Is contingency planning worth it?

Over the past few months, businesses have had to contend with a rapidly changing environment in which the goal posts have shifted hourly. Contingency planning done at the beginning of a week has had to be revised only days later.

It has been the ultimate test of business resilience and leadership: thinking the unthinkable, adapting to a global shutdown and managing employees remotely, while supply chains and cash flow have collapsed. So has contingency planning been the saviour of business or just a waste of time?

Exposing the flaws in forward planning

For many businesses, the problem has been that planning was limited to familiar scenarios of business interruption or damage to premises.

“The plans may not have dealt with long-term shutdowns caused by external factors such as pandemics,” says Rick Smith, managing director of Forbes Burton, company rescue and insolvency specialist.

As the threat increased, daily updates from the government began to indicate that national lockdown, initially seen as unlikely, was set to happen. This led to many companies playing catch-up.

Plans in many cases were inadequate and inflexible, says David Poole, chief executive of technology-focused consultancy Emergence. “They are typically formulaic, bureaucratic box-ticking exercises sealed away within one department and invisible at the strategic or board level,” he says.

“In the future, contingency planning will need to sit at the very centre of the business, be discussed at board level, and involve a complete paradigm shift and a digital overhaul of processes, policies and personnel. In short, immunity needs to be baked into the corporate DNA.”

Think disruptively and prioritise ruthlessly

One of the most striking aspects has been how quickly some companies have been able to adapt, thanks to brave and disruptive thinking by leaders.

“Respirators are rolling off the production lines of car manufacturers and food wholesalers without restaurants to supply are delivering straight to consumers,” says Nicky Little, director at leadership specialist Cirrus.

Yet for others, the pandemic has exposed sloppy planning and revealed the pitfalls of many formulaic contingency planning strategies.

“From the outset, the pandemic checked all four boxes for impact,” says David Nolan, founder and strategic adviser at Fusion Risk Management. “It was at once a workforce, workplace, supply chain and technology event. The organisations that have thrived were focused on combining what was knowable in advance with situational data to clearly understand the situation they are confronted with.”

Paul Smith, executive vice president and general manager of Salesforce UK and Ireland, says businesses are having to reimagine and make decisions faster than ever before. What once took months is now taking days.

“At Salesforce, we think of this crisis in three distinct phases: the crisis response; recovery and getting back to work; and the new normal. Whereas the initial phase demanded a fast shutdown, the second phase will see the gradual return to offices and other physical locations.”

He points out that as businesses start to reopen, there will be a huge need to upskill staff so they can adapt in a world rapidly becoming digitalised.

Is contingency planning a waste of time?

The challenges of COVID-19 have shown that far from being a waste of time, contingency planning has been the saviour of many businesses. But it is only effective if it is flexible and innovative.

“Strategic and successful contingency planning will always require regular reviews, rewrites and updates, and cover scenarios that may not occur,” says Mark Halstead, partner at Red Flag Alert, a business intelligence solution.

“This isn’t a waste of time. It’s time well spent, helping prepare a business for the worse, and can prove the difference in how a company either fails or survives a crisis.”

In certain sectors where safety is paramount, business continuity planning and emergencies are an integral part of planning.

“We had an outline pandemic plan,” says Clare Barlow, chief human resources officer at the government’s National Nuclear Laboratory. “This was a rapidly moving situation, where we had to adapt to travel restrictions and lockdown.”