Pre-Mortem Analysis: Scenario Planning and Risk Management

We create forecasts, build robust models, and devise intricate strategies to achieve our goals. But what if, before launching into execution, we intentionally imagined the project had already failed? What if we tried to figure out why it failed, before it even began?

This exercise is the essence of pre-mortem analysis - a powerful risk management technique that can uncover hidden vulnerabilities.

What is Pre-Mortem Analysis?

Coined by psychologist Gary Klein, a pre-mortem is the opposite of a post-mortem. Instead of analyzing a project's failure after it has occurred, a pre-mortem is conducted before a project begins or a strategy is fully implemented.

Here's how it works: You fast-forward to a point in the future (e.g., a year from now), and assume the project has spectacularly failed. Then, you brainstorm and articulate all the potential reasons why it failed. This shift in perspective unlocks different cognitive pathways, often revealing risks that traditional risk assessments might miss.

Why Pre-Mortem Analysis is Crucial

The pre-mortem offers distinct advantages:

• Uncovers Blind Spots: Our optimism bias can make us overlook potential pitfalls. The pre-mortem actively counteracts this, bringing hidden risks and flawed assumptions to light.
• Enhances Risk Mitigation: By identifying potential failure points early, you can develop proactive mitigation strategies before they become costly problems. This moves you from reactive firefighting to proactive risk management.
• Improves Financial Forecasting Accuracy: Understanding potential failure modes allows for more realistic downside scenario planning, leading to more robust and accurate financial forecasts.
• Strengthens Strategic Resilience: By stress-testing your strategy against imagined failures, you can build in greater resilience and adaptability.
• Fosters Open Communication: The pre-mortem creates a safe space for team members to voice concerns and contrarian opinions without fear of being seen as negative or unsupportive.
• Builds Team Cohesion: Working together to identify and address potential failures can strengthen team collaboration and collective problem-solving.

How to Conduct a Pre-Mortem Analysis: A Step-by-Step Guide

A typical pre-mortem session can be completed in 1-2 hours and should involve core project stakeholders and diverse perspectives.

Step 1: Set the Stage

• Define the Project/Strategy: Clearly articulate the specific project, initiative, or strategy that is being analyzed. What are its goals, scope, and timeline?
• Fast Forward to Failure

Step 2: Brainstorm Failure Reasons (Individual)

• Individual Reflection: Give each team member 5-10 minutes of quiet time to individually brainstorm and write down every conceivable reason why the project failed. Encourage them to think broadly – market shifts, competitor actions, internal operational flaws, funding issues, regulatory changes, talent problems, faulty assumptions, etc.
• The Why: Remind them to focus on why it failed, not just what happened. For instance, not just revenue was low, but "revenue was low because competitor X launched a disruptive product."

Step 3: Share and Consolidate Reasons

• Round Robin Sharing: Go around the room, with each person sharing one reason from their list until all unique reasons have been shared. Write these down on a whiteboard or flip chart.
• Group Similarities: As reasons are shared, group similar or duplicate ideas to create a master list of unique failure modes.

Step 4: Prioritize and Analyze

• Discuss Impact & Likelihood: As a group, discuss each identified failure reason.
  • How plausible is this failure mode? (Likelihood)
  • If it occurred, what would be its impact on the project and the organization? (Severity/Impact)
• Root Cause Analysis: For the most critical and plausible failure modes, delve deeper using 5 Whys or other root cause analysis techniques to understand the underlying issues.

Step 5: Develop Mitigation Strategies & Action Plans

• Brainstorm Solutions: For each high-priority failure mode, brainstorm specific, actionable steps that can be taken now to prevent or mitigate the risk.
• Assign Ownership & Deadlines: Assign clear owners and deadlines for each mitigation action. These become part of your project's risk register or integrated into the main project plan.
• Identify Early Warning Signals: What metrics or external indicators would signal that this potential failure mode is beginning to materialize?

Pre-Mortem in Action: Examples

• Major M&A Integration: Why did this acquisition fail to deliver expected synergies?
  • Failure Reason: Critical talent from acquired company left within 6 months due to cultural clash.
  • Mitigation: Implement a dedicated retention program for key personnel post-acquisition, with clear communication and cultural integration workshops.
• New ERP Implementation: Why did the system go live six months late and over budget?
  • Failure Reason: Data migration from legacy systems was far more complex and error-prone than anticipated.
  • Mitigation: Allocate additional resources and time specifically for data cleansing and migration validation, conduct more rigorous pre-migration testing.

The Payoff: Robust Plans and Confident Execution

By consciously embracing potential failure before it happens, a pre-mortem analysis empowers strategy teams to build more resilient plans and identify critical vulnerabilities.

It's an investment of a few hours that can save organizations months of rework and significant financial losses.

It shifts the mindset from avoiding uncomfortable truths to proactively confronting them, leading to more confident and successful strategic execution.