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Leaders across all businesses should consider the key phases of a crisis—respond, recover, thrive—and consider them concurrently.
While the current situation continues to evolve, I believe we are now coming out of the initial ‘response’ phase of COVID-19. This was characterised by a need to react very quickly to a sudden change in strategy for businesses across the UK, and we saw similar across Europe and in the US. Although this posed an immense challenge, there was a degree of certainty once the lockdown was announced and we knew what had to be done. Those changes, while often difficult, were made very quickly. However, this second phase is going to look quite different and there is still a degree of uncertainty about how the pandemic will progress. And so, many are left wondering how to prepare for the ‘recovery’ phase?
To dive deeper into these questions, Deloitte Private High Growth held a webinar for founders and CxOs of fast growing businesses to discuss operational resilience amongst firms in the high growth sector. I was delighted to join as a speaker and share a few key insights on planning through uncertainty.
What are some approaches businesses might use when planning through uncertainty?
In terms of planning, there are three core planning principles to keep in mind:
1) Safety; safety of your people and your customers or others you do business with, first and foremost.
2) Flexibility; the ability to meet potentially changing demands through this period as government restrictions change.
3) Resilience; making sure that whatever you put in place operationally as you go forwards not only meets the demands, but is viable and sustainable and makes best use of any resources that you have.
Scenario based planning
We’ve all heard about the potential risk of a second and even a third wave of the virus later on in the year. Here are three scenarios which, while not definite, may be useful as planning tools for your business.
Scenario A: ‘Rising Peak’
This is characterised predominantly by the lockdown that we’re in now. While we all hope that we don’t have to go back to scenario A, it is possible in the event of a second wave, that the government may find it cannot control effectively. This is a reasonable worst case assumption.
Scenario B: ‘Post-Peak’
This is a period of gradually lifting restrictions, and the phase that I believe the UK is heading towards. This is potentially the most difficult scenario because it’s the most complex. There’s still lots of uncertainty in terms of what restrictions will be lifted and when they will be lifted. There’s also uncertainty about whether we will see some restrictions having to be reinforced through this period to try and control any potential second wave. Assuming any risk of a second wave is kept under control, there may still be plenty of fluctuation. And at times, I suspect it could feel like we take two steps forward and one step backwards.
This scenario will also cause complexity because there will be choices to be made. Naturally, you will need to follow any restrictions that remain in place from the government at all times, but just because they lift some restrictions, it may not mean you necessarily want to take full advantage of them.
For example, when considering whether to reopen offices or sites and bring people gradually back to work, the government may announce some lifting of restrictions. Those who can work from home may well be encouraged to continue to do so for a period, but those who really can’t will be able to go back to work. In this case, you may decide that, for whatever reason, you want to control how many people come back to work. Even if you want to reopen offices, it may not mean you want to encourage everybody to come back to work. You might want to introduce your own restrictions, say of no more than 20% density compared to normal in your office space. In fact, some businesses are reporting that the move to digital and at-home-working has proven so successful that they’re minded to stay with this way of working and might not move back to office based working of any form for quite a long time. Equally, some workers may fear coming back to work or find travel or working restrictions to work too difficult.
Scenario C: ‘Towards Recovery’
This is a scenario where most restrictions are lifted and you can go back towards a new normal, however you choose to frame that. It is worth bearing in mind, however, that in a pandemic, as determined by the WHO, most restrictions will be lifted but we will continue to see isolations of cases, contact tracing and other techniques to keep the disease under control.
Once you’ve got these three scenarios in mind, you can begin to assign specific planning assumptions to each scenario. This will change depending on the nature of your business, but for many, the core planning assumptions centre around demand.
What demand changes do we think we’ll see as we move from scenario A to scenario B? For our products or services, will we see increases or decreases in demand as we move between these scenarios? Once you have your planning assumptions in place, then you can start to ask, “What are the implications for me in terms of the way I operate?” Whether that is in terms of reopening sites, whether you need additional supplies or in terms of what finance implications there are to operating in that way under those demand conditions. Also, it’s worth considering how long you might need to operate in this way since scenario B in particular is likely to have a long duration with levels of fluctuation in it. Once you’ve answered these questions, you can map out your specific actions; the planning considerations, the immediate actions you might want to take, any barriers to achieving those and the operational dependencies.
1) Establish some local and global view scenarios - we recommend three scenarios.
Particularly if the demand for your products or services is global, or the supplies you recieve come from overseas, or you have international sites, it’s worth understanding these scenarios from both local and global perspectives. As we’ve seen in China, they have come out of a full lockdown with quite a few restrictions eased, but many economies in Europe and the US are only just starting to emerge from ‘lockdown’ mode. Some of China’s businesses have been hampered in recovery as Europe and the US demand has reduced. Using this example as a framework, consider how this would play out for you if different countries that are important to you moved from one scenario to another.
2) Define more detailed planning assumptions relevant to your business. Consider using demand change as the lead assumption.
3) Consider what changes you want to make - modification statements. What modifications or changes you want to put in place and the way you want to operate under those assumptions and scenarios.
4) Set the actions necessary to make the modifications and resources required.
5) Be ready to quickly adapt to maximise the opportunities.
Rick has over 25 years’ industry-leading experience in Crisis Management and Resilience. He has been interim Group Head of Resilience for two global banks has supported and facilitated executive leadership in responding to crisis events. He is a recognised industry leader in his field and Chair of the British Institution Technical Committee for Continuity and Resilience.