Cash management has been the key focus for management teams in the past two to three months. However, as we move out of the first phase of the crisis, history shows that the smart ones will switch their focus to new sources of growth. This is helped by a systematic approach to Resiliency Planning that can give insight into how market opportunities will evolve.
Gartner’s analysis of the 2008 Great Recession revealed that thirty F1000 companies that had sustained growth through 2017 had all invested in new growth options instead of just cutting costs. Reacting to the COVID-19 crisis, some companies have demonstrated resiliency by rapidly shifting resources to meet critical needs. Examples include GM and Ford making personal protective equipment and ventilators and global distilleries (e.g., Anheuser-Busch and Pernod Ricard) making hand sanitizer. The question is how can companies do both, reinvent to drive growth and build resiliency, when facing significant uncertainty?
Resiliency planning can help companies determine how to accelerate through the recovery curve and improve their ability to withstand future disruptions. The primary steps are to:
Create scenarios based on the key drivers of uncertainty for their market
Critically assess scenarios and create plans by leveraging input from broad, diverse groups of people
Act based on leading indicators for the scenarios and future disruptions
So, what are some of the key drivers of uncertainty due to COVID-19?
Disease Progression: duration and severity of COVID-19, treatment / vaccine availability
Economic Impact: depth of economic crisis, shape of recovery curve, distribution of recovery across markets
Society: public confidence in removing social distancing, long term psychological and economic impact
Government: public policy and regulation, international travel restrictions, relief packages
Industry Specific: rules and regulations, new industry standards
Companies select the drivers most pertinent to them and create scenarios of what the world could look like using combinations of low to high impact for each driver. The keys are who is involved in the scenario assessment and how the plans are created. In traditional planning, the strategy and operational leaders do the work. However, to reinvent, it is crucial to challenge existing assumptions and generate provocative ideas that cause discomfort. This can be achieved through engaging broad groups of people through open innovation to create ideas / solutions and build new communities. In addition, gamification techniques (like award points for ideas that are pursued) will keep people engaged to help achieve successful outcomes.
Once plans are defined for the various scenarios, it is important to track and act on related leading indicators. In addition, it is important to identify indicators for potential sustained disruptions like COVID-19. These disruption indicators are dependent on the company’s industry and ecosystem.
Companies are unlikely to have a playbook for every possible disruption. But by embracing resiliency planning, they can better prepare to withstand future disruptions and even thrive during times of uncertainty.
Read More Articles in our COVID-19 Series