By Eric Johnson
Option planning in normal times is never an easy task, so in times of a worldwide pandemic, it is acutely troublesome. In general, individuals are always hesitant to make predictions; when they are right, it is business as usual, when they are wrong, drastic consequences can arise and can potentially ruin reputations. That being said, future prediction is essential to every business as it required to move forward and have goods and services at the ready to meet customer demand. Simply put, we are forecasting; selecting the most advantageous options out of a pool of larger options within the capabilities of the organization for a given situation.
Understand your resources (finance), capabilities (operations), and the environment (stakeholders and forces)
Establish a trusted portal for information
Information is a critical ingredient in scenario and option planning to account for all the variables that can affect the outcomes of your identified situations. The first issue most organizations face is the validity of the information they receive. The second issue is the timeliness of the information and its expiry. For example, information regarding a recent therapeutic discovery maybe over exaggerated based on the source of the news outlet, or a possible financial incentive. Or it can be considered old as newer information has supplanted its usefulness. This is compounded by the fact that news is often repeated through various public and social news domains, giving an indication that the sheer number of publications indicates veracity. Government sources should be considered the first line of objectivity, with varying degrees of trust placed in secondary sources. Social media should be considered a last resort as a general rule of thumb, but can point to direction of news on occasion.
Game Theory: scenario planning and application of probabilities to the best of your ability
Option planning simply allows the organization to create executable plans that can be instituted when the triggers for conditions are met. Game theory associates various possibilities with the associated payoffs and results. While we will not get into the specifics of the many aspects of game theory in this brief post, the applicable main concepts apply significantly here. In scenario planning, we list five primary stages. The first three are developmental, the last two are based in continuous improvement.
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