[Podcast] When Will YOU Need a Contingency Plan?


When Will YOU Need a Contingency Plan?

In pilot training, the first thing you had to do before you ever left land was practice in an emergency simulator. You would be put in the most catastrophic situations and have to figure out how to keep yourself safe.

Business can also use contingency plans to build confidence with their team. To keep the team focused on the goal instead of wondering if the worst will happen. In this episode, we bring back Will “Q” Duke to talk about the critical role checklists and contingency plans play on elite military teams and in business.


Duration 24:49

Thor: Hey, ladies, and gentlemen. Welcome to The Business Thorcast. When I first started flying airplanes, way back in the day, one of the first things they threw at you during training was to put you in a simulator and run you through as many different emergency scenarios in that flight simulator as possible. We called it the dial of death because they would throw the most catastrophic emergency situations that you can imagine taking place in an airplane, to you in this very, very realistic simulator, and you had to figure out how to keep yourself safe. You do that using your checklist. You do that using contingency plans. It gave you a lot of confidence because you figured that if you could make it through these scenarios in the simulator, well then, if the worst happens in flight, you can do the same thing.

Thor: Businesses can use contingency plans to build confidence with their teams and to keep their teams focused on the goal. Today, we’re bringing in Q, our Quartermaster at Afterburner, the one who gives us all the tools, resources, and weapons to help your teams accelerate performance. We’re going to listen to how he describes contingencies and how they played out in the military as well as business teams. We’ll hear about that and more today on The Business Thorcast.

Thor: We are Afterburner, a team of former elite military members. Think fighter pilots, Navy SEALs, and Army Rangers. We’ve taken the lessons learned from the cockpit and the battlefield to the business world, to develop elite teams with leaders like you. For over 20 years, we’ve helped teams succeed across the globe. I’m Thor, the president of Afterburner. Welcome to The Business Thorcast.

Making Your Own Checklist

Thor: Hey, everybody. Welcome, welcome, welcome to The Business Thorcast. Today, we have back, Q, call sign Q, his real name is Will Duke. Welcome back to The Business Thorcast, Q.

Q (Will Duke): Thanks very much, Thor. Happy to be here.

Thor: Of course, we talked last time about your call sign, but I think it bears repeating. Why are we calling you by a letter of the alphabet? Why does everybody call you Q?

Q: Well I think is the simplest way is to answer that, is say, “Q stands for Quartermaster.” But then you have to figure out what the heck is a Quartermaster? Well, a Quartermaster is really about supply and logistics. So really, why I am here at Afterburner is to supply our frontline agents, our executive consultants, and our clients with the flawless execution technology, just like Q in the James Bond films.

Thor: That’s right. He is our Quartermaster. He’s the one who gives us all of the tools and the weapons that we use to help accelerate performance for individuals, teams, and organizations. Q, I think, is a cool call sign, and it rolls off the tongue a lot better than Moneypenny.

Q: “Morning, Moneypenny.”

Thor: “Moneypenny.” Alright. What are we going to talk about today, Q?

Q: I think we’re talking about contingencies and contingency planning.

Thor: What is a contingency? When does contingency planning come up in your mind? What’s the whole purpose of that?

Q: Well, I was teaching a group of kids once, and I knew that the word contingency probably wasn’t going to resonate well with some preteens and early teenagers. So I said, “Let’s just talk about plan B.” Yeah, it’s really what contingency is. It’s plan B. What do you do when plan A doesn’t work out?

Thor: Yup. The best example of contingencies in my world came out of flying and training the new pilots. What you find out is, these are 22-year-old kids, right? Men and women that just graduated college, and we’ve thrown them into an airplane. We said, “Go faster than the speed of sound. We’re going to put you through a few simulator demonstrations. Make sure your academic testing works out.” After that, you’re flying solo. Seven sorties into your flying experience, you’re all by yourself in a big, scary, noisy airplane, and anything can go wrong. We’ve already told them, “You can have an engine fire, you could have one of your tires blow-up on landing, you could have your gear not retract, you could have one of your flight services get stuck in a position and make the plane uncontrollable.” The one saving grace that all these pilots have, because obviously, it’s terrifying and overwhelming, to think that these things can happen to you, “Strapped to your leg is a checklist, and in this checklist is 100 different contingencies. The contingency plans and the initial steps you take, if you would have an engine fire, if you have a scenario where you’re considering ejecting, you’re going reference this checklist.” Any thoughts on how that works as a contingency planning mechanism?

