By: Mark A. Mangano
In times of substantial economic disruption, the natural tendency is to address short-term concerns and put off consideration of longer term strategy until the disruption passes and the picture becomes clearer. Delaying consideration of strategic direction in this fashion forgoes timely consideration of strategic opportunities and evaluation of risks presented by the disruption. Examining your strategic direction is one of the most important measures you can take in times of change and uncertainty.
The COVID-19 pandemic has disrupted the business plans of every bank, business, and nonprofit. The impacts range from overwhelmingly negative to unexpected windfalls. Regardless of the short-term impact, the COVID-19 pandemic will foster long-term changes in the economic landscape.
Common response
Many boards and senior managers resist planning in times of great uncertainty. This is an understandable response. The perceived challenge of planning in such an environment is much greater. Compared to planning in a normal environment, planning presents increased numbers of variables to consider and greater uncertainty around each variable.
It is not uncommon for boards and management teams to freeze and hope that prior plans and strategies will see them through. Staying the course may be the best response. But you should do so intentionally. Hope is not a strategy. There is one certainty about the COVID-19 crisis: The world has changed. Failure to reexamine your strategy leaves the future of your organization to chance.
In a situation as chaotic as a global pandemic, deciding where to start the planning process is often the most challenging question. If we begin with why we exist, the process becomes much less daunting.
Proactive response
There is a practical and effective way to approach planning in times of uncertainty. First, embrace planning as an opportunity to get ahead of what comes next. Second, focus on what may be changing for your stakeholders. Third, create narratives around how you might serve those changing needs. Fourth, monitor which of your narratives becomes increasingly supported by the real-world trends and events.
Embrace planning
Meaningful and productive planning can be achieved even in the midst of great change. Even when your assumptions appear to be in motion, you possess the ability to narrow the range of uncertain variables, assess the quality of your existing priorities, identify key measures that will require strategic and operational changes, and discuss potential opportunities.
Planning at its core addresses why your organization exists, where you are now, where you want to go, and how you plan to get there. If you begin with the fundamental question of why the organization exists, the process becomes clear even in uncertain times. For most organizations the reason for existence is to serve stakeholders: customers, shareholders, funders, and employees.
What is changing for your stakeholders?
It is easier to assess the status of your stakeholders than it is to begin with internal performance. By focusing on their needs, we can begin to determine what is likely to change for them and what is likely to stay the same. Their needs will drive our strategic direction.
Create narratives
In the planning process, you will need to accept that you must make a range of assumptions regarding how the economy and stakeholder behavior will change. Normally, you have long-term trends to guide your discussions. From those discussions you develop a story or narrative of what you believe will occur. Strategic responses are built around that narrative. In times of great change, you may be required to develop alternative narratives that take into account significantly different potential outcomes.
Monitor which narratives most resemble emerging reality
Effective planning is not an event. It is a process. Once you have committed your organization to adapting to your selected narratives, carefully monitor how emerging facts compare to the key assumptions in each narrative. As time passes, it is likely that some narratives deviate sufficiently from reality that they can be eliminated. Over time you gain confidence in other narratives.
It is impossible to predict the future with perfect accuracy. But it is possible to anticipate potential risks and opportunities. Planning in times of uncertainty is not about getting it completely right. It is about considering the possible outcomes and being able to more quickly respond to risks and opportunities when they arise.
Times of great change unquestionably present risks that require caution. But, such times always present opportunities for those prepared to recognize them. Planning can help you be ahead of what comes next.
Mark Mangano is counsel with Jackson Kelly PLLC. Mark is an attorney focusing on strategic planning, corporate governance, and banking matters. He has 26 years of experience as the CEO and owner of a community bank. mark.mangano@jacksonkelly.com. 304-284-4104