From startups to the federal government, no organization is immune to the unpredictable. We’re only halfway through 2016, and the U.S. Department of Defense is already tackling a range of complex challenges: battling the Islamic State group, combating domestic terrorism, and ensuring that key initiatives receive sufficient funding. And the impending presidential administration change will bring new priorities, regardless of who wins the White House.
Without a crystal ball, the department must develop solid strategic plans to achieve its goals this year and beyond. These techniques are based on military ideas, and you can apply them to your business, too.
Effective planning and higher performance in any organization include three core components: leadership, culture, and operations. These components ensure that a holistic set of interventions is developed not only to articulate an organizational strategy, but also to cultivate the habits and behaviors needed to implement those plans.
An organization is fragile without a strategic plan, assuming too much risk and crumbling in the face of disorder. But an “antifragile” organization can adapt to unforeseen changes — and even thrive during the ups and downs.
So how can CEOs and managers break down fragility in their companies and become more antifragile?
Defining the Parameters
Before tackling the specifics of planning, CEOs and other managers must answer several questions about the issues they plan to address, including: Who are our customers, and how do they benefit from our work? What are our core values, and do our teams uphold them? What processes do we use for tracking performance and assessing risks, and are they effective?
Answering these questions will bring the overall vision, values, and cultural behaviors into alignment, ensuring that everyone in the company realistically understands the sacrifices required to implement any new strategy.
Finding the True North Star Through Scenario Planning
Once you’ve had the initial conversations about culture and change maturity, the actual strategy conversations can begin. The mission, vision, and values of your company must stay top of mind when building any solid strategy for change.
After your key players have nailed down your strategy, the conversation can move to aligning and prioritizing your current or planned activities. The key is to have clear goals and objectives that move your company toward its vision.
Every strategic initiative in the pipeline must align with these goals. Keep in mind that prioritizing may means forgoing some current activities in favor of other resources that better align with your strategy, such as people, money, and assets.
With your strategic plan in place conceptually, you should test, analyze, and validate its key components through scenario planning — a method based on standard military operations.
This planning could have all manner of real-world applications: reorganizing departments, responding to shifts in environmental requirements, or forcing your leadership team to consider more complex decision-making models.
Fleshing out the desired outcomes and potential roadblocks for any scenario will help your team establish well-developed, relevant plans with clear roles and accountability touch points — all key components of successful scenario plans.
Scenario planning also helps leaders discuss and instill the cultural values needed to implement and sustain any pending changes. It helps guarantee that your company follows the strategic direction — essentially the North Star of the strategy — when transitional challenges arise.
Becoming Antifragile
Another way to look at scenario planning is through the lens of antifragility. My colleague, Stuart Farrand, is an analyst who theorizes that although risks are inevitable, organizations can protect themselves by using active feedback loops to mitigate potential losses. By doing so, they shore up their futures as much as possible and become antifragile.
Fragile organizations cannot anticipate risk and are always susceptible to crises. They tend to have highly centralized organizational structures in which one or two departments dominate the decision-making process. This exposes the whole company to risks incurred by just a few stakeholders. Ultimately, these groups collapse under their instability.
A prime example of fragile structure involves the ongoing water crisis in Flint, Michigan. The scenario is overseen by few making choices for many. And it’s Flint citizens — the many — who are suffering the consequences.
Antifragile cultures, on the other hand, are well-versed in change and welcome opportunities for improvement. They often have lean or flat organizational structures in which all departments participate in decision-making. They encourage team members to tinker with the system in order to improve it, and they always strive to do better while thinking in terms of risk and scenario application.
Avoiding losses and taking risks may seem contradictory, but risk is inherent to any major change. In fact, educated risk-taking is the only way to achieve new results. CEOs should encourage smart risks and even celebrate failures as learning opportunities.
Anticipating risks and testing different strategies through scenario planning is the best way to strengthen and grow an organization. This is especially true for federal entities and other outfits operating in volatile, uncertain, complex, and ambiguous conditions.
CEOs are tasked with monumental responsibilities, and they must constantly adapt to shifting circumstances to meet their goals. Smart strategic planning with an eye to improving antifragility will prove essential as your business seeks innovative solutions to its most pressing priorities.
This article first appeared on CEO World Magazine.