What would it take to make your organization fail? What conditions could precipitate and sustain “the spiral of death”? What would complete financial collapse really look like? These are grisly questions to consider, but sometimes we need to envision complete breakdown and failure to understand how to prevent it, and find the next level of success.

Envisioning the failure of your organization is not a pleasant exercise, in fact it can be downright scary. In life, and in business, none of us like to think about potential failure, let alone describe it in gory detail and wallow in it. Yet, in a controlled environment, it will be one of the most useful and enlightening discussions a management team will ever have. Creating a vision of failure will force management to:

• Critically understand, challenge and test the assumptions that your strategy is built on.
• Look at the organization as an objective third party might.
• Discover remarkable clarity about weaknesses, gaps, and opportunities.
• Put traditional risk assessment into a broader and more useful context.
• Be truly innovative to find new sources of growth and strength.
• Learn to recognize potential warning signs of real failure, before it is too late.
• Align their thinking on key issues that usually remain unspoken.

The exercise is straightforward

We’ve all been through workshops, and strategic planning off-sites to create a vision of the future, and a strategy to get there. In its traditional form, a typical vision statement spells out where you want to be, and what the organization looks like at a point in time in the future. In essence, the traditional vision statement is a snapshot of the desired future state of the organization.

Rather than create a vision of a desired future state, envision varying degrees of business failure, and what events, inside and outside of your control might contribute. A few pointers for success:

1. The very notion can be alarming and distracting to employees. Without the proper context, shareholders, clients, and competitors will draw their own conclusions.
2. Keep the results secret. The output from the session is an articulation of your flaws and weaknesses, and could be dangerous in the wrong hands.
3. Use a consultant that is experienced with similar exercises. This exercise can get badly off-track if not handled expertly.
4. Be prepared to act on what you learn. If you won’t take steps to change based on the results, then don’t bother with the exercise.
5. Be as open and objective as possible. This is not a session for management to air their pet peeves, and bemoan everything that is bad about the organization.
6. Ensure the work is sponsored and fully supported by the CEO or division leader.

Careful preparation and follow-up are as important as the session itself. After the session, you should have a solid statement of just how bad things could go wrong. Like a traditional vision statement, a vision of failure will be more useful and practical if it is strategic, but specific. Choose a planning horizon 3-5 years out to keep the discussion grounded. Make sure the potential failure points are measurable, so everyone is clear. Just hope you never see those measures of failure in your business, and don’t post the new vision on your website!

As with traditional strategic planning, once you have your vision of the future, you need a plan. The output of the exercise should include well defined actions with clear timelines and accountabilities for members of the management team.

There are crucial side-benefits to envisioning failure

After you go through this exercise, you’ll find that in your usual forums, negativity creeps into the conversation a lot less often. Like facing any fears, envisioning failure helps to remove some of the mystery, and makes it easier to face. When negativity does surface, the team will look at it more thoughtfully, critically, and usually with less detriment to your real agenda.

Talk to anyone that has been deeply and personally involved in a real business failure, and they will likely tell you that things became very clear near the end. There is nothing like winding down a business after catastrophic failure to help you step back and really understand the big picture with remarkable clarity. Like a failed marriage, it’s often easier to see where things started to go off track when it is too late to do anything about it.

This work is not for the faint of heart, but the results are powerful.

Peter Wright is a career strategist and president of The Planning Group. As a respected executive in the financial services industry and in his current consulting practice, Peter has successfully developed and executed business strategy with notable results. Peter used his planning and training experience to develop The Business Planning Boot Camp series. You can e-mail him at peter.wright@theplanninggroup.ca or (519) 740-2725.