Why Scenario Planning Is Critical in Times of Uncertainty
Being a business leader today is stressful. With all the uncertainty the pandemic has brought upon us from an economic, business, and human perspective, how do you balance the health of your team with meeting the needs of your customers and ensuring the long term financial viability of your business when you are surrounded by unknowns? As I wrestled through these questions at Puppet, I found the answers lie not in trying to guess how the future might play out (eg. forecasting) but looking at the variety of ways it will ultimately play out (eg. scenario planning). By moving from a “forecasting” to a “scenario planning” mindset it is possible to determine no-regret moves that enable action with confidence today, while building out the playbooks to give you a head start on shifts required for the future as it unfolds. This approach has helped position my company for long term success, provided clarity for my team, and reduced my stress level. Here’s how you can employ those same tools.
With an understanding of the range of potential future outcomes and clarity around no-regret moves, leaders can confidently develop strategies and plans for navigating through uncertainty and volatility, considering their company’s risk tolerance, investment posture, and cash position, and identifying signals to watch for to make sense of events as they unfold.
The Potential Futures
We have identified four potential futures for coming out of the pandemic. While these are unlikely to be a perfect articulation of what the future holds, collectively they highlight the broad set of realities we need to be prepared to address.
- Gradual Recovery. By mid-summer 2020, life is starting to feel somewhat normal again. Financial markets began rebounding as pent-up demand increased consumer spending and the economy seemed on-track to grow in 2021.
- Fits and Starts. It is a year of unprecedented volatility as society balanced its physical and economic health. Industries that rely on people-gathering will greatly suffer, and major disruptions and economic duress continue for almost all companies.
- Perfect Storm. COVID-19’s impact matches the most pessimistic predictions. The stock market will take a massive hit and it will take several years to return to pre-crash highs.
- The Great Correction. The pandemic spurs innovation. More sustainable, collaborative, resilient models of living and working began proving themselves out, with less travel, consumption, and waste.
Identifying No-Regret Moves
What would you do to succeed in a Fits and Starts World? How about in the Great Correction? What are the similarities and differences in those potential futures versus a Gradual Recovery or the Perfect Storm? I spent time with my leadership team asking these exact questions; designing the strategies and addressing the core operating approaches we would employ for each. Then we took a step back to identify our no-regret moves. These are the actions it makes sense for you to take, no matter which future unfolds for our customers and our business.
For our customers, our focus is on:
- Rebalancing our roadmap to suit their needs: Remote management, efficiency and enhanced security are all enabled through infrastructure automation, making our core offerings increasingly important to the large enterprises we serve in all potential futures. In addition, the pandemic has brought the topics of security and compliance to CEOs and the board room as new business risks and vulnerabilities are called out daily.
- Increased Integrations: With enterprises leaning into automation, security and compliance across all of these scenarios, the need for easier integration is going to increase.
- Remote Work: This is a new reality for many of our customers and prospects and we expect it to continue, for different reasons, in all scenarios as well. Automating your infrastructure is a great first step to making it possible to act on your infrastructure without physically being at a worksite with other people. To provide additional support for the growing remote workforce we are making it easier for IT teams to find modules to automate the configuration and management of remote services, from VPN and directory services to monitoring, logging and collaboration tools. This can help companies quickly spin up new automation capabilities for remote work and beyond.
For our business:
- Agility: While we all expect the economy to recover at some point, we also recognize that even in the best of scenarios, businesses need time to recover from the shock to the system they received. To ensure our organization can deliver as quickly and efficiently as we need, we’ve streamlined our go-to-market model to drive greater customer intimacy and optimized key areas of the business to increase responsiveness, agility and profitability.
- Flexibility: We are committed to a remote-hybrid world and we will re-open our offices around the globe when safe to do so. At the same time, we recognize that, similar to many of our customers, Puppet will be a more remote company in the future than in the past. Given this, we are prioritizing investments in the efficiency, enjoyment, and security of our employees’ remote working experiences today to get the short and long term benefits of these investments.
What Changes and How Will We Know?
Right now it is hard to tell, but over time, market data, testing and re-opening of economies and where venture money is being invested (amongst many other factors) will give us a clue as to what the future may hold. What follows are those scenarios, and how our business will respond.
- Our Dreams Come True. If the re-openings go well, companies stop pulling earnings, testing becomes readily available, a vaccine being ready for fall seems viable, people feel safe going “back to normal” behaviors, and the stock markets around the globe have stabilized we will likely be on our way to the Gradual recovery.
Should this occur, we expect companies to continue to focus on getting the most out of their current environments, while experimenting and innovating with cloud native technologies. Enterprise customers will also likely look to engage with Puppet and other technology companies in much the same ways of the past; trade-shows, in-person sales meetings, and the like. This will mean going back to pre-COVID-19 plans.
- The Nightmare Continues. If we see the re-openings backfire with massive increases in infection rates & deaths and resulting ups and downs in the stock market, a continued increase in unemployment figures and companies remaining uncertain, we will know we are in the nightmare of Fits and Starts.
In this scenario, the environment remains in chaos. Our customers will be focused on business continuity and sensitive to cost — so we’ll focus there as well, ensuring their businesses can run as before, while providing value quickly.
- It Is Just Bad. If the public health crisis persists, we could experience an unprecedented, prolonged, worldwide shutdown. In this scenario, newspaper headlines are grim and bankruptcies and unemployment are on the rise. Nationalism, rather than global collaboration drives policy and even once the virus is contained, the recovery will take years. This is clearly what we all dread, The Perfect Storm.
While no one really wants to be in a long term recessionary environment, at least we will all know what we are dealing with. Navigating this future is going to be all about cost containment and efficiency. We keep our operations as streamlined as possible and enable our customers to do the same. Cloud native solutions will still be important but the drivers behind them will be reducing expenditures and getting more done with less.
- The Silver Lining. If we see businesses and markets start to recover globally, there will be definitive winners (and losers) coming out of the crisis — including a rise in telemedicine, an increased appreciation for science, and ways to keep the pandemic under control. When coupled with venture money going into innovation and those who innovate leading the charge on Wall Street, we will have clear indications we’ve entered The Great Correction.
Perhaps the silver lining to the pandemic will be the acceleration of important business trends already occurring like business digitization and the mass adoption of DevOps. The winners in this world will be the innovators and risk-takers. Here we double down on our cloud native efforts and help our customers reimagine how they can do their jobs in new and exciting ways.
Try It Yourself
One of the great stressors in life is the unknown. Through scenario planning, you can put yourself in the driver seat and expand perspectives, develop shared understanding, identify no-regrets moves, and surface signals that trigger strategic change. At Puppet, we have used scenario planning to help us get our arms around what different potential futures might mean to our business strategy and workforce. This has allowed us to identify “no regret” moves and build out nuanced scenario playbooks so we can move quickly as the real future unfolds. If you haven’t tried this technique yourself, I encourage you to give it a go.
To help you get started, in partnership with Trium, we have created open-source toolkits for both CEOs and Technology leaders. Together, we can navigate through these current challenges to a better world.
Feature image via Pixabay.
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