Expect the Unexpected

While it’s always good to hope for the best, it might be more important to actually plan for the worst

by Bill Huang

Hope for the best. Prepare for the worst.

How many times have Southeast Asian entrepreneurs heard that prescription, and more to the point, how many times have they visualized — maybe even vocalized — that first part, but simply tuned out the second part? Answer: every time something bad happens for which the response is, “Didn’t see that one coming.”

There are any number of events that business owners are loath to consider precisely because they’re too busy trying to develop an overall vision, develop consumer-response, delivery, and after-sales systems, and keep teams functioning and focused on both short- and long-term targets.

These could include: power outages that run for days or even weeks, internet connection problems that cripple online businesses, loss of key personnel to resignation or illness, product failures that lead to serious injury or worse, or even inappropriate social-media posts that spark online reactions that require immediate damage control.

As Dan Matthews of MinuteHack, in his guide to contingency planning for entrepreneurs, put it: “When you’re running a growing business much of your attention is focused on planning for events that will definitely happen … it might seem inconceivable to devote time and effort to events which may never take place — especially when the events are unpalatable. But it’s no exaggeration to say that taking time to plan for the worst could mean the difference between your business’s survival and its failure.”

According to Matthews, “the simple goal of a contingency plan is to maintain proper business operations during an unforeseen disaster.” In summary, the main steps involve:

• Identifying key personnel needed to deliver a minimum level of service and functionality. Who do you need to keep your business running even when a disaster strikes?
• Conducting a risk assessment of the various hazards your business faces and prioritizing them according to their likelihood of happening. List the things that could happen, in descending order of their likelihood of happening, and address each one in that order.
• Developing an action plan for each doomsday scenario, including the trigger(s) for each plan, when to mobilize, and steps for each staff member to take in each plan. Spell out, as specifically as possible, the different circumstances that should trigger each plan, and staff members’ specific responsibilities under each plan. 
• Discussing the plan with staff. Whether you drew up the plan yourself or in consultation with others, when the overall plan and all the scenarios have been drawn up, present the whole thing to everyone when it’s done.
• Testing the plan. No matter how good it look on the drawing board, the proof of the plan will be in the testing. Your plan can, will, and should evolve as you test it in the real world.

Neuroscientist Daniel Levitin, in a recent TED talk, recounted his own experience of breaking into his own house after discovering he had locked his keys inside in the dead of a Montreal winter, the night before he was scheduled to leave for Europe.

He broke a window to get in, then had to worry about arranging to have the window fixed while he was going to be away. Then when he got to the airport the next day, he found that he’d left his passport at home. As he described it, “my thinking was cloudy, but I didn’t know it was cloudy because my thinking was cloudy.”

The entire experience got him to wondering if there was something he could do to “prevent bad things from happening or at least … minimize the likelihood of it being a total catastrophe.”

The answer, he said, came courtesy of psychologist Daniel Kahneman, who suggested practicing “prospective hindsight,” otherwise known as “the pre-mortem.” If the concept of a post-mortem involves analysis of a disaster to figure out what went wrong, a pre-mortem involves looking ahead and anticipating everything that could go wrong, and then figuring out what you can do to either prevent those things from happening or, if unable to do that, to at least minimize the damage.

As Levitin reminded his audience, “when you’re under stress, the brain releases cortisol. Cortisol is toxic, and it causes cloudy thinking. So part of the practice of the pre-mortem is to recognize that under stress you’re not going to be at your best, and you should put systems in place.”

And yet, the most important benefit of anticipating scenarios and developing systems might be in something so simple it bears repeating, lest it get overlooked. In the words of CFO Frank Friedman of Deloitte, “No doubt, you’ll put steps in the playbook you’ll never take, and you’ll probably omit things that you will end up doing. But in a period of crisis … (Y)ou’re not taken by surprise if ever there is a crisis.”