COOs and the pandemic: Shape a more resilient future

At Deloitte, we view the COVID-19 response through a “Respond…Recover…Thrive” framework.

The transition from Respond to Recover presents a real opportunity to reimagine operations in a manner that’s better suited for both good and lean times. As the philosopher Eric Hoffer observed, “the only way to predict the future is to shape it.”¹

How COOs got to this point and why operational resilience is needed

A core mission of the COO is to create efficient, scaled operations. In recent years, with advancements in technology and rapidly evolving customer expectations, customer experience has earned equal footing.

Now, during a pandemic, a third leg of the stool is emerging—operational resilience. Organizations are adjusting to the overnight shift from business-as-usual to a very different reality—one that for many includes:

• Transitioning to remote operations
• Prioritizing and protecting mission critical employees and operations who must continue to work on site
• Mitigating revenue and operating margin fluctuations
• Minimizing customer disruptions
• Mining stakeholder feedback to improve customer and employee experience

This rapid shift emphasizes how important it is that COOs prepare organizations for a more resilient future—one in which there could be continued shocks from disruptions like natural disasters or health crises that business operations must overcome effectively. We call this operational resilience.

How can you build operational resilience while still in the throes of the crisis? Borrowing from Mr. Hoffer, the answer is clear: The only way to predict a resilient future is to shape it.

What is operational resilience and why should you care now?

Operational resilience is a state of preparedness and capabilities achieved, in part, through orchestration of five disciplines, each of which is often the responsibility of a different stakeholder and plays a critical role during any other crisis:

• Crisis management (CEO and analyst/public relations team)
• Emergency response (Chief Administrator, facilities leader, or health/safety team)
• Cyber incident response (Chief Information Security Officer)
• Technology resilience (CIO)
• Business continuity (COO)

As the COO, you might wonder about the difference between operational resilience and traditional business continuity? The distinction is important: Operational resilience is agility that’s embedded in day-to-day operations. That’s different than executing remediations after a crisis erupts, which is largely the focus of traditional business continuity.

We think of resilient operations as ones that can withstand major shocks to revenue (scale up or down), are cyber-secure, are hedged against major risks (e.g., geopolitical), and are data-rich, detecting problems as soon as they happen. That’s the domain of the COO, although it can require close collaboration with other key leaders across the enterprise.

The first step in creating resilient operations is to assess where you are today, which requires a data-driven approach to:

• Understanding and articulating the organization’s most critical end-to-end business services
• Mapping the systems, processes, and third parties that support critical business services
• Developing an operational resilience strategy and action plan
• Testing end-to-end processes, services, and third-parties with plausible respond and recovery scenarios to prove the strategy
• Aligning internal and external communication plans and escalation paths for critical business services
• Continuously identifying and addressing gaps as the business environment and systems change

You may already be doing some of these things, but doing all of them when your organization is in crisis mode is a tall order. That’s where COO-led collaboration across the organization is important.

Three examples of resilient operations

Health care. A physician practice which discovers that it can only support 10 percent of its normal patient volume with virtual health care visits during the COVID-19 crisis may plan for a future in which it can provide significantly greater capacity and/or shift in near-real-time to a greater proportion of virtual visits in a matter of hours.

Technology. A large manufacturer of consumer technologies has a production interruption resulting from a shutdown of a vendor’s key plant overseas, which is the sole producer of a critical component going into the end product, based on a COVID-19 outbreak. Since they must obtain high-quality components consistent with the required specifications in less than a week, they identify and now operate with a second component provider, ensuring both can flex their capacities to meet the organization’s full needs if required.

Life insurance. To purchase life insurance, it is common practice to take a paramed exam for underwriting purposes, which includes blood and urine samples. Given that may not be feasible during the COVID-19 crisis, one organization’s immediate response is to alter standard underwriting procedures by using other proxies (e.g., access to recent physical exams via electronic health records) to issue new insurance policies. However, they are also concurrently accelerating predictive analytics initiatives designed to replace the need for paramed exams. Fast-forwarding to the “Thrive” stage of “Respond…Recover…Thrive,” the insurer could develop the ability to automate the underwriting of the vast majority of new policies if it chooses to do so.

What lies ahead?

Even as the COVID-19 crisis plays out, there are immediate and specific actions COOs can take now to help protect critical enterprise assets while shaping the organization’s ability to Thrive in the future. That will be the topic of our next blog—impactful actions to consider as you look to build resilience. And, in our third blog in the series, we’ll describe likely changes to the role of the COO post-pandemic and explore ways you can prepare for them. Stay tuned.

Endnote

¹ https://www.azquotes.com/quote/549586?ref=offense-and-defense

² Based on direct Deloitte engagement experience

³ http://www.ihi.org/engage/initiatives/TripleAim/Pages/default.aspx