Tuesday, July 19, 2011

Best-case scenario

American Express almost put itself out of business, twice, by being unprepared for the response to new initiatives. Once, they sent direct mail to customers announcing the creation of a new charge card, a way that they could shop without cash. The response was so overwhelming they could not keep up with the demand. Customers were unhappy, and the brand was almost destroyed. Or so I was told when I worked for Amex in the early 1990s.

When planning bold businesses, we often make contingencies for potential downside risk. "Worst-case scenario, we'll only sell 12 million units. We are exuberant, so we describe a scenario far better than the real worst-case scenario.

But how often do we prepare for an outcome so grand it could instantly suck up all our resources and leave us unable to keep commitments?

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