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It’s time to think “What-if”

Feb 27, 2012 Business Daily, Strategy

“A tumultuous 12 months that saw revolutions in the Middle East, a worsening debt crisis in Europe and a tsunami in Japan has set the tone for corporate activity in 2012.
Caution, flexibility, nimbleness and deep knowledge of host countries are more important than ever, executives and their advisers said at the World Economic Forum’s annual meeting.
Fear of a major geopolitical disruption over the next 12 months has risen to 54 percent, up from 36 percent last quarter, a WEF poll showed at the start of this week’s meeting.
“You have to more than at any time in recent memory think in terms of ‘what ifs,'” said Vasant Prabhu, chief financial officer of Starwood Hotels & Resorts Worldwide Inc (HOT.N).
“This is a world in which you have to think in terms of scenarios and alternate outcomes and what you would do.”

REUTERS (January 29, 2012)

Business leaders gathered at the recent World Economic Forum seemed to come to an important realization: no one really knows what’s coming next.

(I could have told them that on Twitter for free, but they prefer to hear this stuff while rubbing shoulders in swanky settings.)

I have been sending the same message to every corporate I interact with in recent years: we’re all winging it now. No one knows what’s going on, and no one knows what we have to prepare for. Consider the following:

What if you were a business with deep interests in Egypt, Libya and Syria in 2010? Did you know what hit you in 2011? What if you were a globally-dominant mobile-phone maker called Nokia or BlackBerry in 2008? Could you have predicted your market trajectory downwards after that year? What if your core revenues came from the apparently very strong economies of Spain, Greece and Ireland pre-2007? Where would your business be today?

Today, Arab countries are in the eye of the storm of violent political revolution; European countries are engrossed in a game of pass-the-parcel as they try to avoid a ruinous debt default; and once-dominant technology companies fall like flies.

Africa faces its own hugely disruptive force: the coming-of-age of a VERY young, VERY connected and VERY disloyal population. This has very serious consequences, as these people are the consumers and employees of tomorrow. And they are nothing like any generation that came before them.

So what are you going to do, business decision-makers?

The answer is to stop planning and predicting, and start building resilience and a culture of experimentation. The era of stable 5-year plans is done and dusted, and the era of severe uncertainty is with us to stay. Now, it’s all about your philosophy of business rather than your plan; your ability to recover from the unexpected rather than your ability to manage business as usual; your intangible strengths rather than your physical assets.

Strong brands and strong bonds are essential in this environment. Your survival will predicate on how well your customers regard you and how essential you are to their lives; and how much you can attract the most talented employees to give you, rather than your competitor, their best years.

It will also be a time when the most avid experimenters will win. You are going to have to try 10 different things in order to produce one or two winning ideas. It will be a time to fail in many things in order to win in a few. So prepare yourself and your organization in the art of failure: fail often, fail small and fail fast. Learn every lesson from every failure deeply. Then win. Maybe.

This is the age of paradox: a time to have a very clear, but intangible, core to your business; and a time to have a continuously changing periphery. If that sentence makes sense to you, you have a hope.

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