How you can plan today to rebuild revenue and cash flow
We’re watching six scenario drivers that we think will impact the operating environment early into 2021. In our view, these interconnected factors will, together, shape the future.
Think about the range of conditions you might face, from best-case, through varying levels of moderate and worst-case.
As businesses begin to ramp up again, there will be many moving parts to your response. Having a framework based on your unique scenario plans can help direct your path.
None of us has ever seen such a complicated and intertwined set of factors driving a public health emergency of this magnitude — let alone the resulting converging crises.
How can you make better business decisions in such a challenging environment? Become more ready and resilient in the way you respond and strategize. Scenario planning and modeling aren’t “nice-to-haves.” They are an essential part of running a complex business, especially when we’re dealing with uncertainty. It’s possible to build muscle for times like this, and there are steps you can take now.
We're watching six scenario drivers that we think will impact the operating environment early into 2021. In our view, these interconnected factors will, together, shape the future. Each driver has three possible outcomes, as shown below.
|Testing and social distancing||Unsuccessful||Mixed results||Successful|
|Supply chain resiliency||Severe challenges||Adjustments required||Functional|
|National/local government response||Insufficient||Mixed results||Effective|
|Willingness of consumers to return to normal||Shelter in place||Slow emergence||Jailbreak|
|Arrival of vaccine||Late 2021||Summer 2021||Early 2021|
|Shape of economic recovery||W-shaped||U-shaped||V-shaped|
To help businesses think about the range of conditions they might face, we’ve developed five illustrative baseline scenarios, from best case to worst case. Each scenario represents a unique combination of the drivers shown above.
As shown to the right, the moderate best case scenario is relatively optimistic about testing/social distancing and supply chain resiliency, but more neutral about the other four factors.
Social distancing discipline holds, and testing is readily available in this scenario, helping to decrease the spread of COVID-19.
Some governments improve coordination as the crisis goes on, but policy gaps remain.
Businesses large and small have relatively stable supply chains in this scenario, and some even benefit from the stress-testing of their suppliers, enabling some to change partners and others to deepen connections to suppliers that have remained stable and capable throughout the crisis.
Consumers are encouraged by the announcement that a vaccine is forthcoming in summer 2021, and they begin to abandon their long isolation as Q1 ends. They pump cash into the economy, almost making the U-shaped recovery a V.
To see all scenarios, download the PDF.
A single glance at the incidence of COVID-19 across the US on any given day makes it clear that leaders will need to consider their company’s geographic footprint.
That’s because the impact of the virus varies over time, plays out differently based on population density and is heavily influenced by the underlying health of the population in the area. Moreover, outcomes are heavily influenced by the responses of state and local governments.
All sectors are not created equal. Think about assessing common factors to make decisions.
Supply chain resiliency. Look at weak links, potential exposures, and reliance on third parties.
Customer demand. Consider the elasticity for your business and related timeframes.
Financial support. Understand how funding from financial markets and private sources differs by industry - and the availability of extraordinary governmental support.