anticipating the exact things that are going to go wrong or right are very small. But training yourself and your people to think through the possibilities will make you dramatically better able to react to whatever surprises do come your way – downside and upside.
Everyone expects 2025 to be filled with all sorts of rapid changes. None of us know just what’s going to change. And we don’t know the implications of those changes. Shame on us if we’re not ready to adapt.
John Hall
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