How can you develop a contingency plan for unexpected events using reasoning skills?

Toyota's reaction to the 2011 earthquake in Japan is a classic case of contingency planning. They already had a crisis management system due to past experiences. When the earthquake hit, their primary objective was to resume production. Knowing this, they activated alternative supply chains and temporary production measures. Within six months, they returned to 90% of their pre-quake production levels. The contingency plans were designed to serve the primary objective of restoring production. While objectives are crucial, it's also essential to identify the risks associated with your objectives.

Begin by pinpointing the most vulnerable aspects of your plan. Next, brainstorm multiple alternative solutions for each vulnerability. Finally, prioritize these alternatives based on their alignment with your core objectives, ensuring a robust response to unexpected challenges.

I believe, developing a contingency plan may seem daunting but it is an important step in risk management. The key to handling this tricky & effective question is to think critically & creatively. You need to be able to identify all the potential risks, even ones that are unlikely to occur. You also need to develop contingency plans that are realistic & achievable. To develop a contingency plan for unexpected events (reasoning skills), one can following steps: 1) Identify potential unexpected events 2) Assess the risks 3) Generate contingency plans 4) Evaluate your contingency plans 5) Communicate your contingency plans to key stakeholders Additionally look for factors in contingency plan: Be specific, realistic, flexible & communicative

Begin with your baseline plan, and define what are your vision, objectives, and KPIs. Next, assess what are the risks your business is exposed to, both internal and external. Based on this, you will know against which risk to develop a contingency. When I managed Ukraine, during the revolution, one risk was road transportation due to the war. Hence, our contingency plan included loading the distributors' warehouses to account for a period of disrupted transportation.

You can develop contingency plans to unexpected events by first applying the "why" to unexpected events. Why do they occur? It is already established that they're unexpected but the manner in which they occur will give an answer to why and possibly even the root cause - which will better fine tune the contingency plan to be put in place. As soon as you've established why you need the contingency plan you can then build on its objectives, its timeline of execution and when it should expire. A contingency is not infinite and should be maintained for a limited time only before returning to business as usual.

Regularly review and categorize potential risks, distinguishing between those that are controllable and those that are not. Then, analyze the potential impact and likelihood of each risk, using data-driven insights where possible. Lastly, always be prepared to adapt and evolve your strategies based on new uncertainties that emerge, ensuring your plan remains resilient.

Let's look at Netflix's decision to produce original content as an example. They faced risks like high production costs and uncertainties like audience reception to new shows. By using data analytics, Netflix deduced from existing user behavior that a series like "House of Cards" would be a hit. They also used inductive reasoning, observing patterns in what kinds of shows or movies became popular. Finally, abductive reasoning helped them hypothesize that a big-name actor (Kevin Spacey) and director (David Fincher) would likely bring in viewers.

Find the swans, black and white. I enjoy this part of the process because it helps my team and I admit that we might not have thought of everything. We acknowledge that there is something we missed and then spend valuable time trying to find it. Along the way, we often identify improvements to the plan related to known uncertainties or risks. The key is to not restrict the risks with ideas like "that won't happen" or "those things don't affect us."

When you assess a risk, start gauging its standard error. How bad is the downside and how good is the upside? Most risks have a minor impact on the business, so being risk-prone pays out often.

Let's take SpaceX's Mars mission plans as an example. Elon Musk has always expressed that SpaceX will employ reusable rockets for these missions. But they also explore alternative actions like different types of spacecraft and various funding methods. SpaceX uses creative reasoning to think out of the box, like the possibility of creating a self-sustaining city on Mars. Analogical reasoning comes into play by applying lessons learned from past space missions. Causal reasoning helps SpaceX think through the long-term impact of each alternative, such as the environmental implications.

Start by casting a wide net, encouraging diverse and out-of-the-box thinking to generate a broad range of alternative actions. Once you have a list, utilize past experiences or analogous situations to refine and rank the options. Finally, critically evaluate each alternative's potential outcomes, ensuring they align with your core objectives and can effectively address the identified risks.

When you evaluate alternative actions, ask yourself - Is my team able to carry it out? - Can it be implemented in a reasonable amount of time - Can it be implemented with a reasonable cost - Will it address the root cause

Begin by establishing clear criteria for evaluation, ensuring they reflect the core objectives and potential challenges. Next, objectively assess each alternative against these criteria, gathering data and feedback where necessary. Lastly, consider both short-term and long-term implications, ensuring that the chosen alternatives are sustainable and adaptable to future changes.

Amazon Web Services (AWS) had to evaluate alternative data center locations when deciding to expand its global infrastructure. They assessed the feasibility by looking at energy costs and availability of skilled labor. Effectiveness was gauged by how well the new data centers would serve their customer base. Efficiency was calculated by examining operational costs against projected revenues. According to their public financials, AWS saw a 32% year-over-year growth in net sales in Q2 2023, which indicates that their strategy in evaluating and prioritizing alternatives likely paid off.

To evaluate alternatives, write them down and create a scorecard listing the key evaluation criteria. Be objective and use a voting system from a large and diverse group of stakeholders, so you are not biased.

Take Tesla, for example. In 2020, they had to shut down their main factory in Fremont, California due to COVID-19 regulations. Tesla had a contingency plan to shift some production to their Nevada and Shanghai facilities. Tesla's Q2 2020 production was still about 82,000 vehicles, only about 5% less than Q2 2019, showing that their contingency planning was effective. A PMI (Project Management Institute) report stated that 37% of projects fail due to a lack of clearly defined objectives and milestones to measure progress, emphasizing the need for detailed contingency plans.

Start by documenting every detail of the contingency plan in a structured and accessible format. Engage stakeholders early, ensuring they understand their roles and the importance of the plan. Finally, conduct regular reviews and drills, fostering open communication and ensuring everyone is prepared to act swiftly and confidently when faced with unexpected challenges.

If you operate in risky situations, you should have a contingency plan ready and documented with the critical task force identified and emergency protocols (e.g. Call Tree) ready.

Developing a contingency plan within the higher education sector start with following: Identify Potential Risks & Assess Impact: Analyze the potential impact of these events on your institution's global partnerships, including financial, operational, and reputational consequences. Followed by Prioritize Risk, Gather Stakeholder Input, Set Objectives, Resource Allocation, Response Strategies, Communication Plan, Testing and Training, Coordination with Partners, Monitoring and Evaluation, Legal and Compliance Considerations, Document Everything. Flexibility and adaptability are key in handling unexpected events within the higher education sector.

Planning for the unexpected starts with identifying the unexpected. This requires having a birds-eye view of everything that may impact your business. To begin tackling this, I recommend conducting a PESTLE analysis. PESTLE is an abbreviation for Political, Economic, Social, Technological, Legal, and Environmental. The PESTLE creates a starting point for understanding unexpected events, reasoning through them, and acting when they occur. I recommend the following steps: 1. Identify controllable and uncontrollable factors in these six categories. 2. Create mitigation and contingency plans based on these factors. 3. Create a dashboard of these factors and plans. 4. Review with stakeholders and update (how often depends on your circumstances).

Assess and analyze possible risks and their probability of occurrence with clear understanding on impact(s) of each risk(s) - from 360 degree perspective- not limited to numbers & extending areas across resource, brand good will, team culture etc etc… Accessing risks & setting contingency plan is reasonably fool proof provided, Setting an objective of contingency plan, followed with appropriate resource allocation, well documented response strategies, timely circulated/communicated plan to relevant stakeholders with roles/responsibilities detailed with constant & appropriate training. Staying up-to-date with changing circumstances, emerging threats & suitably reviewing and revising the contingency plan is vital.