Q: Absolutely. The checklist is not just a contingency, it’s almost a plan contingency, right?

Thor: Yeah.

Q: You know what specifically could go wrong very, and you already have a specifically detailed way to respond that’s proven. It’s not just conjecture. You know it’s going to work because over and over again it has worked. So that’s great. That’s those tactical contingencies. I think we’ll talk a little bit later about strategic contingencies, things that maybe you never encountered before. How do you deal with those?

Thor: What’s interesting is that we would fly better as pilots because we had that checklist. In other words, if you ever asked me to fly without that checklist as a young student pilot, I would have been terrified because my mind would be focusing the entire time on the what-if scenarios and, “What am I going to do and react to keep the plane safe if that were to occur?” But because I had this list of contingency strapped to my leg, it gave me the confidence that if something did go wrong, heaven forbid, as I’m flying 400 miles an hour in this airplane, at 22 years old, upside down in the skies of Mississippi, that I at least had the initial steps to take to keep the plane safe. And it translates so well to business, don’t you think? We’ve seen the same thing take place where teams would wring their hands over the possible challenges they could face until you give them the contingency plans and say, “No, we thought about that. We don’t have all the answers, but we do have the initial steps we’d take if the worst happens.”

Q: Yeah. When we plan, the critical thing about contingency planning as a function, as a part of the process of planning, is it forces you to think deeply and considerably about not just what could go wrong and what you’re going to do about it, is, can you take preemptive action as well? We teach our planning process, as a powerful notion of recognizing that every threat that you identify may be addressed with positive action. You may be able to avoid it, negate it, or at least some way mitigate, rather than just responding to it. That, I think, is so powerful and something that should not be missed in any planning process.

Thor: What do we call those types of threats when you can mitigate it or negate it?

Q: Well, we have controllable and uncontrollable threats, and when we teach planning, we want everyone to have a robust discussion in the team on whether a threat is truly controllable, or is it uncontrollable? The knee-jerk reaction, most times, is to say, “Oh, yeah, that’s uncontrollable. It’s like the weather; you can’t control the weather,” and a multitude of other things that you can’t control. But when you stop and think about it, maybe the weather itself is uncontrollable, but the context of the weather, we do have the power to influence. So what can we do to control that issue? That’s true across all sorts of business situations.

Thor: The weather is another great one, I think, because of the engine fire example, you’re only reacting to that once your plane’s on fire. That’s a very reactive scenario. We can be more proactive in the case of weather because I always ran the risk, every single flight I flew, there was a chance that I would return to the runway that I took off from, and there would be a thunderstorm on the field. In particular, as I’m flying out of the coast of Florida and buzzin’ the beaches and checking out the spring breakers as I’d return home, very often, you’d see some thunderstorm roll in off the ocean, and lightning is now striking the place you were going to land on both sides of the field. I didn’t come up with my plan of what I was going to do at that point. I had to, at that point, execute the plan I’d already established, the contingency plan I had ready. But unlike the engine fire example, where you’re just waiting for the worst to happen, we had some early indicators for this even being a factor. In other words, I wouldn’t just put my hand out the window and see if it was raining, I would check the weather the day prior. Talk a little bit about how you can use those triggers to be more effective in your planning.

Q: Well, I want to address something.

Thor: Yeah.

Q: Because the audience probably thinks I’m a fighter pilot, and I have to say I am not.

Thor: I was going to let you pretend.

Q: Most people let me pretend for a little while. I didn’t fly the planes. I “flew” the airport. That’s what I like to tell people. I was an engineering bridge officer on a nuclear aircraft carrier for several years. What a lot of people don’t understand about aircraft carriers, you think that “Oh, it’s huge!” It’s such a powerful and modern ship. Surely, it can fly a plane at any time it wants to, in any direction that it wants to. Not true. Current aircraft carriers are much like the old days of sail. We are very constricted in our ability to operate by the wind, something as simple as the wind; we were talking about the weather. There are all kinds of connects. Two things that scared me most when I was on the bridge running the ship, and that was the wind, and when launching aircraft, you pilots are so particular about crosswind components. So I needed to have exactly a specific knot of winds.

