One of the greatest challenges facing business leaders today is uncertainty. We’ve all heard the adage, “the only constant is change”, but when it comes to business, change and the uncertainty that comes with it can be paralyzing. We are in times of greater uncertainty than ever before and this is unsettling to many of those responsible for planning and directing companies. Businesses need to be prepared and to plan appropriately for contingencies in order to reduce uncertainty.
Everywhere they look, business leaders see uncertainty. There’s the roiling global economy, ever-changing credit policies, new demographics as immigrants search for a better and safer life, rising trade protectionism, regulations that change at the whim of the next party in power, global military and security threats that lurch from one crisis to another and more. All of these contribute to the sense many executives have that the situation is only barely under control.
This has a significant effect on the strategic goals of many businesses and interferes with their planning. Companies are more and more focusing on planning for the short term, putting out the fires that keep cropping up and losing focus on their long-term goals. The effect is that instead of being ready to face the challenges when they arrive, companies tend to be unprepared and have inadequate plans in place for the uncertainties that loom ahead. The common business wisdom, which is absolutely true, is that if you fail to plan, you are planning to fail. Strategic planning for uncertainty is essential. It’s too late to plan for the crisis once the crisis arrives. The time for planning for contingencies is when things are going well and this is a trap that many executives fall into.
The importance of the five-year plan cannot be overemphasized. It might be argued that with such uncertainties, how can we know where we’ll be in five years? But in reality, that’s just an excuse to avoid planning. There has to be more than just a desire to get through this year without being concerned about the long term.
When business leaders look at the long term it forces them to make a review of the potential hazards that lie ahead. Scenarios can be envisaged and weaknesses identified in areas that need improvement. The knowledge gained may alter plans somewhat, such as setting more funds aside in reserves for contingencies by paying less dividends. A sound plan backed by a risk analysis will be needed to convince shareholders that this step is necessary. Yet done prudently and carefully, such an analysis will allay fears and bring certainty back to business management in an uncertain world.
Strategic Planning Agencies in Australia
Having made a thorough examination of the risks and potential hazards in every area facing a company, business leaders will be confident and ready to face whatever lies ahead. Uncertainty will be replaced by readiness.
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