Why Contingency Planning? Importance and Benefits
Simpkins (2009) argues that Contingency Planning (CP) is probably the most important topic of an organizationís overall strategic plan. The importance of preparing for any contingencies must not be underestimated. Contingency planning takes into account other outcomes than the expected and desired outcomes.
And this is exactly what makes CP important.
Indeed, the world of today and its business environment is changing at fast pace. Every organizaton has to deal with continuous and fast changing internal and external environmental dynamics. Important changes today are technological changes, globalization, market transformations, democracy and more. Successful leaders should consider and prepare for those possible changes. Contingency planning enables leaders to mitigate the negative consequences of those transformations on their organizations.
Furthermore, CP makes leaders aware of and adapt to changes in consumersí preferences. Every product goes through a product life cycle in which consumersí preferences for certain products change over time. Contingency planning helps leaders to take into account those changing preferences and adapt to it.
By continuously redesigning and reinventing products and services, products can become desired again for customers and stakeholders.
⇒ Do you have additional ideas why CP is important?
Source: Simpkins, R.A. (2009),"How Great Leaders Avoid Disaster: The Value of Contingency Planning", Business Strategy Series, Vol. 10 Iss. 2 pp. 104 - 108