by Lynn Hinderaker, Strategic Innovation Expert
No one at the Pentagon asked the question that is critical to strategic planning: 'What if the Taliban gets to Kabul much faster than the 18 months that we are assuming? What if it only takes a few weeks for the Taliban to surround Kabul? What if everything goes to hell?
The United States military and the Biden administration did not have a plan for what is happening at this very moment in Afghanistan. If the Taliban takes over the entire country, disaster could soon follow.
What about your company? Have you challenged every assumption that you have about your operating model? Are you asking the right questions now, during this confusing period when everything is supposed to be normalizing?
Create a strategic 'plan B' that is meaningful. Here's how:
Stop focusing on issues like declining profits or market share. Instead, define two mutually exclusive options that could resolve the issue in question. Instead of analyzing the challenge, reframe the problem as a choice. Focus on possibilities. Realize that your organization must make a choice and that the choice has implications. Move away from contemplating an issue to facing a serious choice.
Turn to the full range of possibilities, including the scenarios already identified. Create a happy story that describes how your firm may succeed. Lay out where your company currently sits and how it could win there. Then develop three to five alternative possible happy scenarios. (If necessary, bring in a facilitator to energize and organize this exercise.) They do not require proof at this point. Tell a story about how each possibility could make sense. Focus on the advantage you aim to offer and the activities that would deliver the intended advantage. Note: It's important that the leader not shoot down ideas prematurely.
Specify conditions for each possibility. Ask what must be true for possibility to be strategically sound. Make a list of all the conditions that need to hold true for everyone in the room in the room to be able to say, "I feel confident that this possibility could become a reality." Ask which segments would buy or re-segment along different lines. What would the channel value? What could the end user value? Who is being underserved? What is the pricing sweet spot?
Identify barriers. Determine which scenarios are least likely to hold true under scrutiny. Does the current business model support the idea? How will competitors likely respond?
Design tests. For each likely barrier condition, set up a test that is sufficient to generate commitment.
Conduct the tests. Start with the barriers in which you have the least confidence.
Make your choice. Often, there are acrimonious debates between powerful executives about what should be done. For example, when Taco Bell realized in 1988 that they could use the low cost of beans as the basis for a Value Menu, there was great dismay among some top level managers who wanted to the chain to be the premium, high end provider of fast food. Franchisees didn't want to sacrifice profits as was required to lower prices dramatically on six core items. Pepsico executives were flummoxed. But the end users wanted to 'feel full' more than they wanted innovative Mexican food choices. The Value Menu moved forward at a 59/69/79 cent price point and the profits skyrocketed. The Plan B transformed the chain into a leader in value and it took two years for McDonalds and Burger King to catch up.
Three years later, PepsiCo executives thanked Taco Bell's ad agency account manager for his persistence in moving the Value Menu forward despite great internal resistance. His courage in resisting the status quo made PepsiCo a billion dollars, doubling Taco Bell's size.
This is what can happen when 'contingency plans' turn into 'innovation programs' and innovation programs turn into a core repositioning. It's not a reaction or even a response. It's a revolution.
Contact Growth Dynamix Consulting to discuss contingency planning and strategic renewal.