Complex Made Simple

Decisive measures to navigate in an uncertain future post-COVID-19

Traditional approaches to strategy such as analyzing trends, making detailed forecasts, and committing to the best course of action, aren’t calibrated for the high degree of instability we face today

The companies that make the future will be those that can embrace uncertainty and turn it to their advantage Entrepreneurs should look for opportunities to generate passive income In a world increasingly defined by its unpredictability, agility is king

Nikhil Prasad Ojha, Partner, Bain & Company Mumbai and Juerg Kronenberg, Partner, Bain & Company Middle East wrote that in the heat of the COVID-19 crisis, management teams had to quickly assess what was changing and make decisions that were not always right, which prompted many course corrections along the way, up until today.

Juerg Kronenberg

“Traditional approaches to strategy such as analyzing trends, making detailed forecasts, and committing to the best course of action, aren’t calibrated for the high degree of instability we face today,” the two experts co-jointly wrote.  

“The hallmark of companies that chart the right course through turbulence is that they embrace uncertainty. They focus on the vital few uncertainties that matter, lay out the possible scenarios that could develop, and identify the critical trigger points or signposts that signal swings in direction.”

Planning, they opined becomes a cycle of “execute, monitor, and adapt,” that dynamically redirects the company toward the best opportunities over time.

A strategy for uncertainty

A scenario-based strategic planning process proactively prepares for a range of futures by:

  • Defining uncertainties and separating them into those that matter and those that don’t
  • Creating a set of probable scenarios for how the future might unfold and determining the threats—and opportunities—that these scenarios present
  • Devising a specific set of strategic playbooks that balance commitment to a course of action with the flexibility to adjust and thrive amid different future scenarios
  • Defining possible scenarios, building a detailed fact base around them, and developing a set of signposts or indicators that management could monitor on a regular basis to understand how things were unfolding

“The object isn’t to stray far from the company’s core strengths or long-term vision. On the contrary, our experience suggests that those strengths and values provide the best compass for adapting to changing circumstances,” Nikhil and Juerg opined.

Nikhil Prasad Ojha

“Continuous disruption is a steady state for all businesses. The companies that make the future will be those that can embrace uncertainty and turn it to their advantage.”

Future-proofing life

Here are 5 ways a person or business can look at the future via corrective lenses, so to speak.

1- Expect the unexpected

Looking at the future with rose-colored glasses and later experiencing unfavorable circumstances leads to trouble.  And if your outlook is full of negativity, you will fail to recognize opportunities and leave you dealing with stress and excessive worrying. So, accept that things can go wrong but don’t be too negative or positive about it.

2- Have plan A and plan B

Ideally, one should prepare for all possibilities by creating plans A and B (and even C) for when your ideal outcomes do not push through as expected. This allows you to remain resilient despite the multiple probabilities, whether favorable or unfavorable to your situation. 

3- Find ways to increase income streams

Getting finances in order, cutting unnecessary costs, and saving for a rainy day are also priorities. Entrepreneurs should look for opportunities to generate passive income. 

4- Insure your future

Insurance products have become flexible these days, with some offering easily withdrawable and all-in-one options that integrate investments, too. With insurance coverage, you can avoid paying for out-of-pocket costs as a result of incidents beyond your control.

5- Do the things you love  

Make time to enjoy the present. Performing some physical and meditation exercises, traveling, ticking an item off your bucket list, and just doing the things that you love can help keep worries off your mind, and create helpful support networks.  

Agility is king

The near future is likely to feature more destabilizing events, not fewer: more chaotic weather disasters, more global health crises, more international conflicts with the potential to disrupt the global economy.  

In today’s business landscape, where the only certainty is uncertainty, CEOs must find new ways of defining efficiency to avoid getting caught flat-footed.

The most successful companies of this moment, and perhaps of the coming era, have redefined efficiency as the strategic work of balancing leanness with resiliency.

For example, automakers are expected to lose more than $60 billion in revenue in 2021 or about 10% of global demand for the year, because of the shortage of semiconductor chips.

But while many car companies are suffering, with manufacturers such as Honda and Nissan expected to sell 250,000 fewer cars in 2021, Toyota used a counterintuitive approach to efficiency that helped it weather the storm.

Toyota pioneered the concept of just-in-time manufacturing, in which suppliers deliver parts days or even hours before they are needed. The success of this approach made lack of inventory the hallmark of manufacturing efficiency.

But in 2011, when a major earthquake and tsunami struck Japan, Toyota got a crash course in the downside of “just in time.” Key suppliers to Japanese carmakers were knocked out of commission for months, delaying output by approximately 760,000 vehicles globally at Toyota alone. It took the company six months to get back to normal levels of output.

In the aftermath, the company estimated that the supply chain for more than 1,200 parts or materials might be affected, and it drew up a list of priority items to stockpile. Holding inventory was no longer seen as anathema to lean manufacturing, but rather as a way of preparing for the certainty of uncertainty, an insurance plan for the guaranteed unforeseeable.

Today, as some automakers struggle with the global chip shortage, Toyota foresees no near-term consequences for its business.

Companies still clinging to a definition of efficiency rooted in lowering headcounts and driving speed will be left behind.  

Ultimately, the fundamental challenge of this new era will come down to balancing just-in-time efficiency against just-in-case strategy. In a world increasingly defined by its unpredictability, agility is king.