Companies that execute can put a contingency plan into effect on the turn of a dime—recall how Honeywell responded to the crisis of September 11. When the Asian contagion roiled world economies in 1997, both AlliedSignal and GE created contingency plans and redid their budgets in six weeks. They had this capability because they had thought about it beforehand and had been practicing the process for years.

LARRY: The operating plan is done. Now the leadership looks at the assumptions that might be most vulner-able and plans for contingencies in case results start to come up short. For example, we’ll calculate that if a business misses its growth target of 10 percent, it will cost us revenues of X and margins of Y. So we’ll have an idea of the magnitude of costs we would have to take out and the productivity gains we’d have to increase to make up for the shortfall. We don’t get very granular, but our people are very adaptable. They know the kinds of actions they’ll have to take to adjust, when and if.

Taken from: Execution The discipline of Getting things Done