Business leaders everywhere are currently immersed in crisis management and response planning conversations, recognising the gravity of the coronavirus pandemic and the importance of timely, critical action. While an immediate and effective response is vital, organisations should not overlook the medium and long-term position, as we embark on a ‘new normal’ following the crisis.
Is this a challenge to businesses unlike any other?
The answer is: yes and no. The coronavirus outbreak is having a seismic effect on all aspects of society and commerce. We are clearly on the cusp of an unprecedented challenge. But we also believe many businesses are set up to respond to this challenge because they have been honing their strategic flexibility for many years – some purposefully, others by simply responding to business and market forces which have changed radically over the last decade. Successful past performance is, in this case, a strong indicator of future performance.
Notwithstanding the relative advantage of financial strength, organisations with strategic flexibility typically demonstrate a high level of situational awareness, operational resilience and ways of working that promote agility and speed of response.
Inform your strategic response through situational awareness
By considering political, economic, social, technological, legal and environmental implications as part of a situational analysis exercise, you can explore what to expect and how you might prepare to respond to potential opportunities and threats, recognising that an opportunity for one organisation may be a threat for another. Preparedness and consideration are key to the success of any strategic response, along with resilience and adaptability.
For UK plc there are a range of considerations that sit across its PESTLE.
- High levels of focus and support on the needs of UK businesses
- Temporarily suspended or relaxed regulations
- Potential for lockdown on a rolling basis to manage demand on health services
- Stimulus packages and policy change to protect global economies
- Uncertain labour market conditions and supply
- Investor uncertainty for new ventures and expansions
- Increased advocacy for purpose-driven organisations
- Heightened recognition of the importance of employee health and wellbeing
- Prolonged fear and reticience for travel, particularly air travel
- More sophisicated and flexible use of technology to support a remote workforce
- Increased adoption and dependency on digital channels
- Labour and employment legislation changes
- Exposure to litigation as a result of contractual breaches caused by supply chain disruption
- Revived appreciation for the outdoors and leisure time bringing changes to customer behaviour
Many of these considerations are industry-agnostic, but you should also be ready to address challenges specific to your industry environment. Indeed, the effect of the pandemic will be felt differently by organisations across geographies and sectors.
Businesses that require a higher degree of face-to-face customer interaction including travel, hospitality, tourism and events are, as we know, witnessing the most severe impact on trading. By contrast, some organisations have seen an upturn in business, for example, Ocado with its home delivery service, and Zoom and Microsoft with their respective cloud collaboration tools, facilitating the widespread adoption of home working. The question for these organisations is how do they continue to satisfy increased demand for their services and sustain this level of performance once the crisis abates?
For others, the need for agility has been forced upon them but now creates opportunities to embrace change. One example is the current need to enable and embrace remote working, which potentially serves to dispel long-held beliefs or reservations that such an approach might be detrimental to collaboration and productivity.
Using planning horizons to segment and structure response plans
Having adopted a crisis management mindset the next step is to start planning how to respond to the new normal, such that the business is ready to bounce back.
Segmenting response plans across three planning horizons can help you prepare as the situation evolves – instead of submitting to an ad hoc, reactive approach.
Horizon 1 – crisis management
The organisation is most likely in survival mode, focused on protecting its employees, maintaining access to cash and liquidity, and keeping critical services in operation through the depth of the crisis.
Horizon 2 – transition
Post peak period in which society and businesses gradually start to return to normal once the crisis abates. Disruption continues due to precautionary measures, such as prolonged social distancing, to avoid the possibility of another outbreak.
Horizon 3 – recovery and rebuild
Post pandemic period in which organisations and businesses embark on understanding the full effects of the crisis, implications for future working, and opportunities for rebuild and rejuvenation.
No-one can predict the timeline for moving through these phases. Rolling planning cycles across a 30, 60, and 90-day timeline can be an effective way of focusing action and response during the initial crisis period. Beyond this, scenario modelling the possible and anticipated impact on your organisation, with assumptions based on a quick recovery versus a more prolonged period of disruption, can help to inform key strategic and operational decisions.
Understand how you will respond purposefully and increase operational resilience
There are three key activities that you can do to maximise your ability to respond effectively to the current situation and be prepared for the medium and long-term implications as they unfold across horizons two and three.
Given the current uncertainty, rehearsing – even conceptually – how you will respond across different scenarios and creating a wider range of options is critical to building resilience in key business functions. From our experience, it is important to factor in this preparation time and process across your market, supply chain and people teams.
