Nobody expects the Spanish inquisition. But many people had to deal with it nonetheless.
Likewise, nobody expected the current crisis and its specific implications on business. I’m not talking just about the fact that we can’t fly anywhere and all conferences are canceled (I know quite a few companies who relied heavily on conferences as their primary marketing channel, they took a serious hit). I’m talking about what happened to the travel industry, the show business, and restaurants. A severe crisis which all of a sudden just stopped the entire business. These industries were and some still are on hold for a long time. An extremely difficult business situation.
Still, some responded quicker than others. Take for example Airbnb’s Online Experiences – a new service launched in April, as a resolution for both the company and their hosts to make a living while their primary revenue source had gone missing.
Should anything like this happen to your industry or product, how can you be among the companies who respond quickly, and increase your chances of surviving the crisis with minimum impact?
Chance Favors the Prepared Mind
Two years ago, I participated in an entrepreneurship workshop that included coaching from the Olympic medalist Arik Ze’evi. Arik talked about the endurance and the mindset needed to be able to succeed in such a long journey, with so many ups and downs. You see why it’s relevant for entrepreneurs right?
One of the things Arik mentioned, was that you need to prepare yourself for the worst case scenario. Not in a diminishing, “I’m not going to make it”, kind of way. But truly prepare – think about what the worst case actually is, what you are going to do – almost deal with it before it happens, so that if and when it happens you will be prepared and won’t lose your way.
In this article I am going to cover four questions, that if you answer them, you will be much more prepared when the storm comes. The important insights you get from this exercise are relevant even if it never does.
This is a great exercise to do on your own, and even greater to run together as the company management. If you do the latter, my recommendation is to give each member of the management team to think about these questions on their own, and only then share everyone’s perspective and discuss. There is no right or wrong here, so the more points of view the better.
Question #1: What Is the Worst Case Scenario?
To prepare for the worst, we need to think about it in advance. This is not something we usually do as part of our hectic day-to-day. Most companies don’t do it even as part of more strategic planning efforts. But what can go wrong is an important question to look into – both for understanding where you are vulnerable and for preparing in advance for a future hit. Salesforce, for instance, has a format called V2MOM for planning of strategic initiatives. The ‘O’ in it stands for ‘Obstacles’. That is, in the planning, before the initiative gets approved, you already are expected to think about obstacles and explain how you are going to overcome them. Salesforce calls this method their secret to success.
These are, however, the obstacles that you already see, and have to deal with them no matter what. COVID-19 wouldn’t appear in any of these documents for the industries I mentioned above. So while you should include obstacles as part of your regular planning efforts, I would recommend at least once a year to think about what your COVID-19 could be.
I often recommend using fairies and wizards to unleash yourself from what you already know possible. For today’s exercise, you’ll need to call the devil himself.
To get to your own industry or product’s COVID-19, ask yourself: if someone with unlimited power and a vicious mind planned the worst for my product, what would it be?
Write it down in detail and include the specifics of the situation. It should be at least a few paragraphs long. You need to feel very uncomfortable when you read it. A complete loss of control mixed with really bad luck. If you don’t, it’s probably not your best worst case scenario. You can try harder.
At this point, by the way, you don’t need to think about how to resolve it. It will only interfere with your ability to come up with a really bad scenario. In fact, you want to try to come up with something you can’t resolve. If you won’t, there’s a chance reality will.
Question #2: How Is It Bad and How Bad Is It?
We know it’s bad, otherwise you wouldn’t be in step 2 already. But ‘bad’ is a very general term. In answering this question, you want to dive deep into the implications and consequences of the scenario you described in the previous question. You want to understand exactly the mechanism of how this situation would impact your business, as well as the magnitude of it.
This process is revealing vulnerabilities in your product or business strategy that you probably haven’t seen before. That in and of itself is a huge gain.
When you look into the potential damage, try to quantify it. You want to make it as real and vivid as possible. It will require you to take a close look at the dependencies you have in and out of your company. Try to stick to the worst case scenario, and assess the damage at its worst. You want to understand how vulnerable you really are, even if the chances of it actually happening don’t seem high.
Question #3: What Would You Do?
If the worst case scenario actually happens today, what would you do? How would you react? Thinking about it not as part of the crisis itself is a very powerful tool, first and foremost because your mind can actually think instead of responding from the primitive fight or flight mechanism we all use when we face danger.
Again, try to be as detailed as possible and eventually quantify how much you would be able to save. Quantifying has a double purpose here: first, it forces you to be specific and get into the right level of detail. And second, it helps you see the bottom line, and re-assess how bad this scenario really is.
In some cases, you will find out that it’s not as bad as it initially seems. In other cases, it only amplifies the magnitude of the problem, since it seems like no matter what you do, you still have severe damage. Potentially, a deadly one.
Question #4: What Can You Do to Prevent It?
Even if you stop here, you are already at a much better place than you were before this exercise. You learned a lot about your business, exposed new vulnerabilities, and made plans for a rainy day. These are all helpful and important things.
This last question is a game changer though. Because in most cases, you do have things that you can do to make your company more resilient to begin with. That’s the reason I recommended doing this exercise at least once a year, so that you have the opportunity to embark on these prevention efforts as part of your strategic plan.
When you answer this question, focus on preventing the damage, not the situation itself (because that is usually out of your control anyway).
Note that not every idea is worth pursuing and putting into action. Product and business leadership is about risk management, and some risks are not worth mitigating, especially when it requires very high effort. But you want to take this decision knowingly, after it is well thought of and considered.
You might find out that there are small things you can easily do, that would reduce most of the risk. You might find out that since the risk is deadly, major efforts you planned for the future might be worth starting earlier.
If you decide to leave the risk unmitigated, make sure to at least set the process to keep an eye on it. Ask yourself these two final questions: how do I know it’s coming? And how frequently should I check? If you can find early signals that you can check easily and frequently, it might be ok to do nothing else.
No matter what you decide to do, the insights you will gain as part of this process are priceless. And even if you guessed wrong, and another worst-case scenario happens eventually, you are still much better shaped to deal with it now.
Nobody expects the Spanish inquisition. But what if you would?