How To Plan For Adversity In Business

July 5, 2016 Leadership

The Good To Great books are wonderful if you are in business.

I can’t remember what or who prompted me to read those books originally, but I’ve read through them a couple times and each time I learn something new.

One of the big lessons from those books is luck – both good and bad.

One of the findings the researches identified was that business leaders thought that they had pretty good luck when it came to the success of their companies. And outsiders also looked at luck as a possible reason for some companies succeeding and others falling off by the wayside.

Every Business Deals With Luck: Good & Bad

But the researches found that all businesses basically dealt with the same situations or at least similar situations – both good and bad. Yet some companies were able to succeed, even in crazy difficult situations, while others weren’t able to figure it out.

One example was Southwest Airlines and Pacific Southwest Airlines.

PSA was doing really well in the 1970s. Then uncertainty hit the airline industry with deregulation in 1978. This allowed airlines to service larger areas and it seemed like a good thing for PSA, but it wasn’t able to succeed and was sold in 1986.

Southwest kind of copied the things that PSA was doing in the ’70s and was able to take advantage off the deregulation and found steady growth through the ’80s and ’90s even through challenging situations with fuel costs and more and it continues to succeed today.

Productive Paranoia

Southwest hasn’t prepared perfectly for every situation. That’s not possible, but the company seems to be able to plan for adversity and others companies are able to do the same in other industries.

A common theme throughout the Good To Great series was that leaders felt they had experienced good luck. The interesting thing is that successful leaders were usually leaning toward the pessimistic side of things. They were paranoid about something happening in the industry or with their business and that the whole thing would collapse.

Bill Gates was mentioned as one of the successful leaders who was always on edge about things collapsing. He was paranoid and constantly sending memos to his team asking about certain situations and how the company could respond if this bad thing happened or if that bad thing happened.

The researches in Good To Great named this Productive Paranoia.

Successful leaders, like Gates, were paranoid, but they used their paranoia to prepare the company for the worst. They were always looking at threats and figuring out how to prepare for eventual adversity.

These leaders looked for opportunities as well, but they were different from other leaders in their paranoia. It’s not that they were pessimistic, but they knew that at any moment something could come along that could derail the business.

How To Plan For Adversity

A good way to plan for adversity is to change your outlook on your business. Leaders like Gates seemed to wake up every day thinking about all the bad things that could happen to their business. You can train yourself to think like that and work each morning noting threats to your business. That might drive you a little nuts, but it’s a good habit to get into.

Another way to prepare for adversity is to take time every month or every quarter to look at your biggest threats and to make a plan of action for how to change them.

It might be good to combine the two strategies. You can create notes every day about new threats and big threats and all kinds of threats. Then every month or quarter you sit down and identify the big ones and make plans of action for changing your business or for preparing for the worst.

The reality is that negative things happen to us all in life. In happens in our regular lives and it happens in business. It’s easy to run a business when things are going good, but there is always something going on under the surface or around the corner that can potentially derail things.

You have to prepare for things that can rock your world.

What if a competitor comes in and slashes industry prices by half?

What if Google changes how they do ads and rankings and your organic search traffic completely disappears?

What if Amazon starts manufacturing and selling a product just like yours?

What if your workers quit?

What if, what if, what if…

By preparing for the worst you’re putting yourself in the best position to succeed. Many times when bad things happen it’s the businesses that have prepared that are able to make it through. They might not always make it through, but they’re better prepared for the situation than those that haven’t thought about it.

Conclusion

It’s not seemingly possible to prepare for every potential disaster. But what this practice does for you is to prepare you for disasters in general. Something might come along and surprise you, but one of your plans for another disaster might be something you can use to weather the new disaster.

It’s not fun to think about the worst that can happen, but the more you think about threats and the more you prepare the better you’ll be positioned to handle it when bad things happen.

And unfortunately in life things do take a turn for the worse. It’s just a matter of when.