Should You Alter Course? Fresh, Practical, Strategic Planning Ideas for Turbulent Times

Summary: Five outstanding recommendations from Bain for developing a strategy under uncertain conditions (and what industry isn’t uncertain). Innovative, practical, wise, proven, and almost certainly not what you are doing now.

Many business processes, including the typical staged, periodic, strategic planning process, were developed at a time when things changed at a slower and less disruptive pace. Strategic plans are typically prepared, aligned on, cascaded through the hierarchy, then worked. Adjustments happen at five or one-year intervals. Perhaps in keeping with the realization that the rate of change has accelerated – more often. Whatever the interval, interim deviations are discouraged or if they are absolutely necessary, treated as inconveniences.

It's not that this traditional process is wrong, but given our volatile, high-change era, are there better ways? Can planning in a different way make businesses more resilient, more adaptive, and better able to take advantage of market shifts?

Signals for when to make strategic lane shifts can be built right into the planning process (Image by Rene Bohmer, Courtesy of Unsplash)

In an article written for Harvard Business Review called Strategy-making in Turbulent Times, two Bain & Company partners offer an unconventional notion: what if executives were to approach strategic planning with the deliberate intention to shift forward rather than trying to approach change as an inconvenience? Here's a quick summary of the five recommendations described in the article. I strongly encourage you to read the full article for its compelling case studies (the Dell Technologies case is especially good) and more detailed recommendations.

Imagining the future

The overarching advice in the article is to eliminate the practice of “one and done” strategic planning. Every year? Every five years? Forget about it. The need to shift can occur at any time, so planning must be continuous, dynamic, and living.

Recommendation 1: Define extreme but plausible scenarios. Scenario planning, the practice of forecasting several future states, has been around since the 1970’s. The new suggestion is to think extreme. Many scenario plans are too meek, imagining the future as a linear extension in some direction from today. This view usually results in incremental tweaks to the current strategy. Instead, push the bounds of scenarios to deliberately force executives to seek novel ways to compete and to identify aggressive, “no regrets” moves. The article describes CMS Energy’s successful experience with this practice.

Making decisions

With forecasts and scenarios in hand, the next step is asking the anxiety-ridden question “now what?” The authors offer two augmentations to the way you answer this question that will lower decision risk.

Recommendation 2: Identify strategic hedges and options. Flexibility offers tremendous value in uncertain conditions. Investors build flexibility with hedges and options (the article go into some depth about the use of Real Options Analysis). My main takeaway: If two alternatives can solve a problem, pick the one that a) provides greater flexibility to alter course and/or b) allows you to defer decisions until you have more information. I’ll add from my own experience, choosing options that give you more information about reality or what’s ahead are also useful choices.

Recommendation 3: Run experiments before locking in investments. Digital marketers and agile practitioners are getting used to this tactic. It’s time to move this invaluable practice to strategic planning. Making small, minimally viable, bets early allows you to learn and adapt before scaling. The article discusses how Amazon loves to run experiments. Several of these (AWS, Prime) resulted in big wins, but others, well, not so much (multiplayer gaming, for example) and knowing this early allowed the company to abandon without much pain those strategies that didn’t work. Set guidelines for experiments and don’t try too many small bets at once.

Read How Anyone Can Become a Marketing Scientist

Monitoring and course correcting

Recommendation 4: Identify trigger points, signposts, and metrics. With the intention of making a dynamic, living plan, while you are still the planning process identity the checkpoints you will use to determine when to reassess the strategy and, if necessary, make a course correction. The authors suggest aligning these checkpoints with the nature of the situation rather than arbitrary calendar dates (e.g., quarterly, monthly).

At the beginning of the pandemic, when no one had any idea whether quarantines would last for weeks or months (much less years), I saw savvy event planners use triggers to manage the uncertainty of in-person functions. For example, the date at which a deposit became unrecoverable signaled the need for another go-no go assessment. The article describes how an automotive OEM identified the penetration of electric vehicles as a metric to evaluate their investment strategy.

Recommendation 5: Provide prescriptive surveillance. Perhaps the most remarkable quote in this valuable article – a statement to read over and over and post on the white board in every planning meeting is “The central question cannot be ‘How did we perform?” Instead, it must be “Should we alter course?” Answering this question will require organizations to have prepared for this decision point because by the time a shift in context (e.g., market or competitive changes, new regulations) mandates a change in strategy, it’s too late to start from scratch to develop one. Root cause data analysis, contingency plans, and agile processes are among the arsenal necessary to act effectively under uncertain conditions.

W. Edwards Deming, the engineer, statistician, and management consultant who pioneered some of the concepts on which Agile is based said, “Two basic rules of life are: 1) Change is inevitable and 2) Everybody resists change.” Some resistance can be dissolved, and outcomes improved if organizations adopt mind sets and practices that welcome uncertainty instead of trying to ignore it.

For more recommendations on strategic planning methods that lean into uncertainty, read Seven Practices for Planning During Uncertain Times