Covid-19 challenged many aspects of our lives at various levels of society globally. The pandemic has caused, and is continuing to cause, a huge impact on the lives of people, their families, businesses and communities. Organisations are facing potentially significant challenges to which they must respond on the journey to normality, or the ‘new normal’.
Crisis is defined in many ways. For example, “A condition of instability or danger, as in social, economic, political, or international affairs, leading to a decisive change”.
Crises shake society, individuals and organisations, testing their ability to weather the storm. This ability is often characterised by resilience and agility.
For most organisations a level of resilience is maintained through a combination of a system of internal controls, executed via a risk management process, a business continuity plan and disaster recovery procedures, that are all well documented, regularly reviewed and tested. In reality, however, no human being or organisation can control everything. There will always be unforeseen events that are beyond anyone’s control. These events impact market demand and business operations, sometimes critically. Covid-19 wasn’t the first event to impact our every day lives and it won’t be the last either.
But crises also give us impetus to become more agile and more able to adapt and change. Crises shake, test and challenge us at all levels. No matter how well we think we have everything under control, at the point of crisis and uncertainty we need to stand firmly on our two feet, remain resolute but also be ready and open for change. Naturally, we will hold on to our risk management, control and continuity mechanisms, like to a wall bar, to protect us from certain risks (i.e. fraud, cyber-attack and other). But whilst controls provide us with assurance over risks when it’s ‘business as usual’, what helps us survive during a crisis, is a strong core.
The impact of any crisis will vary from sector to sector and market to market. Imagine your business being an online communication platform, your services became essential to many users and were in a high demand. While other sectors may be staring at bankruptcy, the biggest challenge you have is how to best meet increased, not decreased, sales.
You sailed through the recovery phase and moulded into the new normal. Bingo! You decided to do nothing to prepare for the new future, the next test.
Now, ask yourself: ‘Was I just lucky this time? Will I be lucky next time?’ The answers is: ‘Probably not’. Unless you strengthen and test your core, you are putting your organisation at risk of not being able to survive the next crisis.
You could, of course, decide to look at the situation as an opportunity to re-examine your organisation from the inside and outside in order to assess your organisational core strength.
How can your organisation prepare the ‘core’ for the future?
First, a company needs to be financially viable to sustain any crisis with or without government and fiscal help. For the purpose of this article, I assumed that your organisation has managed their liquidity risks. But being able to pay your employees and suppliers alone is not enough.
Let us try to understand what the organisational core is. What makes us resist the impact of a shock? Your ability to flex operations immediately, whether at full or reduced scale or your ability to pivot to a change in market demands, is a true measure of our operational resilience.
In my view the organisational core is an effective and loyal workforce, well-defined, efficient and understood business processes, and critical underlying business assets such as production facilities, customer services and IT systems, combined with sustainable relationship with key stakeholder groups: customers, suppliers and local communities.
Behind any strong successful organisation is a strong team. Behind any business processes, including the automated processes run by bots, there are people. During this pandemic, like never before, many companies’ operations moved from offices into people’s homes. Executives had to engage with their employees and peers at a very personal human level, experience first-hand the challenges employees are facing, including home office space, childcare, home schooling, emotional resilience, physical and mental health. As never before, management has had to adjust their leadership style to show empathy towards employees and their teams, to bring conversations with their teams to a more personal level and allow for more flexibility on work delivery.
There is no turning back. During the recovery phase, engaging with your employees is critical when designing new business practices of safe working at home, offices and factories; adjusting processes to allow social distancing on the production floor, office and at customer engagement points. If homeworking is to become the new normal, a good employer will have to ensure Health & Safety guidance is extended to people’s home offices. The lessons learnt and coping strategies should be embedded into organisational business continuity practices. Furthermore, establishing and maintaining two-way communication protocols is critical for building effective, engaged and loyal employees. A trusting workforce will contribute to your company’s ability to withstand a shock and adapt to a new norm after any unforeseen event.
For most organisations, the value chain process flow from stakeholders needs and organisational values to products and services is complex. Management’s understanding of the whole picture can often become fragmented. For example, the product development team may not be fully abreast with the supply chain process.
At the time of unforeseen events or shifts in the market the lack of a deep enterprise knowledge will slow down the decision-making process. The devil is in the detail: a well-defined end to end process model of your operations, a single picture of truth,[i] provides a better understanding of your business options. It will act as a tool to make informed operational decisions, based on scenario planning, modelling and simulations. For example, with the requirements to maintain social distancing at workplaces, management will need to introduce changes in shift patterns, which leads to immediate adjustments across the value chain, including production line scheduling, quality control, site operation, customer orders and other activities.
Without a well-documented enterprise, with multiple inter-dependencies, it will be problematic for you to derive an accurate plan. The deep understanding of your business processes allows clear articulation of operational risks, scenario planning and the mitigating controls in the event of the unforeseen circumstances. This is your operational resilience plan.
It also allows you to remain agile, to be able to pivot your business model to focus on the most value adding activities. For example, to drop products with lesser margin, to switch the production line to more profitable products or design a completely new offering based on the changed customer demands in the marketplace.
Stakeholders: customers, suppliers and wider communities
Responsible sustainable engagement does not stop at the employees’ level. Listening and understanding other stakeholders’ needs is equally important and valuable. Sustainable working relations throughout the entire eco-system driven by value adding activities to all partners will contribute toward building organisational resilience in your organisation.
Organisations making efforts to engage with customers on a regular basis to ensure that their needs are well understood become more flexible when pivoting at short notice in response to a crisis. In a new normal, closer engagement with customers will become the key to success for your organisation to build a loyal customer base. This will require you to understand customer processes and to pivot yours as required. As a reaction to the crisis, we have seen many examples how agile businesses of all sizes made adjustments to their operating models to continue serving their customers at difficult times.
Similarly, investing in building partnerships with your suppliers will pay dividends in the long run. Working closely with your suppliers, understanding and influencing their business processes and risks is critical to your supply chain. As a business partner, the responsible thing to do is to ensure your suppliers, big or small, are paid on time as this helps them to manage their working capital. I guarantee that the suppliers, who are being treated well will be willing to go the extra mile to help your organisation in return. The suppliers are human too.
Lastly, it is important that your organisation continues to act responsibly, supporting the wider communities (i.e. charities, local schools), and investing back into communities where the organisation operates.
‘Every cloud has a silver lining’
Crisis provides an opportunity to re-design the future. It is hard to predict when the next ‘shake-up’ will arrive, but it will and in a shape, we won’t expect or foresee.
Organisations with built-in resilience, with a strong core, will be winners. They will be in a better position to withstand the shock, make investments into new technological opportunities and organisational improvements; gaining momentum before the collective memories of reality fades away.
If you survived this crisis, will you take a risk to do nothing? Will you rely on being lucky next time? How strong is your core?
[i] Ownet is behind the concept of Digital Twin of Organisation (DTO), which provides a single picture of truth of company enterprise management systems.