The Hidden Power of Pre-Mortems in Business Planning
In business planning, leaders often focus on setting goals, defining milestones and mapping a path forward. Yet one of the most effective strategies for resilience comes not from planning success, but from planning failure. Gregory Hold, CEO and founder of Hold Brothers Capital[1], highlights that the best leaders do not wait for setbacks to reveal weaknesses. Instead, they imagine what could go wrong before it happens, allowing them to anticipate problems and strengthen their plans. His perspective reflects a growing appreciation for pre-mortems as a vital step in building stronger, more adaptive organizations.
A pre-mortem is a structured exercise in which a team imagines that a project has failed and then works backward to identify the reasons why. Unlike a post-mortem, which analyzes mistakes after they occur, a pre-mortem brings those lessons forward into the planning stage. By surfacing risks early, small businesses can avoid costly surprises, while also creating a culture that values open discussion and innovation.
Why Pre-Mortems Work
The power of pre-mortems lies in shifting the mindset from “what could go right” to “what might go wrong.” This reframing reduces blind spots that often accompany optimism in planning. Leaders naturally want to believe in their strategies, but unchecked optimism can obscure real risks.
By forcing a team to imagine failure, pre-mortems normalize the idea that plans will face challenges. This opens the door for honest conversations about vulnerabilities that might otherwise be ignored. Instead of viewing potential problems as signs of weakness, the exercise reframes them as opportunities to prepare and adapt.
Building Resilience Through Anticipation
Resilience is not about avoiding every problem, but about being ready when problems appear. Pre-mortems allow businesses to identify weak points before they become critical. For example, a small retail company planning a new location might imagine failure due to supply chain issues, unexpected zoning rules or poor customer traffic. By naming these risks early, the team can plan contingencies such as diversifying suppliers or investing in market research.
This proactive stance not only reduces the impact of setbacks but also builds confidence. Teams know that they have already considered worst-case scenarios and developed responses. This assurance creates steadier performance, even when external conditions shift.
Encouraging Psychological Safety
Pre-mortems also strengthen culture by encouraging candid discussion. During normal planning sessions, employees may hesitate to voice concerns for fear of sounding negative. The structure of a pre-mortem flips that dynamic. Since the exercise assumes failure, raising concerns is not viewed as pessimism, but as a contribution.
This dynamic promotes psychological safety, where employees feel free to speak openly, without fear of judgment. Over time, this openness extends beyond the exercise itself, creating a workplace culture where sharing ideas and identifying risks become normal. For small businesses, where every voice carries weight, this inclusivity can be progressive.
Driving Innovation Through Risk Awareness
Innovation often emerges from exploring failure. When teams imagine what could derail a project, they uncover insights that inspire novel approaches. A service business, for example, might identify customer dissatisfaction as a cause of failure in a pre-mortem. This realization could lead to new customer engagement strategies or service improvements that strengthen the company overall.
Pre-mortems encourage creativity, rather than stifle it. By acknowledging risks, teams are free to brainstorm alternatives, evaluate new methods and build resilience into their innovations. This balance between risk and creativity produces strategies that are both bold and realistic.
Practical Steps for Running a Pre-Mortem
Conducting a pre-mortem is straightforward but requires thoughtful facilitation. First, a leader or facilitator frames the exercise by asking the team to imagine that a project has failed completely. Next, participants individually write down reasons why this failure may have occurred. Once the list is compiled, the group discusses it, clusters themes and identifies the most significant risks.
From there, the team creates action steps to mitigate those risks, before the project begins. The key is to document insights and integrate them into the plan, rather than treating the exercise as an abstract discussion. A pre-mortem works best when outcomes translate directly into adjustments in strategy, budget or operations.
Integrating Pre-Mortems into Small Business Strategy
For small businesses, pre-mortems can be especially useful because resources are limited, and the margin for error is often smaller. Unlike large corporations that can absorb failures, small firms must be more deliberate about anticipating problems. Integrating pre-mortems into planning cycles ensures that risks are surfaced and addressed systematically.
Leaders can incorporate pre-mortems into quarterly reviews, major project launches or even routine planning sessions. By making this exercise a habit rather than an exception, small businesses build resilience into their culture. Over time, this proactive mindset becomes part of the company’s identity, preparing it for both challenges and opportunities.
Overcoming Resistance to Failure Thinking
Some leaders resist pre-mortems because imagining failure feels uncomfortable. They worry that focusing on negative outcomes will discourage motivation or create doubt. The opposite is true. By normalizing discussion of risks, pre-mortems reduce anxiety and uncertainty.
When teams know that risks have been considered and contingency plans exist, they approach work with greater confidence. Instead of fearing the unknown, they feel prepared for it. This shift in mindset strengthens both morale and performance, proving that discussing failure openly makes success more likely.
Learning From Other Sectors
Fast-moving industries provide clear examples of pre-mortems in action. In healthcare, surgical teams conduct “pre-flight checks” to anticipate complications before operations. In aviation, crews routinely run through failure scenarios to ensure readiness. Small businesses can borrow these practices and apply the same level of foresight to their own projects.
For instance, a small software firm might run a pre-mortem before launching a new app, identifying possible failure points, such as server overloads or user adoption barriers. By planning, the firm can invest in scalable infrastructure or create training resources to support adoption. These simple steps, inspired by high-stakes sectors, reduce risk and increase the odds of success.
Preparing for the Unexpected
The greatest strength of pre-mortems is that they prepare companies for uncertainty. No plan can anticipate every scenario, but the act of imagining failure builds flexibility into the business mindset. Leaders who practice pre-mortems accept that failure is not an endpoint, but a learning tool.
Gregory Hold notes that leaders who anticipate failure before it arrives build organizations that are not easily shaken by setbacks. His perspective emphasizes that resilience comes from preparation and openness, not unquestioning optimism. At Hold Brothers Capital, this forward-looking approach is reflected in how strategy teams anticipate risks early, embedding resilience into planning and decision-making. By embedding pre-mortems into planning, small businesses can turn the fear of failure into a source of strength, driving both resilience and innovation.
[1] Hold Brothers Capital is a group of affiliated companies, founded by Gregory Hold.
