Contingency and Scenario Planning
In the process of ensuring that you are prepared for disaster at any given point no matter how good it’s going, some have coined it the phrase “preparing for the worst while expecting the best” preparation to prohibit or mitigate the damages of things going your way. The human being as a species has always evolved to expect the worst, especially when it’s going right, “waiting for something to happen while doing something about it will make the difference between a; surviving, struggling, managing, struggling company, organization, or entity. Having a risk assessment of self or separate existence will not be enough when the day you’ve dreading off happens. Sinking or floating will mean that plans have been made to ensure that something like this does not drive you into the ground.
Contingency Planning
Having a go-to plan for unexpected occurrences or a “plan B” to fall back to for survival, is the simplest definition of a contingency plan—having a laid out step by a step action plan to implement when the project does not go as forecasted, mitigation processes and an alternate route of action. Contingency plans are designed to cover the risk of the expected outcome of a business decision or failure to launch in projects. The program is used to ensure that the entity can maintain a degree of control over situations that lead them to unchartered waters and the ability to steer them back on track. The process of getting the company back on the right track with instructions on how to drive the company in the level of policy modification. Instructions will ensure that the plan can be initiate from the top-level management to the lower classes of employees.
Imagine a small business owner waking up to all of his employees out because of food poisoning from Sunday barbecue. What is he supposed to do? Does he get part-time employees? If yes, where does he get the employees? Having a contingency plan might save the business owner money and customers if he had a laid out idea on what to do on such a day. Ensuring that every entity has a contingency plan which has been well crafted to suit their needs demarcates the line between good business models and the rest. The higher the risk associated with the specific business design, the need for a contingency plan. It is essential that a contingency plan is crafted for any business, company, organization, institution, or establishment.
Contingency plans are a measure that should be taken to ensure that the business does not make losses or other negative impacts. It is necessary to insist on the importance of a contingency plan for any entity. The contingency plan is essential in that it makes the business prepare for the future, which is a good business practice. Preparing for the eventuality of an unpleasant scenario with preemptive planning will save the company. Enhancing the flexibility of the entity is another vital function of a contingency plan implemented. How easily a company can adapt to change in the environment or other external factors is referred to as its flexibility. Changing the course of action while still maintaining the same results help a company bounce back quickly after a crisis.
Planning for certain situations will mean that when the event happens, it takes a shorter time to react to the problem and recover. Knowing what to do when specific processes fail will even help the management in the office to implement the best course of action without having to go through the filtering process of proposed action plans. Having an absolute path of action also enhances the confidence of employees on what they are doing and in the company generally. The contingency plan is designed to work in case of failure; hence it is a sure correct action plan that the company can rely on to take them out of such occurrences. Your workforce knowing that there is a way out prevents panicking during uncertain eventualities. Uncertainty brews no-confidence in the establishment, but knowing that a plan for implementation is available restores calmness. The contingency plan contains orders for action for every level of employees to ensure everybody knows what to do.
Scenario Planning
Scenario planning is another tool that entities and individuals use to mitigate the risk of uncertainty of the future—having the knowledge of what will happen using predictions and trends of the market help a company plan for the future. The over forecast and underprediction of the company’s future will result in the wrong action plans being implemented. Evaluation of business strengths and weaknesses is one of the initial stages of scenario planning. Knowing your weaknesses will help in determining where you most expect the failure to occur. The evaluation will enable the company to create mitigation practices for the most common areas where they feel like the error will occur. Scenarios that are expected to happen are listed, and the most relevant ones are chosen and implemented.
Information gathering on the specific area that mitigation will be needed needs to be conducted conclusively to make sure that the right decision is being made. Having this kind of information helps the development team to narrow down on where they need to focus the attention and resources. Assumptions of the future environment need are based on research facts that identify most likely scenarios to happen. The same information will also be useful in determining the best course of action when the different realities predicted to occur. The ability to stay within acceptable ranges of prediction of the future close consideration will be taken on how the various scenarios were chosen.
Every possible future outcome possible, a different scenario is drawn up that would best suit and mitigate the problem. The list generated, the choices are filtered to remain with the most plausible course of action. A successful scenario planning process will try to be as close to the real future as much as possible. Aiming too low will result in reduced performance of the entity while aiming too high might cause overstretching of resources. Studying the scenarios will enable me to create a plan that addresses core patterns and uncertainty. Ensuring that the choice of strategy to go with will be the difference between successful planning.
The process of Scenario planning is as much important as actually implementing the plan in a relevant situation. The process ensures that the best outcome of the tool is gotten and that every possible better outcome has been captured in the list. The process starts with defining the scope and the time frame that the process will take. The time that it takes to come up with the scenario will be determined by different factors, both internal and external. The production process of manufacturing and the technological change rate, not to forget competitors. The investigation of the trend over a certain period, like five years in the past, will help when coming up with a scope for five years in the future. Including different parts of the organization will ensure that you capture all their concerns, which will help n the development of the scenario.
The second step or most logically preceding process is the identification of the major stakeholders that will affect or be affected by the planning and the trend. The stakeholders that are responsible for the everyday running of the company will be the most affected if the plan does not go as expected. The employees, customers, suppliers, government, and competitors are perhaps distinct stakeholders. The position and responsibilities of the different stakeholders also help pave a way on how the company has been, and by observing the changes that have happened to those positions helps shed some light on how it’s going to be even in the future.
It is then vital to study the trend to ensure you capture the social, political, economic, legal, and technological trends that will affect the decisions you need to make. Make a detailed report of how each pattern is directly changing your company and what kind of influence it will have on the general decision-making process. Capturing the path of specific trends will ensure that you make the right assumption for the future and better prepare for it. The stakeholders involved in the process should agree that the trends will continue like that. Then you need to identify the main uncertainties that will arise from different events happening. Using the pattern and the current state of things in the society, political scene, market, or industries, investigate which are the most likely uncertainties and the relationship between different possibilities.
After you have gone through the initial steps, it is time to develop your scenario using the information collected from the above steps and what you have learned. Considering each factor evaluated, create a situation using the trends and traits observed. Developing a stable scenario will test your grasp of the different environments that affect the business. Evaluate the scenario after development to ensure that what is written does not look like science fiction but is borderline creativity and imagination. Using knowledge acquired and experience evaluate the potentiality of the actual occurrence of the scenario in question. Ensuring the focal issues and uncertainties have been addresses can build confidence in the situation that has been developed.
You, however, need to ensure that you reevaluate the scenario to investigate the need to update strategies and policies driving the company in response to the environment. Have it flexible in ways that you can adjust to current changes in the different situations that the entity operates. It should be done after a particular predetermined time to ensure that it does not become stale. The importance of developing scenario planning is apparent for any business, project manager, or organization. Operating in unpredictable environments will need any individual to stay vigilant not to be overtaken by events that they do not have control over, ruining the chances of success.
The process of scenario development is essential to ensure that the proper development of scenarios is achieved and all the factors considered. The driving forces of the process should be well investigated to ensure that the scenario captures all their needs, which will be useful in strategy development. Evaluating process planning ensures that every step has been carefully planned and that everything has been considered before being decided. It outlines the decision-making process to make sure that all plausible outcomes have been captured in the scenario. The successful development of scenarios will significantly rely on the competence of the scenario planning process.