“When the winds of change blow, some people build walls and others build windmills”, this age-old proverb still holds good today. First of all, to build a resilient and robust business, we need to embrace this pandemic as winds of change, then decide whether we build a wall to protect old business model or reinvent it to this changing environment. With this thought in mind, the following are five vital tools every business needs to consider and employ:
- Implement Enterprise Risk Management (ERM): Organizations that recognized and classified pandemic as risk and developed actions to mitigate adverse impact are significantly in comfortable position compared to ones that had no ERM in place. Simply stated, ERM in pursuit of business objectives, covers comprehensive risk register of an organization with corresponding controls to optimize risks with defined role and responsibility and accountability for each control. Risk register contains all uncertain events that any business may face, from simple ones like delay in delivery of goods to complex events like fraud, disaster, and contravention of the law. For each control, a role is defined to execute control in order to optimize risks. Having ERM in place, reliefs management from daily and known issues, so they can focus on bigger and more complex matters.
2. Develop Business Continuity Plan and Disaster Recovery Plan (BCP/ DRP): When World Health Organization declared Covid-19 as a pandemic, entities that had BCP/DRP in place were able to absorb the sudden shock and effectively navigate through this troubling time. Entities without BCP were in the state of confusion and darkness with respect to the further course of action. In simple terms, BCP is a process to continue to run business operations in event of a disaster, while DRP is processed to recover from disaster with minimal impact. In developing BCP, various scenarios are simulated ranging from man-made to natural disasters and effective and efficient action plan is developed to counter the negative impact and resume operations. Operations are divided into critical and non-critical, depending on their relevance to the attainment of business objectives.
3. Reconsider strategic objective: With the significant change in the relative perceptional value of products and services in the minds of customers, for example, the value of high-end mobile phones today may equal a few kilograms of potatoes. We anticipate a significant decrease in perceived value and utility of non-essential products/ services. This mindset is expected to stay for longer-term, hence warrants management attention to revisit and reconsider strategic objective or the very purpose of the organization. Entities may decide to switch to industries where the demand and return on investment are positive in future. The temporary or permanent pause may be explored for products/ services where sluggish demand is anticipated, this enables entities to focus on products and services where active demand is expected. However, any new opportunity exploration should be within organization capability. Any modification in the strategic objective should not dilute employee safety and welfare.
4. Re-work on cost structure: Established cost structures require a fresh look under this changed scenario. Widely referred and celebrated cost model of high-end mobile phones or cola drinks where manufacturing cost constitutes 20% or less of the total product price and perceptional value the rest, will no longer be valid in new normal. Organizations will de-risk from single country sourcing, increase focus on sustainability rather than cheap manufacturing, and shift from a fixed cost model to variable one. Apart from the basic features of products/ services, value-added features demand management attention, as post this pandemic, the customer may carefully evaluate each feature before spending a single penny. Dropping features would be a viable option when customers no longer value them and may not be willing to spend on it.
Digital adaption: Digital adaption is vital and utmost important, however, its design and implementation should not be left to the middle level or low level in the organization. Before proceeding for any digital adaption, a committee should be formed by management which should comprehensively understand the entire flow of business processes not only from a management point of view, but also from customers, suppliers, employees, and other stakeholders under the proposed digital model. Necessary control and reporting and feedback mechanism require attention, otherwise going digital may turn as a liability and lead to inefficiencies in processes, wastage of resources, reduced employee satisfaction, and finally an unhappy customer. Cybersecurity issues and data privacy concerns must be adequately addressed and incorporated in overall design and implementation.
With these tools and tips in execution, organizations that embraces this pandemic as change and respond timely, rather than resisting to change will surely turn this crisis into opportunity for growth and effective and efficient value creation for its stakeholders.
Shakeel Ahmed Khan can be reached at firstname.lastname@example.org