Thor: We don’t like crosswinds.

QD: No crosswinds. I had a tiny envelope of crosswind that I can allow over the deck, so you precious little pilots could launch off of my airfield. Well, I knew that wind’s fickle, so I might have my course laid out, and I might have 12 aircraft’s I’m going to launch. I keep my fingers crossed that wind doesn’t change while I’m driving, but I would keep my eyes fixed. You were talking about cross-checking components. My eyes were fixed on the wind gauge because I had to make sure that thing didn’t fluctuate much. And I knew if it jumped two knots… And it would do it; it would rise two knots one way, two knots the next. If it did it one more time, I needed to change course; I needed to adjust speed, maybe both.

Q: So I didn’t wait, because your cross component was good with one or two knots one way or the other. You don’t care too much as a pilot, but I know something’s about to happen. That was my leading indicator. If I didn’t act, they would get out of control, and then it started to endanger lives, or we might have to shut down the sortie, the launch sequence. Not good things. I don’t want that to happen on my watch. That’s our military story of why contingency planning and leading indicators can be so important. It’s essential in business too, because you need to set triggers for when you’re going to act. Because if you don’t respond in time, if you don’t have a bias for action, even in contingencies, you spend money, you spend time, and you spend effort unnecessarily.

Thor: You’ve talked to me in the past about developing these triggers. And one of the things you said is that sometimes it even helps you to abort the mission and turn the mission off. Talk a little bit about why that’s so important and, psychologically, why you need to have that trigger already built into your plan.

Sunk Cost Effects

Q: Yeah, most of you that are listening to this have probably heard of the sunk cost effect. We fall in love with our little project, and we have our budget, and a month into it, we’ve spent our budget, and we’re running over time, but the project isn’t finished. So we say, “Okay, we’ll just push that out a little bit more.” We spend some more money and goes on forever. You get attached to the project. When are you going to quit? What are the limits? I’ve got some statistics here; some famous sunk cost effects will blow your mind. Two of the big ones in history have been the Concorde supersonic jet that used to cross the Atlantic and the BART. If you’ve ever been out in the San Francisco Bay Area, ride in the BART. These went on for years and years and years, and hundreds of millions and billions of dollars in cost overruns. Sunk cost effect is gone crazy. When in your project, maybe it’s not a BART or Concorde yet, but how much are you willing to spend before you say, “Okay, let’s cut the losses and walk away from this thing before it drags us all down and maybe cost the company.”

Thor: Yeah. Blockbuster, I think is an excellent example of sunk cost fallacy too, because Blockbuster Video in the ’90s bought up all this real estate and they had all these brick and mortar stores all across the globe. As the 2000s hit, everybody in the world saw the direction that Netflix was taking thing, first by distributing DVDs, second is streaming it. Blockbuster had the resources, had the connections, had everything they could have used to succeed, but you have to believe they had a sunk cost impression where they’re saying, “No, we put all this money already into these other resources. We put all this effort into this other strategy.” They couldn’t pivot their team with their resources and strategies for them to pursue if they were starting from that point, because they had way more money, way more assets than the Netflixes of the world did. And yet they couldn’t make that transition because they had all their eggs in the other basket and the sunk cost fallacy stepped in.

Q: Yeah. That’s gambling run amok. You think, “I’ve spent so much, I’ve lost so much. My luck’s going to turn, right?” Well, good luck with that.

Thor: Yeah, and you don’t want to be pessimistic during the planning phase, but I’ve seen influential leaders have the conversation where they’ll say, “Alright, so… ” Let’s say it’s a pipeline mission that’s for sales, and they say, “We need to create 150% pipeline by next month.” They’ll say, “What happens if we have created no new pipeline in two weeks? What are we going to do?” Either they have one of two answers at that point, they say, “We’re going to enlist the big guns and bring in the leadership and the CEO and executives, and they’re going to enforce this and make sure we do it.” Or they say, “We’re going to turn it off. We’re going to abort the mission. What we are doing isn’t working. We need to put our effort in another direction, and we need to get back to the drawing board.” I love it when they build in those triggers to be able to assess their plan and the progress, and have an idea of what they’re going to do to either, A, keep it on track, or B, switch strategies and move it in a different direction.

