Beyond Survival

So many businesses — large and small — seem to have gone into survival mode over the past two years. Hiring is frozen, or still declining. Investment, ditto. Growth plans are on hold. Debt is being paid down and cash is being hoarded. The result is a stagnant, and possibly, declining and deflationary economy. Paralysis reigns.

What a great opportunity! When else would you ever expect to find many of your competitors so hunkered down and fearful? This may be as good as it gets.

The question you should be asking is how best to take advantage of this rare opportunity.

But there is an even more important question that you have to answer beforehand:

How can we survive an extended, and perhaps unprecedented, period of great uncertainty?

Managing To Survive

This is a fundamental issue facing all organizations today. It has generated the common reaction of cutting costs and investment and building up cash reserves. Extreme caution rules. To succeed, you first have to survive.

Reactive approaches to survival may very well turn out to be damaging to your ability to survive. These approaches may decrease flexibility to handle new shocks. Worse yet, they may open your business to attack by aggressive competitors.

To truly increase your survivability, you have to know where your most important vulnerabilities lie and how to strengthen them. Do you know where your critical vulnerabilities are?

Major uncertainties, particularly of the "black swan" variety, are simply unknowable in nature, timing and severity. Trying to forecast them is a complete waste of time. Relying on such forecasts may be fatal.

What you can do is to make your organization more robust — able to absorb a variety of possible shocks without major damage resulting. Robustness is the key to survival.

We look at some ways to increase your organization's robustness in our discussion of Survivability.

Managing Beyond Survival

This is where you look at uncertainty as an opportunity to make gains that may be impossible under normal business conditions. Many, or even most, of your competitors may be paralyzed, distracted, or severely weakened. If you are prepared to act, you may be able to succeed to a degree simply unattainable in normal times.

Focus is critical. This is not the time for big gambles. You have to know where the best opportunities lie and to have made preparations to go after them. Lead time to be able to focus and prepare to act is vital.

Much of what you might do here will look familiar since it is what you would do in normal times — except for the constraints imposed by robustness requirements. See our Managing for Success page for more.

Business-As-Usual May Be Fatal

Extreme caution, which may be the same as paralysis, leads in most cases to a defensive focus on business-as-usual (BAU). Rarely, however, is this approach effective under highly uncertain conditions. In some number of cases, it may so weaken the business that it will fail.

Doing nothing — that is, doing business as usual — is always an option and a very popular one. It assumes that what worked well in past will work well in the future, even a very different and disruptive future. If you are hunkered down with a BAU strategy, you are placing a pretty big bet on this assumption being correct. The bet stakes may well be the entire organization. A huge gamble for very uncertain times.

You need to be very confident that your BAU strategy is capable of ensuring your survival. This means that you should carry out a survivability analysis with this strategy as one of the primary options.

Next: Survivability

Addressing survivability can be done without analysis but you risk missing the critical targets and getting your priorities wrong. Here is one approach that you may want to think about ... Next ...

 

The Gathering Storm

As this page is being written (3Q2010), the economic and political indicators are in turmoil and rather ominous. It is getting increasingly difficult to foresee a positive scenario unfolding.

What appears most likely is that uncertainty will remain high and most businesses will remain cautious, if not paralyzed, for some time.

Also very likely is that nobody knows what will actually happen. Prediction track records are predictably poor. Some will get it right but predicting who is impossible. The broken watch that is right twice a day applies here.

In the absence of reliable predictions, we have only our robustness to fall back on. We know our vulnerabilities and we are working to reduce them and to build defenses.

Survivability

The first step is ensuring your survival under whatever may occur in future. Reliable prediction is not possible.

Action Plan for Survival
builds on the survivability discussion by offering some ideas for improving survivability in practice.

Managing for Success

The second step is taking advantage of the rare opportunities created by uncertainty but subject to critical constraints imposed by your survivability plan.

Action Plan for Success describes some ways that you might consider for taking advantage of these opportunities.