The current economic crisis gives us plenty to worry about. Markets despise uncertainty and yet seem to find ways to profit from exploiting it. We are in the middle of a deep recession with forecast estimates of recovery stretching from early to mid 2010 depending upon our mistakes and luck.
But for many, volatility and uncertainty can be a wonderful thing since every strategy that every client put together is now back on the table as facts on the ground, market conditions, and the opportunities and risks they present have changed. As we look for insight to see through this fog of uncertainty, most know they must refresh their strategies refocused on the future. In so doing, we regain confidence by executing around a focus on the future when we need it most.
What has not changed is the power of scenario analysis as a tool for rehearsing the future and managing uncertainty. Only a few months ago we were debating how high oil prices might go and the implications of such a spike. In doing so, we fell into the most common strategy trap of all—assuming that current conditions will be projected into the future as they are now. Now as we experience falling oil prices and a tanking economy we are talking about the broken fragmented future ahead. But the same lesson holds true on the correction side of any business cycle.
The truth is we have just experienced the amazing power of “what if” in living, frightful shock and awe. Both high oil prices and low oil prices offers an alternative view of the future that is sharp, distinct and fraught with possibilities and risk.
So what should we do now? Think! Think broadly about the opportunities and risks we face. Think about how these changing economic and market conditions are affecting competitors. Think about the shifting balance of power, market share, capacity for change and global positioning and the opportunities and risks offered.
Think about strategies that perform well across several alternative scenarios.
Thankfully, time is not an ally. If the economic forecasters are correct about the length and depth of the recession we have a narrow window of opportunity to get our acts together to assess the opportunity in this carnage. For those on the sidelined or in trouble this seems like an eternity. But for those adapting their business plans to re-position their business for a competitive future in the recovery ahead—immediate action is needed to use this time wisely. Even the process of considering the future is liberating for those who find themselves like deer in the headlights. Strategic thinking that is focused on positioning for the future is like a flashlight peering into the darkness.