The global pandemic has disrupted almost everything we do in business, government and our own lives. We are still reeling and looking for answers about what it is and how to fix it. But well before things settle down and the crisis subsides, entrepreneurs should be asking, “What will things look like when we emerge from the crisis phase and begin to recover?”
With this crisis descending upon us with lightning speed and bringing about catastrophic changes, it is hard to fathom what will happen next. In situations like this, when uncertainty clouds traditional forecasting methods, experienced planners turn to scenario planning. Scenarios are stories built around a structured framework describing alternate, plausible futures. Scenario thinking helps you select the best path forward by shining light on newly arrived opportunities and risks while exploring what it will take to survive and thrive.
In response to the crisis, Santa Clara University's Miller Center for Social Entrepreneurship, which has accelerated more than 1,000 enterprises since 2003, developed a COVID-19 response team to support its global network during these challenging times.
How recovery from COVID-19 might look
The Miller Center COVID-19 response team also created four scenarios to understand how we should prepare to accomplish our vision and mission in the post-crisis recovery. We developed an understanding of how existing programs and teams would change, what new ones would be needed, and how we would access key resources and funding.
We've modified our scenarios to be used as a starting point for other enterprises to get a better sense of the preparations needed to succeed in the new business environment.
Constructing the coronavirus recovery scenarios
The scenario framework is built on two forces. The first is the strength of the short-term economic recovery. This includes the robustness of supply chains to deliver products and services, the level of demand for products and services, and the overall financial strength of companies and organizations.
The second force is the amount of damage done to your business ecosystem. This includes the enterprise morbidity and mortality in your sector; the degree that direct and indirect competitors have folded or are barely surviving. The ecosystem damage also includes consideration of the funding amount available for enterprise recovery and growth.
These two forces frame four scenarios: Difficult Domain, Unchartered Lands, Terra Incognita and Grueling Terrain. Each of the scenarios is possible, they are all different from one another, and each requires distinctive strategic and operational responses.
The scenarios describe different recovery environments roughly six to nine months from now. The exact timing is not critical. The key is that the scenarios describe the point you have come out of survival mode and are ready to get back to business and make the crucial shift from "a play not to lose" strategy to a "play to win" strategy.
Envisioning your business's recovery from COVID-19
As you read the following scenarios, keep in mind that they are not meant to be the perfect picture of what will happen. They are useful models of what could happen and what it would mean if they did. The scenarios should challenge your expectations and stimulate constructive conversations. To get the full value, immerse yourself in all the scenarios and avoid focusing on one that matches your expectation of what will happen. Use the scenarios to imagine how the things you were sure would happen could now be on a different course. Ask yourself, "How will I rebuild to meet the new challenges and opportunities?"
Scenario 1: Difficult domain
A very challenging landscape to traverse, but one that is not wildly unfamiliar. The ecosystem is intact but damaged. There has been a low to medium mortality of enterprises in your ecosystem. Surviving enterprises are in recovery mode and seeking help; some to survive, many others to recover and grow. Most of your key resources (the critical things you need such as materials or people) are available but constrained. Most supply chains are intact but fragile. Internal and external funding is available, but acquiring funds to rebuild is tougher and takes longer. Employment and financial strength are beginning to return in many but not all business sectors. Innovation is alive and well and entrepreneurs are launching businesses.
Scenario 2: Uncharted lands
Managing a recovery feels like steering through an unfamiliar terrain without a map. Your ecosystem is damaged but recuperating, yet some areas are significantly diminished. Many organizations have disappeared and the survivors are weak and moving into a cautious recovery mode. Funding availability is very limited, slow and usually has strings attached. Most key resources you require are available, but supply chains are in disarray and sketchy. The weak overall economy and significant unemployment have decreased demand for many types of products and services creating an unbalanced recovery.
Scenario 3: Terra incognita
A strange and unfamiliar environment to work in. There is major damage to your ecosystem with a high mortality rate of enterprises and partners in it. Surviving enterprises are struggling. Traditional supply chains are in complete disarray and some have been nearly obliterated. Products and services flow unevenly if at all. The economy has been hammered; funding sources are in shambles and demand for many types of products and services remains weak. The mood is gloomy, double-digit unemployment persists and the timing and strength of recovery remain uncertain. Undeterred, some entrepreneurs use the situation to launch new businesses.
Scenario 4: Grueling terrain
An uneven, difficult topography to maneuver in. There has been significant mortality of businesses in the ecosystem and survivors are in recovery mode. Funding is limited and comes with strings attached. Supply chains are generally intact and able to deliver products and services. The overall economy appears to be recovering slowly. Unemployment begins to recede as financial strength returns in most but not all sectors. Significant entrepreneurial activity is resurfacing.
Creating your post-coronavirus recovery plans
Describe a mode of operation in each scenario consistent with your vision, mission, and values. Have your team explore these critical questions:
- What major elements of your business stay the same?
- What are the three most important things you will do differently?
- What do you need to stop doing?
- What are the new needs and major opportunities for you?
- What are the most important partnerships?
Capture the descriptions of the different operating realities across the scenarios. Then have your team review them for important similarities; organizational and operational themes that are present in some or all of the scenarios. They could include:
- Creating new offerings to meet new customer needs
- Forming new partnerships and improved ways of collaborating
- Finding new sources of key materials
- Accessing new funds
Before you leave the scenarios, identify several leading indicators that will signal which one is emerging – things like unemployment, the number of company closures in your ecosystem, and availability of funds. At this point, you are ready to embark on the next step.
Then, track the indicators and revisit the scenarios every month and determine if there's a clearer picture on which scenario is most likely to emerge. Once the uncertainties have decreased and you can discern the emerging scenario, it's time to focus on your planning and preparation.
Becoming resilient in the face of coronavirus and future emergencies
Traditional planning approaches don't work well in times like this. They lead you to choose an approach prematurely. That can be a costly mistake; the probabilities of being right are extremely low and a wrong choice could be fatal. Alternately, waiting to act until there is a clear picture guarantees you will be ill-prepared for what emerges. In this chaotic and unsure time, looking at scenarios and preparing for the most likely one to emerge is the best approach to shifting into a 'play to win' operating mode and thrive during recovery.