As the clouds of COVID-19 darken, they are eclipsing our ability to see a clear future. The initial shock of the economic, employment and retail collapse has been intellectually and somewhat emotionally absorbed, but rather than the impact dissipating, it has morphed into palpable anxiety that is seeping into our organizations. We want to have the answers for the future, but this is a time to get comfortable with the now, and our inability to predict outcomes for the foreseeable future. As we are functioning in a situation without historical analog, we must guard against reacting reflexively; rather, we need to take in the uncertainty of the moment, wrestle with it and face the demons that were, honestly, well in play before this crisis.
Simply, we need to examine our business models before the crisis hit and challenge the assumptions those models were built on. While planning for resiliency may feel pointless in the midst of this flux, it can be an opportunity to generate a new strategic plan that will serve your business well moving forward. To get there, rather than predictions, we need to consider an array of plausible scenarios from the aftereffects of the crisis and evaluate them critically, looking for unseen opportunities or risks that may arise. This calamity will end one way or the other; we want our companies to be standing when it does. It is time to be prepared!
This article draws liberally on the scenario analysis tools created by Amy Webb, futurist, author, NYU Stern School professor, and Founder/CEO of The Future Today Institute, which advises Fortune 100 companies. Webb recently tweeted “This is what strategic foresight is for — to imagine the unimaginable, and then develop scenarios and plans”.
If a plausible risk arises that may be existential to your business, don’t let it paralyze you. The point of the exercise is to approach all risks rationally, lean into the existential risk and strategize around it.
Webb suggests a tool called the Axes of Uncertainty to game potential outcomes. The axes inform an apparatus through which you can identify the dynamics shaping a disruption. They enable you to analytically understand the signals that are flashing red as well as those that are more positive. They encourage you to confront your cherished beliefs honestly to determine if they are still relevant in this unpredictable state. She wrote, “The more plausible outcomes you can discover, and the more flexible you can be in your thinking and planning, the more assured you will feel about your futures. That’s how you break the vicious cycle of corporate anxiety.”
Risk Assessment Exercise: Externals
The system works by examining uncertain outcomes in two areas. The first is external: drivers over which you have no control. Let’s imagine some of the hypotheticals that could arise externally in the wake of COVID-19 that would fall within the domain of what you cannot control.
- Economic shifts
COVID-19 leads to a reduction in the workforce
- Social changes
A decline in birth rates
A decline in the elderly population
Migration from cities
- Technological progress
5G rollout accelerates, encouraging e-commerce, long term remote work, and migration
Robotic and drone delivery methods implemented to reduce delivery bottlenecks caused by work from home initiatives
Distribution center robotics replace workers in response to illness
- Politics and activism
Implementation of a universal basic income
Government support of domestic supply chain development
A wealth tax
Risk Assessment Exercise: Internals
The second exercise is identifying internal or known uncertainties that may develop in the wake of the COVID-19 crisis over which you have a modicum of control.
- Repurpose retail points of sale to showroom/experiential/pick-up spaces
- Shift stores from physical checkouts to virtual systems
- Make associates and stylists available virtually
- Body scanning goes mainstream
- Virtual fitting is optimized
- Standardize all sizing of apparel and shoes globally
- Prohibit apparel returns
- The apparel rental and resale business will shrink
- Customized apparel sales boom
- AR and VR are optimized for e-commerce.
Theory to Practice
The FTI model continues through a sequence of steps that result in what-if scenarios. It is in these seemingly hypothetical situations that specific risks and opportunities can be identified. If a plausible risk arises that may be existential to your business, don’t let it paralyze you. The point of the exercise is to approach all risks rationally, lean into the existential risk and strategize around it. I encourage you to explore this process with a cross-functional team bringing together different talents and perspectives. As Amy Webb states, “Acknowledging the uncertainties that lie before us enables us to confront them head-on, to spot both opportunity and risk, and to rehearse our responses when we still have time to make corrections.”
We are navigating through unmapped territory. Our teams are scattered, distracted, anxious, and we all want our businesses to survive. This exercise is a challenge, but the vulnerabilities and opportunities it may reveal can elevate our focus from negativity to the creation of a strategic roadmap to the other side. Do not wait. Now is the time to develop your strategic plans for when you need it.
Webb’s tools for developing data-based future models are all open source and available at futuretodayinstitute.com.