Mike Tyson famously once said, “Everyone has a plan until they get punched in the mouth.”
He wasn’t wrong. Yet scenario planning, game planning, disaster planning, wargaming, etc. is a common practice used by businesses of all shapes and sizes to prepare for the risk of a potential threat.
They spend hours and hours building models and analyzing different variables, adjusting them up and down to come up with different response plans for different scenarios. Executives demand more analyses be run to consider additional possibilities because they don’t want to be caught not having a plan in place. Key employees get taken away from their day jobs. And the bigger the perceived risk, the more time organizations spend running scenarios as they wait for the situation to unfold—analysis paralysis.
Is it a Waste of Time?
But if in reality you toss the plan to the side the minute the risk becomes a problem, why bother? The operative word here is risk—the chance and impact of an adverse outcome from a particular situation occurring. Regardless of the methodology you use, the real value comes not from the plan created but from gaining a deeper understanding of the potential scenario and the levers an organization can pull when the risk turns into a problem.
No amount of analysis can predict the future. There are simply too many variables that are out of your control. But what you can learn is which variables matter most and which ones you can influence through your actions.
Tariff uncertainty is the latest risk that has organizations building models and analyzing scenarios. It is the number one topic in every discussion I’ve been having lately with executives. It is the number one story on every news network, with breaking news seemingly every day. But the situation is so fluid and so vast that no one can predict what tariffs will get put in place or for how long. The biggest frustration I’m hearing from executives is about how the uncertainty is paralyzing their customers and consequently their organizations.
Don’t Get Frozen in Place
So how do you avoid the trap of analysis paralysis? How much scenario planning is enough?
- Shift from maximizer to satisficer mode. In the face of a complex and dynamic situation, focus on finding an option that meets your basic requirements and then stop. Resist the urge to conduct further analysis to find a better solution. Given that the situation will likely change, it isn’t worth the time or effort to try to find a more optimal solution.
- Think big picture. Assess the potential risk on your customers and competitors. What are the broad implications of the scenario? What are the likely shared impacts and responses? How will they impact relative demand for your products and services? How will they impact your competitive position?
- Don’t sweat the small stuff. Build your models and test the sensitivity of the different external (non-controllable) and internal (controllable) variables. Determine which internal variables have the biggest impact on the most impactful external variables.
- Take action. Determine what actions you can and should take now that are good business decisions regardless of how the scenario plays out. Time is the one thing you can never have enough of and can’t get back once it’s gone. For actions you’d only take if the scenario plays out a certain way, build your response plan and don’t forget to identify your trigger point.
Run your scenario-planning exercise, but don’t let it distract the organization to the point where it’s impacting the running of the business. Take action where it makes sense, but be practical and don’t try to predict the future. Control what you can control.
April 29, 2025
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