In a fast-changing world, optimism isn’t enough. Plan for the worst while staying hopeful—true for budgeting, crisis, and resilience.

Optimism is a virtue.

Why worry, everything will be alright.

Whilst I agree it’s not worth worrying all the time, never forget that we live in a volatile, uncertain, complex, and ambiguous (VUCA) world. What does this mean? It means that things can change much faster and much more dramatically than you’d ever imagine. It means that things can turn out to be much more positive than anticipated — or much worse.

The further ahead you plan, the less certainty there is. We don’t know what the world will look like in 10, 20, or 30 years. It can be dramatically better, or dramatically worse than today.

So what’s the problem with not knowing where we end up?

The problem in organizational life is that most initiatives need lots of time for planning, preparation, and implementation. Combine that with the speed at which things can change, and you’ll realize that you might be in trouble if you don’t prepare adequately.

The core concept to survive in a VUCA world is this: Hope for the best, plan for the worst.

Usually, you don’t need to prepare anything for the best case — that is, as long as you are prepared for the worst case. And that’s exactly what people have forgotten in the fat years that lie behind us. The world as it looks right now faces other challenges than personal growth, self-actualization, and the perfect social media profile.

Getting rid of fossil energies.

Rebuilding our defense capabilities.

Overcoming polarization in politics.

Fighting inflation.

Preparing for the next pandemic.

Making sure the lights stay on next winter.

What’s the worst case that could happen? A dry summer, with empty power dams, no Russian gas, and a cold winter. Add a new, more deadly pandemic, and another hot war over Taiwan. And last but not least, AI is wiping out three-quarters of all office jobs.

And you’re sitting there with your just-in-time, zero-inventory centralized logistics system, and with your obsolete military equipment. You’re wetting your pants, scrambling to buy supplies and military kit.

You didn’t prepare for the worst case. And now it’s too late to stock up on everything you need. Because everybody now wants the same supplies and the same military kit.

Always plan for the worst, and hope for the best.

That was abstract and high-level. Let’s take the concept of hoping for the best, and planning for the worst down to a practical level.

1. Budgeting

No matter whether you prepare your household budget or a budget for your company, the concept of hoping for the best and planning for the worst boils down to being conservative on the earnings, and generous on the spendings.

The worst case is that your earnings fold and your costs explode. And that you can’t get additional dollars from investors. So besides being conservative on the earnings and generous on the spendings, I would advocate a dynamic cashflow plan, comparing actual and forecast values of your cash level. This can be done easily with Excel, and it allows you to play around with it, seeing the consequences of the worst case long before it occurs.

2. Crisis Management

Crisis management is a skill that is often overlooked. When a crisis starts, it is imperative to call it what it is — a crisis. And as long as you don’t know how it will develop, I would advocate to hope for the best and plan for the worst.

And once you see that you get away from the worst-case path, you can call an end to the crisis and return to business as usual. But not before.

3. Self-Sufficiency

Long before people were talking about the energy crisis, I invested significantly in solar panels to boost my self-sufficiency.

Before 24th February 2022, I was often laughed at for my “power anxiety”, my “Armageddon fantasies” and my apparent stupidity to spend extra money on building technology.

Nowadays, people often call me to ask for advice on installing solar panels and other measures to increase the resilience of their homes. Even when they laughed at me some ten years ago, I still offer my advice. Because my efforts paid off.

For me personally, my investments into self-sufficiency turned out to be the best case: I enjoy up to 80% self-sufficiency over the year (that is with two electric cars), plus I earn a lot of money from the surplus energy I produce during the summer months.

Conclusion

Don’t get me wrong, I am not advocating to be pessimistic all the time. I advocate investing in preparedness, not prediction.

If you live by this philosophy, you’ll never be caught off-guard by events that unfold faster than anyone could have predicted.