1. Supply chain and markets
Gather data and insight on changing consumer and customer needs on the assumption that customers’ changing preferences are not likely to go back to pre-outbreak norms. Perform a market analysis to identify opportunities and gaps that might emerge for your organisation. Consider your approach to customer engagement – how will you engage customers over the coming weeks and months to ensure they feel informed and supported?
Take the time now to ensure you understand your current supply chain – where you are now and, specifically, how prepared you are to respond to sustained disruption, securing continuity of products, and managing large swings in demand. Engage suppliers to identify upstream supply dependencies within their supply chains as a result of cargo quarantines, port and border closures, and reduced workforces. Try to get an understanding of how prepared key suppliers are for prolonged disruption. Will they be able to sustain their operations and to what end? Rapid end-to-end reviews will allow you to identify exposure points quickly.
2. Test the key points of your operating model
You will see strong returns from a full operating model review in an environment of sustained business disruption. Understand the impacts across your corporate and operational functions. Where are your unique challenges? How might you transform methods of service delivery in order to preserve income and levels of service and, consequently, how might functions need to change to meet a different customer or employee journey? A key commercial consideration will be how organisations reconfigure their cost base to align to trading conditions in the medium term while balancing the inevitable trade-off between efficiency and resilience.
Such a review is generally best initiated through a targeted, senior leadership-led accelerator event to focus on the key pain points and identify what can be addressed and repaired now.
3. Have a clear people plan
Appoint a rapid response team within HR so that they can address changes as and when they appear. There is likely to be a tactical set of near-term response considerations already in place and being monitored. More generally, however, you will need to outline a strategic response to reorganising teams and longer-term staffing plans in line with any revisions to your operating model.
Revise ways of working to respond effectively
Evaluate and articulate the space needed for decision-making
1. Build the headroom to determine your longer-term response
Your near-term response is critical to protecting employees, customers and your organisation. While this is likely to be consuming all available resource, you must create the additional headspace to consider the enduring implications and possible responses. Assembling and empowering small trusted teams to make rapid tactical decisions is critical in times of crisis. Similarly, informed cross-functional teams tasked with defining scenario models that hypothesise what might change can serve to inform the longer-term response.
2. Take an emergent strategy mindset
Taking an emergent mindset is key to resilience. Continually listening to your people, leads and suppliers are the first steps to getting yourself ready to respond to what is ahead. Asking and proactively responding is the step that marks out those that are resilient to change. For example, jointly aligning response plans with suppliers and partners will ensure that you are collectively positioned to respond effectively. Building this flexibility into your entire value chain is just as important as building it into your own business.
3. Lead with messages, once known
Those organisations that are set up for success have been focused on building out their key communication and change impact channels for when the unknown becomes known. Equipping leadership with key messages and the right cadence to take messages to their people and partners requires clear accountabilities and plans. Getting these in shape now is a must.
Getting off go
1. Pick must-do/must-fix changes
Once the backlog of immediate actions materialises, employing a triage-based approach to solving them is key. Complete your must-dos through ruthless prioritisation and by equipping teams to deal with them. Agreeing, communicating and building effective self-organising teams under executive leadership is a hallmark of high-resilience organisations. This is particularly important in the new virtual environment that we find ourselves in.
2. Deliver bigger change in agile ‘chunks’ to secure benefit early and to maintain agility and flexibility to respond as the situation evolves
There will be large change programmes resulting from this event and, in many cases, a need to review and refresh the transformation portfolio: what you should stop – pause – accelerate – start. Some organisations will identify the need to accelerate investment and reallocate resources to develop new capabilities in light of their learnings, whether that’s changing buyer behaviour, changing channel mix or prolonged supply chain constraints. Building a change engine throughout your business creates adaptability in what for many organisations will still be uncertain times. Moving to a scaled agile delivery approach, underpinned by an agile change mindset, is the way large, disruptive businesses look to deliver at speed.
3. Drive your change response through visible, transparent and accountable leadership, enabled by change accelerators
As ever, visible, transparent and accountable leadership will determine whether your response is effective or not. Building out key events, where leaders can drive change, is key to an effective 100-day plan and beyond. Focusing these around change accelerators – specific events focused on concrete outcomes – has been shown to be a successful tool after large change events or crises occur. This plan should be a living document based on the current best view in order to readily adapt in a rapidly changing situation.
Gate One is committed to helping companies navigate their way through this period of unprecedented disruption. We are supporting organisations with their crisis management response, helping them to build strategic flexibility, and specifically readying them for the weeks and months ahead.