Response Readiness Part Five: Creating Contingency Action Plans

07 Dec 2020


Blog

Our 10-step Scenario and Contingency Action Planning process is designed to help organisations get Ready to Respond to the potential uncertain futures they face in 2021 and beyond. In this blog we look at steps seven and eight in the process – creating contingency action plans and determining the trigger points.

The previous blogs in this series, looked at these six steps in the 10-step SCAP process:

  1. Defining the entity and its current environment
  2. Identifying the driving forces that could shape the organisation's future
  3. Identifying the critical uncertainties
  4. Visualising contrasting outcomes
  5. Selecting the top critical uncertainties and describing the scenarios
  6. Identifying the positives and negatives, opportunities and challenges for each scenario

 

The seventh step involves creating contingency action plans for each scenario.  

These will address the challenges and opportunities you identified after reviewing the positives and negatives associated with each scenario in step six.

A simple way to approach this, is to ask the question "What will we do if…?" and create a response that allows you to defend against/mitigate the challenge or take advantage of the opportunity.

When it comes to contingency planning, one area where many organisations can improve, is the level of thinking and rigour they put into the plan itself. Let's look at an example.

An FMCG company identifies a scenario where a new competitor may enter the market and so creates a contingency plan to add significant promotional activities around their key products in order to defend sales revenues and share. Job done, you may be thinking, but in fact there is more work to be done. In creating a contingency action plan, it is important to answer these key questions:

 

Looking at these questions through the eyes of our example FMCG company, the answers could look something like this:

What will we do? We will invest 50% more over a six-month period in price, in-store promotional activities and TV advertising for Brand X in the major grocery retail channel (to defend against the challenge of the new competitor)

Who will do it?

Major grocery retail sales team, and Brand X marketing team

Who will be responsible for making it happen?

Sales director

What resources will be required? $5 million and additional time from people in major grocery retail sales team and Brand X marketing team

When will we need those resources?

Detailed activity plan will contain monthly phasing. $5 million will be spread across the end of one financial year and beginning of the next financial year.
What will the lead time be between deciding to act and taking action?

12 weeks

What will be the trigger for us to decide to take action?

Customer range review feedback (indicating sufficient net deletion of our Brand X products)

The intent of asking these additional questions is to create a ‘fully-formed’ action plan that ensures the organisation is Ready to Respond with sufficient lead time, if and when the scenario eventuates.

Once you have your contingency action plans, the eighth step of the SCAP process is determining the trigger points for action. You need to decide how you identify when a scenario is becoming the future reality, or ‘most likely outcome’, thus triggering your contingency action plan.

It may be a specific action or piece of information e.g., an announcement from a customer, a competitor’s action, or an announcement from government. It could also be a trend that confirms a hypothesis e.g., declining sales in a specific category, confirming a switch in consumer behaviour.

Whatever the trigger point, it is essential your organisation intentionally and regularly looks for it, as this will be the catalyst for you to take action.


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