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Strategic Planning: Scenario Planning and the Butterfly Effect

Would you sleep better if you had a clear idea how to mitigate real risks in your strategic planning and business operations? One way to mitigate the uncertainty of the present is to plan for the future. We’ve all seen unsettling headlines pointing to a business slowdown in the newspapers and in national news: “Home Foreclosures Skyrocket,” “Housing Market Continues Slump,” “Disappearing Sales Tax Revenue,” and “Credit-Market Contagion From US Subprime Crisis Affects Global Economy.”

Most of us consider such trends to be too national to have local impact. However, the chatter in our local business community indicates otherwise as people are citing slower decisions with contracts, capital expenditures, and other big commitments. Human nature is to ignore the bad news rather than pay attention to it.

Whether you think you’re immune to this slowdown or not, consider the ramifications of disregarding such an economic change. You may be familiar with the butterfly effect, which theorizes that something seemingly innocuous, such as a butterfly’s wings, may be the catalyst for something larger, such as a tornado. Having a simple action plan for a couple of potential scenarios that may impact you is well worth your time.

So if the impossible happens, all you need to do is implement the plan instead of scrambling to figure out what to do. A scenario plan will help you do just that.

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