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Contingency Planning

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Contingency PlanningThe best leaders always have a back-up plan, so my question to you is: what’s your Plan B? My experience with most executives & entrepreneurs is they are totally committed to and focused on success. As a result, many of them tend to have a major blind-spot (translation: weakness) when it comes to the anticipation of set-backs.  While this is understandable, it is nonetheless naive, and it constitutes a major flaw in the business logic of most strategic plans. This is so much the case that the most often overlooked aspect of strategic planning is adequately addressing contingencies as part of the planning process. In the text that follows, I’ll take a closer look at the value of contingency planning…

The reality surrounding the success of any implementation is found by understanding that no matter how smart you are, things rarely go as planned. Those that plan in advance for changes in circumstances can adroitly address issues when they occur, while those who must deal with “unforeseen” circumstances don’t tend to fare as well. Smart leaders view obstacles as a constant rather than a variable, and incorporate that thinking into their planning.  Any well crafted strategy anticipates obstacles and factors in multiple “what if” scenarios.  Leaders that wait until a problem occurs to deal with it place themselves and their organization at a huge strategic disadvantage.

The three most common outcomes created by a lack of contingency planning are:

  1. Watching things grind to a halt as you scramble to evaluate options;
  2. Having fewer options to assess based upon the new found time constraint, and;
  3. Carrying flawed initiatives forward. Leaders without a Plan B can sometimes refuse to acknowledge the reality of a failed initiative.

One of the exercises I like to take clients through to help identify areas of risk is a premortem – the hypothetical opposite of a postmortem. If you anticipate what might kill a plan before you embark upon the plan, you’re much more likely to succeed in refining and executing the plan. Speed is your friend and should be leveraged to your advantage. Speed is aided by anticipation and slowed by a lack thereof. Smart leaders will do everything in their power to keep a decrease in velocity from becoming a self imposed adversary due to a lack of contingency planning.

It is important to remember that contingency planning is a key to avoiding costly mistakes. In most cases your wins won’t put you out of business, but your losses most certainly can. The three most critical items to focus on when conducting your planning are:

  1. Insure that personal accountability is present on any major benchmark, milestone or deliverable.
  2. Make sure that someone has identified the 5 worst things that could happen with any initiative, what steps can be taken to prevent their occurrence, and what measures will be taken to overcome them if they happen?
  3. Make sure that advance warning signs for potential failures are identified and understood so that you have plenty of runway in front of you to implement your contingency plans.

My final suggestion is that you take the time to review all mission critical plans to ensure that the proper contingency plans have been put into place. If you find an initiative that is flawed or failed don’t let your pride or ego keep you from doing the right thing. Smart Leaders know when to cut their losses and make the needed or necessary changes.

Sidebar: This post was inspired by a conversation I had with Mark Oakes (@MarkOOakes) about the historical origin of the term” Plan B.” As told by Mark, the story goes like this: Baron Von Bismark was tasked with unifying the axis powers in WW1. He had his aids work for months preparing the perfect unification plan. Upon completion they wanted to immediately put it into action. Bismark said “NO…prepare a second plan in the event the first doesn’t work.” It became knows as ‘Plan B’ (B)ismark Plan = Plan ‘B’

 

Image credit: Sailing Magazine

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    Mike Henry Sr.

    September 26, 2011 at 4:50 pm

    It’s only fitting that Mark would know the history of something like that.  Great post Mike.  “No matter how smart you are, things rarely go as planned.”

    I liked the line “In most cases your wins won’t put you out of business but your losses most certainly can.”  Many times we spend so much effort on the half-full side of things that we underestimate the potential downside of half-empty.  It’s wise to count the costs and plan for something other than ideal outcomes.

    Mike…

      Mike Myatt

      September 26, 2011 at 6:05 pm

      It’s been said that most things take twice as long and cost four times as much as original planning estimates. One of the best things leaders can do is to challenge their own logic. Just asking themselves “what will happen if this takes longer or costs more than planned?” can save a great deal of brain damage down the road. Smart leaders understand that  proformas and projections are just that – they are theory and not much more…Thanks for weighing in Mike.    

    Mike Henry Sr.

    September 26, 2011 at 4:50 pm

    It’s only fitting that Mark would know the history of something like that.  Great post Mike.  “No matter how smart you are, things rarely go as planned.”

    I liked the line “In most cases your wins won’t put you out of business but your losses most certainly can.”  Many times we spend so much effort on the half-full side of things that we underestimate the potential downside of half-empty.  It’s wise to count the costs and plan for something other than ideal outcomes.

    Mike…

    Ron

    September 26, 2011 at 5:33 pm

    Mike.

    Another great post! Most business “Generals” I’ve known are insecure, egoistic narcissists who believe any miscarriage of their perfect plans can be traced to insubordination.

    Why should they even consider contingencies when everyone should be simply rapt in awe as they carry out their schemes — to which universal laws will simply have to conform? Thankfully, most of these demigods have some good lieutenants who get the job done in spite of them.

    Loved your historical sidebar! I was surprised to learn that ‘blood ‘n iron’ Bismarck saw a need for a ‘Plan B’. Such humility and foresight is foreign to most centralizers.

    Ron

      Mike Myatt

      September 26, 2011 at 5:58 pm

      Hi Ron:

      We’re in agreement that far too many leaders place the ego of their agenda ahead of reality based needs, which may occur outside of the initial planning process. Thanks for stopping by Ron. 

    Wally Bock

    September 26, 2011 at 10:29 pm

    Great post on an important issue, Mike. Let me add three things
    from my experience, mostly with police and fire services. Having contingency
    plans lessens the emotional hit of a surprise outcome which increases the odds
    of coming up with a good decision. Those odds are enhanced still further
    because the plans are drawn up when there’s no pressure. It’s hard to make
    tough decisions, but it’s even harder when you have to make them quickly. One
    thing I found about the top performing supervisors I studied was that they
    might not have formal contingency plans, but they were constantly doing
    “what-if” analysis in their head.

      Mike Myatt

      September 26, 2011 at 10:41 pm

      Thanks for sharing your insights and observations Wally. I particularly liked your point about contingency planning lessening the impact of an unplanned outcome. Thanks again for adding to the thought stream Wally. 

    Tanveer Naseer

    September 28, 2011 at 7:41 pm

    Hi Mike,

    Great post and definitely a subject that requires more light be shed on it given the current tendency to react/implement damage-control instead of reflect/anticipate problems.

    One thing I would add is that in planning for contingencies, leaders need to be more receptive to the warnings being offered by those on the front line.  Although now decommissioned, NASA’s shuttle program demonstrated how turning a deaf ear to the problems foreseen by those on the ground can lead to long-term repercussions, if not the inability to develop a truly viable “Plan B” when current conditions demand a course change.

    Of course, this also means that leaders should also provide clear directives on what fires employees have the power to put out on their own without having to seek the approval of those higher up the chain.  Such initiatives will ensure smoldering fires are put out before they have a chance to evolve into a more consuming and costly firestorm.

      Mike Myatt

      September 29, 2011 at 1:49 am

      Hi Tanveer:

      Thanks for sharing your observations. Too many leaders forget to close the feedback loop with their own employees. Business Intelligence is most valuable when it is produced organically. Thanks again for stoping by Tanveer.  

        Tanveer Naseer

        September 29, 2011 at 2:32 pm

        My pleasure, Mike.  Always enjoy participating in the wonderful discussions you foster here on your blog.

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