Post COVID-19 retail strategy: Remember scenario planning
If you have ever worked in an office building, chances are you have had to take part in a fire drill. Or another safety drill of some description. Acting these out can feel obscure, morbid even. But they are valuable.
The same is true for your business. While few (if any) businesses would have put “the whole world shuts down because of a global pandemic” on their list of scenario planning – despite scientists warning repeatedly it was not a matter of if, but when – the renewal and recovery post-pandemic has kickstarted a lot of strategic planning.
For retail businesses, online and offline, scenario planning is critical. It is more than just planning out a what-if situation.
These are not just ideas and responses to things that might happen in the future. Scenario planning considers a variety of plausible, coherent and substantially different situations and how your business will respond to those. These exercises can shed light not just on how prepared you are as an organization, but reveal insights into members of your team and how adaptable they can be should the world be turned upside down (not again, please).
Scenario planning is a pillar of operational excellence. Scenario planning removes the blinders of the past by allowing visionaries to rapidly evaluate what will need to be done, what resources will be required to accomplish the tasks and where to find and achieve the highest value in the shortest time.
The big disadvantage of process thinking is that it focuses on actions rather than outcomes. As such, it is far less descriptive and less actionable than vision, yet more predictive than a KPI.
Yet, from a developmental point of view, a consideration of scope and time is critical for an organization's decision-making process.
It is imperative to conduct strategic planning with peak time-efficiency. But where do you even start?
Glad you asked.
If you are looking to accelerate your business growth now that most countries are entering the post-COVID-19 recovery period, scenario planning needs to form part of that. We don’t know what the world is going to look like a year from now, making scenario planning all the more difficult.
But we can drill down into the foundations of understanding how scenarios are created, organized and processed in order to provide a practical framework for more advanced and integral strategic planning.
Start by creating and organize scenarios, not just problem solutions
Scenarios are created to facilitate the execution of a strategic program or a response to something.
However, the concepts of scenario-oriented problem solving, and scenario-oriented action planning are applicable to any real-time planning process.
What are the scenarios used in scenario planning?
Scenarios can be viewed as a series of logical decision-making events. However, rather than explaining the logical process behind each scenario, it is important to point out that the development of a scenario is not driven by logical reasoning. Rather, it is driven by interrelated and contextual factors such as:
- structural capabilities
- mission requirements
- operational needs
- elements of decision-making
Although each scenario may not fit under any single category, several scenarios can be described as strategic planning and operational planning in where several subcategories are employed.
One of these subcategories is an organization-focused scenario. Another is a value-based scenario.
Anyone who understands how disruption impacts strategic and organizational decision-making at companies can help make effective adjustments to prepare their own teams for risk and uncertainty.
Most organizational leaders now act as strategic consultants for corporate scenario planning research, but not many have their experience in planning and executing scenarios.
Those who work frequently with their CFOs on the preparation of financial scenarios – which are more specifically linked to the operational plan - will need to adjust their skills when it comes to developing scenario planning skills. The most important thing to remember is that scenarios are not meant to forecast the future. The outcome is not meant to be a prediction or a contingency plan. These are not strategic solutions to respond to what you already know. Scenarios are things that are beyond the control of your organization. They are external crises that cannot be influenced by your business. You know, a bit like a global pandemic.
Things to keep in mind when scenario planning for retail
One of the biggest lessons from COVID-19 is that far too many retail businesses simply weren’t prepared. That includes ecommerce shops which simply could not keep up with the demand or who had their supply chains completely disrupted – due to closed borders or other restrictions on movement - bringing their manufacturing to a grinding halt.
Customers didn’t go away in that time. In fact, due to the lockdown restrictions, in the online world, customers increased as more people adopted online shopping for the first time.
While scenario planning can feel a bit like make believe or blue-sky thinking, outlining the objectives from the start can make these ideas a great success.
The key outcome to scenario planning is to ensure your business stays on the path of growth even in the grip of severe disruptions. An example of this is, as already mentioned, what would happen if overnight, the demand for your product multiplies? You do not have to invest in that infrastructure right now, but you should know where to go if that does happen. It’s a bit like stress testing your ecommerce infrastructure but on expert level.
Finding at least one definitive outcome to pursue for each scenario - even if the solution seems farfetched – is also helpful. Do you know where to find oxygen tanks if the atmosphere disappears, for example? Okay, that’s hyperbole.
A more practical example would be considering what would happen if the province or state you lived in suddenly became independent. Would there be visa-costs and duties imposed? And if so, would your retail business still be profitable in that case? Are there any alternative solutions that could help you weather the exit storm?
This is not as obscure as you might think. Consider the impact that Brexit will have on the United Kingdom, for example. For many businesses, the solution was not to absorb the potential costs, but rather to forge new partnerships with EU countries.
Scenario planning can unveil opportunities you might not have considered before and which you can implement straight away.
Most importantly is to ensure your team knows how they are expected to respond should it all come tumbling down. Some organizations appoint “action” teams to respond to these external scenarios, but that is entirely dependent on your business model.
Long story short: introducing problem-solving, puzzles, and playing with this inside your business isn’t just about the team building, and scenario planning is even more critical for early-stage and high growth businesses - because, even without a global pandemic to mess with your vibe, when you’re moving fast, things can and will change overnight. Is your team ready?
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