Wednesday, May 17, 2006

Oil in the news

Oil prices are again in the news, but that's not news to you.

Harvard Business School published Scanning for Threats and Opportunities, an excerpt from the recently published Peripheral Vision: Detecting the Weak Signals That Will Make or Break Your Company.

Perhaps the juxtaposition is a bit late; oil prices may not be "weak signals" anymore. Yet I think there's still time for serious scenario planning, if you haven't already undertaken it.

How will your company respond if petroleum goes to $100 a barrel? To $150 a barrel? What might that do to your supply chain? What might that do to your raw materials costs (e.g., are your products made out of plastic?)? What plans should you make today? What "triggers" should you set in place to cause you to take certain future actions if certain events come to pass?

While I've used oil prices as the impetus for this note, the lesson is a general one. In addition to making plans for success, be aware of the risks to those plans, and be prepared for the likely or deadly ones.

When you do create and write down scenarios, I encourage you to think of them as literary stories, not simply as varying sets of parameters values. The latter are dry and boring and inspire few to action (or even deep understanding); the former can make the challenges come alive and help you think about what it might mean for your company if such a scenario were to come to pass.


Post a Comment

<< Home