Firms should apply robust yet agile programme principles to navigate an environment which remains so uncertain
The ever-changing Brexit landscape is proving to be a real burden for businesses attempting to respond. Ongoing negotiations and political uncertainty make it difficult for firms to develop and follow robust plans and prepare for their desired outcomes.
The vast impact of Brexit adds to the burden. It will touch every industry in Britain in some form, with many feeling the effects more than others. For example, in financial services the potential loss of access to the single market is detrimental and exiting the customs union will have a similarly disruptive impact to a number of other sectors with reliance on imports and exports. Additionally, in the public sector and beyond there will be a hugely adverse impact on the work force. The confirmation of a transition period, agreed this week, will add additional complexity, as it is still conditional on both sides agreeing a final withdrawal treaty. Although negotiators hail this as a “decisive step”, this may still be too late for many businesses to alter their plans.
So with all these upcoming disruptions, how do you successfully plan your Brexit programme when the impact is huge but the specifics are uncertain? When should you make decisions on what changes to implement?
The bigger the impact to your business, the earlier the action required and the further along you should now be in your planning. This should include proactively working through the uncertainties and understanding if and how they will impact your business. Depending on your sector, these may include new regulatory implications, identifying and hiring talent or arranging new supply chains.
The most effective way of navigating the unknown is through a diligent impact assessment and scenario planning. This will allow you to be strategically flexible in your business planning whilst at the same time identifying the possible risks and corresponding actions required.
1. Impact assess for success
It may sound simple, but unless you understand the implications of Brexit and the specific uncertainties that will impact your business planning, then your programme is very likely to fail. Doing this early and thoroughly will allow you to think creatively about your solutions. It will also allow you to understand what you need to do to get ahead of the game where this is needed to achieve the right outcome for your business.
First, list out the potential scenarios that Brexit could result in. We recommend defining scenarios that cover the broad range of possible outcomes, rather than meticulously covering every single potential permutation. This set of scenarios should also include the various potential options for a transition period. Next, assess the impact of each scenario on your customers, suppliers and your operating model. This will provide greater clarity on the challenges and risks to your business and will provide you with the basis at which to work out your future options.
2. Work out your favoured approach for each potential scenario
With the clarity we do have around the political outcomes and your finalised assessment, you should now be able to identify the plans which are both realistic and suitable for your business.
You should prepare your first-choice and fall-back plan for each of the possible political outcomes. Ensure each plan has sufficient detail (including costs and resources) for you to implement it if required. Avoid the temptation to leave your project planning at high level because of the uncertainty of the broader macro context and/or a reluctance to invest the hard work required.
Failing to think things through at the required level of detail risks hurting your business. Indeed, we have seen several firms in the financial services sector working only to a worst-case scenario and implementing key (and hard to reverse) changes before they need to do so, despite these changes not leading to their preferred outcome. This includes a major bank moving key desks abroad.
3. Determine what ‘no regrets’ actions can be made now
Once you have determined your scenarios, you can establish the decisions you can take now that will benefit your company, such as your location strategy or which services you can source from the EU, as well as implement any actions that work in all scenarios.
Conversely, establish which changes will be too difficult or expensive to reverse, such as moving your staff. You should assess the risk versus the benefits of postponing these tasks.
At the same time, identify activities with longer lead times. Assess whether you need to start them now to ensure they are in place by the date of Brexit, even though all relevant decisions may not yet have been made. You should establish what these activities are and think hard about your options for making the changes in an agile way to allow you to constantly review them and reverse them, if needed or possible. One of our current clients has made the decision to move a crucial part of its EU supply chain from the UK to Germany. Due to the long set up process, they have had to already start this work, even though in the end it may turn out to have been suitable to stay in the UK – they simply can’t take the risk.
Strategic scenario planning will help to preserve budgets and resources
You will see the most success from your Brexit programme if you can be flexible and agile, with regular decision-making points. Understanding your options through scenario planning will mean you will be on the front foot as developments become known, and you can quickly take advantage of opportunities that may arise. It will mean you can divert resources to the relevant place and preserve your budget at the same time.
Clarity on the negotiations and confirmation of the transitional period may not arrive until October 2018. But with just one year to go; now is the time to plan your scenarios and implement the ‘no-regrets’ actions that will really make a difference to your business.