Q: Absolutely, switching strategy. That’s so important. The way I like to think about the laws of execution at a tactical level versus a strategic level is that at a tactical level, you hope you’re in a static environment where things aren’t changing much so you can spend time and experiment. You need to know what the limits of your experimentation are. At a tactical level, you say, “It’s probably money and time,” things like that. At a strategic level, you don’t know because things are in flux, volatility, complexities going on. Well, you want to set those same kinds of money and time limits, but you also have to approach it with an experimental, or truly experimental, because all strategies are ultimately experimental. You have your best guess that it’s going to work, but you need to know when you’ve confirmed that it’s not working and make that pivot without a hardline trigger that says, “Let’s get out now.” You’re more likely to drag it out and miss another opportunity because you’ve put effort and money and time into something that doesn’t work.

Weather or Not

Thor: Alright, contingencies are critical for flying. We couldn’t fly confidently without that checklist strapped to our leg. As young pilots, we needed to have that warm fuzzy that we would at least have the initial actions to take if the worst happens if we have an engine fire or something else to address. Contingencies are critical for business. We talked about some examples of companies that could have used contingency plans and get out of the sunk cost fallacy and make use of pop-up resources and opportunities, but how do you apply this then? If somebody’s listening out there with their small team or even their business and they want to figure out, “How do I build these contingencies into my plan?” What would you tell them?

Q: Well, it starts with considering, hey, what’s your objective and what stands in the way? Best way to begin populating the ideas of what could go wrong is in that step number two of planning. What stands in our way? What are the threats? Then moving to, once you’ve identified what those top threats are, usually about five things, are those controllable or uncontrollable? If they’re controllable, do you want to take positive action in your course of action to address them? That’s also consider anything that it’s not entirely under our control, but we can negate, mitigate or avoid it in some way. Those, I suggest you also address in your course of action. Truly uncontrollable things, that’s the contingency.

Thor: Weather.

Q: Yeah, weather. We’re having a wedding. Alright, let’s plan a wedding. And we’re planning that wedding in Phoenix in July. Am I worried too much about the weather? Probably not. Maybe a little about the heat.

Thor: The heat.

Q: Better put up a tent.

Thor: That’s not as terrible.

Q: I’m not going to worry too much about it raining. But if I’m doing the same thing in Seattle, maybe I want to have a rain plan in my contingencies. Perhaps my primary course of action is to have it outside. Maybe my contingency is to have it inside. Your contingency plan could be as detailed a plan as your primary course of action in those kinds of situations, because of the probability that that rain could fall. But in most cases, it doesn’t take that level.

Thor: I love that example because you can imagine a bride on her wedding day as she’s getting ready. And two brides, one that has a contingency plan in Seattle, as they’re getting ready for this outdoor wedding, and as her hair all done and is excited, and they also have the indoor place where they’re going to go if it doesn’t work out and it starts raining. And then the other one who doesn’t have that contingency plan, and yet she knows there’s this uncontrollable threat. And here she is, just crossing her fingers in Operation Hope.

Q: Hope is not a strategy.

Thor: Yeah, just hoping that things work out. That’s no way for your teams to operate either. You can imagine the different stress levels that they both participated in that event, and that’s what we’re asking our teams to do. If you give them the contingency plan, then they’re going to be an entirely different person. So how do you build that? Continue.

Q: Yeah, if it’s truly uncontrollable, you must have that as part of your contingency plan. And the best thing to do is think about leading and lagging triggers.

Leading and Lagging Triggers

Thor: Okay.

Q: Leading triggers is like if it’s a weather situation… Well, weather forecast probably is a pretty good leading trigger. You can say, “Oh, 24 hours out, if it’s going to be at 30% or if there’s even going to be clouds, maybe we want to… ” That to be our trigger to take action to move it inside. Who knows? It depends on the context. Business situations are the same way. “Hey, what are the leading triggers? How are we going to know when something bad is about to happen?” And leading triggers are the best, but I have to be honest with you. Sometimes, they’re tough to identify. That’s why you always have to have a lagging trigger as well. And your lagging trigger is, “Ah, the event has happened.” You say, “Oh look, it’s raining outside.”

