Small Business: Preparing and Planning For Uncertainty

Workers installing Simpliphi batteries. 

Photographer: Courtesy Simpliphi

Back in December, during a scenario planning meeting for battery manufacturer SimpliPhi Power, one of the company’s board members suggested a global pandemic might torpedo the economy. SimpliPhi CEO Catherine Von Burg remembers rolling her eyes at the suggestion. “I couldn’t imagine, certainly not the U.S., being brought to its knees because of the pandemic,” she says. 

Fast forward nearly 8 months, and Oxnard, Calif.,-based SimpliPhi has weathered the economic slowdown so well that sales of its power storage systems are up roughly 30 percent over last year, and the company hasn’t cut salaries; in fact, it had to hire eight more employees. (Bloomberg Businessweek profiled the private venture in November, when it was on track to exceed $20 million in revenue.) 

Von Burg credits scenario planning for the company’s resilience. The process “forces you to think about these very unlikely scenarios. You don’t have to believe them. You just have to figure out a way to survive or thrive in them,” she says. To prepare SimpliPhi for a possible pandemic, she increased reserves and stockpiled materials. The exercise “is absolutely not about predicting the future. It’s about testing your overall business strategy in different scenarios,” says SimpliPhi board member Hunter Lovins.

Below, Lovins and Von Burg share advice on using the scenario planning process in your own business.

1. Be aware of your bubble. “Most companies operate as if they were living in a mylar balloon: everywhere they look they see themselves,” says Lovins. Their regular planning assumes that the future is fairly predictable. Scenario planning is quite different because it “recognizes that we really have no clue about the big events that will change everything,” she says. It’s a strategy tool meant to challenge your (and your employees’) conventional assumptions and instead imagine plausible but different scenarios that could transform your business. You want to base these scenarios on the social, technological, economic, environmental, and social forces that are shaping the world. Martians landing probably isn’t something to worry about; a pandemic is.

2. Embrace uncertainty. Royal Dutch Shell started using the tool decades ago to “break the habit, ingrained in most corporate planning, of assuming that the future will look much like the present,” former Shell executives explain in this Harvard Business Review article. The big idea is to make your business more resilient by testing strategies in advance that can handle multiple futures. Scenario planning can work for any size business in any industry, says Lovins, who teaches it at Bard College’s MBA in Sustainability program. If you run a small company, you can spend as little as half a day doing it but you should probably allot at least a full day the first time. It’s supposed to be fun and engage employees. 

3. Find a scenario-planning guide. “It really helps to have someone lead a company through this and make it come alive,” says SimpliPhi’s Von Burg, who wasn’t aware of the tool until Lovins suggested the company try it. Lovins acted as a facilitator for the company, preparing a PowerPoint explaining the process that she shared in advance, visiting the company’s California factory briefly, and walking all the participants through the exercise. Once a few employees understand how to do it, they can lead their company through it themselves, she says. Lovins and other consultants are available for hire. 

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