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We have found the most reliable sources for reporting on the Coronavirus and what actions should be taken are the Centers for Disease Control Coronavirus Site and the UN’s World Health Organization Coronavirus Site. For short term actions relevant to your business and personal life those sites should be top of your list.
But we see no reliable sources providing insights that can help organizations plan strategically for how to react to this outbreak. This special report is provided as an aid to kickstarting your corporate efforts in strategic planning around the coronavirus specifically and other potential pandemics more generally.
The Coronavirus is having an impact on the world already. Up to 100,000 may be infected today, and although no reliable numbers exist on the number of casualties, there are probably already 1,000’s of deaths. Regions in China that have been hit are seeing significant disruption of commerce. Globally, supply chains are being disrupted and the travel industry is being hit hard. Your business, no doubt, has already started reacting to the news in one way or another.
But what will the world of 2 to 3 years from now look like because of the Coronavirus? More importantly, what decisions should you be making now to optimize your ability to serve your employees, customers and stakeholders in the future? For answers to these questions we recommend your organization examine the future through the lens of scenario based planning.
Scenario Based Planning
As practitioners in government in industry with a deep DNA in both red-teaming and attempts to project future contingencies, we have been exposed to every major method of projecting the future. Every method has flaws. For example, the easiest projections to make about the future are linear ones. Something that is growing at 10% a year will be 10% larger next year. The problem with this type of projection is there are always discontinuities. No linear trend can continue forever. Data and trends are important, but the further away from today we project the more misleading they can be to our conclusions. We have to expect, and plan for, surprise.
A formal method of creating and examining future scenarios can help ensure planners examine realistic potential futures they have not thought of yet. This scenario based planning can help decision-makers think through future opportunities, risks and mitigation measures that would not be apparent without thinking through the scenarios.
Four Scenarios For Strategic Planning Around Pandemics
The four scenarios below are meant to capture a range of potentials in two dimensions, the number of casualties from Coronavirus and the economic cost of the pandemic.
Each quadrant of the chart above can be considered a separate scenario:
- Scenario One: Low Financial Impact, Low Casualties
This is the scenario we all want. This scenario leads to business as usual. Corporations can still learn lessons from the Coronavirus event and can use those lessons to mitigate future risks. - Scenario Two: High Financial Impact, Low Casualties
This scenario involves financial impact due to government response and also due to investment required by businesses to mitigate risks. But the payoff of this costly response is a lower casualty rate. In this scenario, financial impact is eventually mitigated because the human element is protected. - Scenario Three: Low Financial Impact, High Casualties
It is hard to imagine a scenario that would have high human casualties but low financial impact, making this a less likely scenario. But in relative terms the tragedy might not lead to extended recession or global economic slowdown so financial impact in this scenario might be more limited. - Scenario Four: High Financial Impact, High Casualties
This is the worse possible scenario and would likely lead to both a global economic slowdown and a recession in the US. Government action would be required to ensure safety and security of populace and continuity of critical infrastructure. The disruptions in the market will mean it is harder for customers to pay on time or at all. Many businesses will cease to exist.
Leveraging These Scenarios In Your Strategic Planning
Decision-makers can use these four scenarios in planning sessions by examining each scenario in turn. Ask yourself and your planners these questions for each scenario:
- Are there any core business processes that will fail in this future?
- What will the competitive landscape look like in this future?
- Is there anything we need to invest in now to optimize our position in this future?
- Are there any prudent changes to corporate policy to reduce risks in this future?
- How and when will we know if this future will come to pass?
- Are there changes to our products or services that can better serve the world in this scenario?
- How can our organization better inform and protect our people to reduce their personal risks in this future?
- Are there changes to our technology infrastructure that can help us succeed in this future?
- Should we make changes to our supply chain or partnerships or target customers to succeed in this future?
Concluding Thoughts
It is natural to fear the threat of pandemics, and the news around Coronavirus is certainly worrisome. Leaders seeking to inform business strategies need to balance this natural fear with insights, information and vision. Leaders should also seek to optimize strategic planning in ways that reduce risk to your business and your workforce while optimizing opportunities. The four scenarios we list here can help kickstart your strategic planning in this area.
OODA members should also see:
https://www.oodaloop.com/covid-19/
