The pre-emptive strike

By challenging and testing the assumptions of your company’s strategy, you create a stronger organization. How does your management team manage the process?

By Peter Wright

Strategic planning lies at the heart of business success. It helps to motivate all members of an organization towards goals, and clearly solidifies the company culture. But senior management must also take into account potentially negative circumstances to make this vision of the company’s success solid and enduring.

What would it take to make your business fail? What conditions could precipitate and sustain a spiralling of the organization’s fortunes? If your primary competitor acquired the firm, where would they strip out expenses, and what assets would they covet? These are difficult questions to consider, but sometimes it’s necessary to envision complete failure to understand how to prevent it, and find the next level of success.

Third-party perspective

Envisioning the failure of your organization is not a pleasant exercise — in fact, it can be downright scary. In life, and in business, none of us like to think about potential failure, let alone describe it in gory detail. Yet, in a controlled environment, it can be one of the most useful and enlightening discussions a management team will ever have. Creating a vision of failure forces management to:

• critically understand, challenge and test the assumptions that company strategy is built on;
• look at the business as an objective third party might;
• determine, with remarkable clarity, weaknesses, gaps, and opportunities;
• put traditional risk assessment into a broader and more useful context;
• be truly innovative in finding new sources of growth and strength;
• learn to recognize potential warning signs of real failure, before it is too late; and
• align their thinking on key issues that usually remain unspoken.

The exercise is straightforward. We’ve all been through workshops and strategic off-sites to create a vision of the future, and a strategy to get there. In its traditional form, a typical vision statement spells out where you want to be, and what the company looks like at a point in time in the future. In essence, the traditional vision statement is a snapshot of the desired future state of the company.

Rather than create a vision of a desired future state, envision varying degrees of business failure, and what events, inside and outside of your control, might contribute. A few pointers for success:

• Keep the session secret. The very notion of doing such an exercise can be alarming and distracting to employees. Without the proper context, shareholders, customers, and competitors will draw misleading conclusions.
• Keep the results secret. The output from the session is an articulation of your flaws and weaknesses, and could be dangerous in the wrong hands.
• Use a consultant that is experienced with similar exercises. This exercise can get badly off-track if not handled expertly.
• Be prepared to act on what you learn. If you won’t take steps to change based on the results, then don’t bother with the exercise.
• Be as open and objective as possible. This is not a session for management to air their pet peeves, and bemoan everything that is bad about the company.
• Ensure the work is properly sponsored. If such an exercise isn’t fully supported by the CEO or division leader, it can’t hope to have a positive impact. Make sure this support is there from the start.

Careful preparation and follow up are as important as the session itself. After the session, you should have a solid statement of just how things could go wrong. Like a traditional vision statement, a vision of failure will be more useful and practical if it is strategic, but specific. Choose a planning horizon 3-5 years out to keep the discussion grounded. Make sure the potential challenge points are measurable, so everyone is clear of what they are working to avoid.

Removing the mystery

As with traditional strategic planning, once you have your vision of potential future challenges, you need a plan. The output of the exercise should include well-defined actions with clear timelines and accountabilities for members of the management team.

There are crucial side-benefits to envisioning failure. After you go through this exercise with your management team, you’ll find that in your usual forums, negativity creeps into the conversation a lot less often. Like facing any fears, envisioning failure helps to remove some of the mystery, and makes it easier to face. When negativity does surface, the team will look at it more thoughtfully, critically, and usually with less detriment to your real agenda.

Talk to anyone that has been deeply and personally involved in a real business failure, and they will likely tell you that things became very clear near the end. There is nothing like winding down a business after failure to help you step back and really understand the big picture with remarkable clarity. Like a failed marriage, it’s often easier to see where things started to go off track when it is too late to do anything about it.

This work is not for the faint of heart, but the results are powerful.

Peter Wright (peter.wright@theplanninggroup.ca) is president of The Planning Group and author of the Business Planning Boot Camp series.

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