Benjamin Franklin famously wrote: “In this world nothing can be said to be certain, except death and taxes”. In today’s volatile business world, it seems that the only certainty is in fact uncertainty. We’ve written before about planning for uncertainty, but the topic seems even more poignant today. In our current political, economic and business environment, leaders often cultivate uncertainty as a means of creating disruption to gain advantage. So it’s not unsurprising that businesses have difficulty appreciating all the potential changes that might occur.
More alarming, however, is that some organizations seem paralyzed to even work through plans for events which are reasonably known. A recent survey by FinanceMonthly in the UK revealed that 40% of businesses have yet to make plans for Brexit outcomes.
This is far from a European issue. In North America, there are widespread changes anticipated in trade, health care, tax policy, immigration and legalization of various substances, to name a few, and known changes in demographics due to generational shifts. All of these will give rise to various events, the specific outcomes of which may be unknown but certainly can be contemplated.
We know that organizations find it difficult to plan for “Black Swan” events - we wrote about this in our blog “Black Swans vs. Crystal Balls: Considering the Unknown Unknowns”. In the case of Brexit, the event itself is in fact reasonably known (there is only a small likelihood that the train can be stopped now with Article 50 triggered, even with the coming election). The unknown portion is what it means - how will trade, access to human and financial capital, regulation, etc. be impacted by potential changes - and when the changes will take effect. Some organizations are responding proactively, setting up or strengthening offshore businesses, while others are determining how to respond defensively.
Planning for the Unknown
What stops businesses from planning for the unknown? It is often the sheer effort of considering all of the potential impacts of external factors and internal decisions in a business that is increasingly inter-connected. An impact in exchange rates or import duties impacts the cost of goods, which in turn impacts pricing and sales, which in turn necessitates changes in production or inventory, and then impacts on the level of staff resources needed for sales, production and operations, ultimately affecting the Balance Sheet. Churning through all of these connections under multiple scenarios is nearly impossible - the size of the spreadsheets boggle the mind - unless you are set up with a Connected Planning Platform.
A Way Forward
Fortunately, this capability is within reach of today’s businesses. We work with tools such as Anaplan that allow organizations to rapidly collaborate across multiple scenarios, leveraging the vast data that they already have to test and iterate plans based on a wide range of assumptions. Different parts of the business can be connected and modelled together under a consistent set of assumptions, and often these changes can be evaluated within the executive group during an interactive work session.
Businesses that take advantage of these tools position themselves to be agile in the face of uncertainty, giving them the best chance of success.