Thor: The engines on fire.

Q: “The engines on fire. It’s time to do something.” “The pilot just went in the water, have to do something.” That’s the lead or lagging trigger. Things to think about that is, once you’ve identified those, what are you going to do? I was mentioning before; you could have an elaborate secondary plan, that’s just as detailed as your primary course of action. That’s usually not the case.

Thor: Right.

Q: Typically, it’s the first few primary critical actions that you need to take to recover from the contingency. And usually, that’s two or three things. Most tactical level planning is just two or three, maybe four, five things. Usually not much more, because you don’t want to over plan. It’s usually just the things focused on recovering, and this is why we brief contingencies so that everyone knows what the leading and the lagging triggers are because anyone on the team could be the person that identifies or notices the trigger. Maybe it’s not the team leader; perhaps it’s someone else on the team that says, “Oh, look, I just went out to get something out of my car, and it’s raining out there. I think we’re supposed to do something at this point.” So if everyone’s aware of the triggers, everyone’s a member of the team that can identify and set the course of action as a response in action. “Something’s got to be done now as… We decided we’re going to do it. Okay, team, there’s the indicator, let’s go do it.”

Thor: Such vital concepts. Let’s capture those one more time. The first one is we determine what our contingencies will be based on the top uncontrollable threats, those things we cannot mitigate. They either happen, or they don’t. It’s the rain at the wedding story. I have to have a plan B, should that occur. Next thing I want to do is look at the triggers. What’s the earliest opportunity that I see that I can execute this plan, or I’m going to have to go with my contingency? And then last, what are the initial steps that you’re going to take to manage this scenario? The last example I’ll give you is on takeoff. Every time I did a takeoff, I’d brief this up to the students, brief it up to our formation, didn’t matter if I was talking to a 4,000-hour F-15 pilot or a new pilot. We’d always talk about this. You brief it up every time, and we’d say, “If we have an emergency on takeoff, I want to know when I should abort and when I should continue with the takeoff.” Our threshold was if you’re below abort speed and get an engine fire, that’s the trigger to abort the mission. We are not going flying that day, so I’m going to execute the abort.

Thor: Abort includes boldface, which means the first steps we memorize, so we know exactly what to do. The boldface is, “Throttles, idle, wheel brakes, as required. I pull my throttles idle, I start putting my pressure on the wheel brakes and my pedals, and I bring the aircraft to a stop. It doesn’t have all the steps that I would take. It doesn’t talk about how I’m going to taxi back, or how I’m going to get out of my aircraft, or maybe even eject if it’s really on fire. It just gives me the initial steps to get the situation under control, and then take an assessment with my team, or by myself if I’m flying solo, to identify what the next course of action is. That’s what contingencies are about, figuring out how do I keep the situation in a state where I can still handle it and still land the aircraft safely? They would tell us over and over again in pilot training, “Very few things are just going immediately blow up your airplane. Look to execute these contingency plans and trust these contingency plans, and then make decisions based off of the state that you’re in after you’ve executed the contingency.”

Thor: Great, great feedback today. Well, Duke, I loved it. Q, always great having you on the show. I’ll give you the last words. Anything else you want to share with the team, about contingencies or anything else on the topic?

Q: No. I think we’ve covered the structure of it, and that’s the critical part, is the simple structure.

Thor: Yeah.

Q: As you pointed out, a simple course of action, because when the time is of the essence, executing something complicated usually isn’t very easy and it’s usually set up to fail.

Thor: That’s right. Q, that’s why you’re the pro. That’s why you’re the one who gives us all our weapons, and that’s why we call you the name after the individual on James Bond 007.

Q: Good day, Moneypenny.

Thor: Yeah. Have a great one.

Thor: Ladies and gentlemen, thank you for listening to The Business Thorcast. For more information on today’s episode, please visit our website at www.thebusinessthorcast.com. If you like this podcast, please rate it and leave a review on iTunes, Stitcher or Google Play. Thor, over and out.