Reviewing and adapting your business
Ensure that your business is ready for growth and is able to adapt to the environment. This can be difficult if you are not prepared for the difficulties that may arise when guiding your business effectively through the necessary changes.
The broader context in which your business operates may now be unrecognisable: your competitors may have ceased trading or moved into new areas and, at the same time, customer behaviour is likely to have changed. As a result, you may need to invest in refreshed products or marketing, or even consider acquisitions of complementary businesses to supplement your offerings.
To help your business with planning growth or change, explore some of the essential areas you have identified and assess them on a regular basis.
• Value creation and future focus – Is your business aware of the changing dynamics in its existing market and any opportunities to diversify or introduce new products or services?
• Business strategy and planning – Your business should have a clear strategy to understand:
— where it is going: the vision and purpose, financial goals and strategic priorities
— where it will operate: a clear business model detailing the markets, value proposition and brands, customers and channels of communication
— how it will win: a clearly defined operating model.
• Business structure, operations and finance – Are the appropriate processes and structures in place to provide accurate and timely financial and management information? Are the business structure, key performance indicators and incentives aligned with the strategy?
• Human resources – Talent management is critical and therefore your business needs to ensure that it has the right people doing the right jobs, that the processes for recruitment and retention of the right people are in place, that succession plans for key positions are established and training programmes are set up to improve internal staff skills. [Link to Leadership and people management]
• Technology – Technology is critical in any business, including ongoing investment and maintenance. Are measures in place to deal with cyber events or disaster recovery should a significant event occur?
• Governance – The appropriate level of governance is important to ensure continuity of the business, especially with the increasing requirements of regulatory, tax and financial laws. Are the key strategic and operational business risks being reviewed on an annual basis? Does the business have appropriate insurance coverage? Does the business have the appropriate skills and experience to achieve the growth objectives?
Make sure you update your business plan and strategy accordingly to support the change.
It is essential that your business understands the challenges and prepares the organisation to be resilient. This is not about surviving the initial phase of any disruption but about keeping your people and business safe and resilient for the long term.
Review the potential impacts of any disruption to your business’s:
• legal and regulatory requirements
• customer service or current service level agreements
• operational maximum allowable downtime.
Business continuity planning
To successfully weather a crisis or economic downturn, your business must be able to adapt to rapidly changing market conditions. Not having a course of action to take if a devastating disaster or service interruption occurs may result in total loss of the business or significant reputational damage.
• There are continued threats that businesses often do not take seriously. These include:
— extreme weather events, significant earthquakes, flooding or fire
— extended power disruption
— international or national supply chain disruption
— civil unrest, terrorism, biosecurity or ecoterrorism
— cyber security incidents or catastrophic IT events
— health and safety events (including loss of staff)
— legislation changes.
• While the likelihood of these risks occurring may be assessed within your business as low, they can significantly affect your business’s ability to operate as usual. As a result, you should ensure your business and staff know what to do during a severe incident, your systems can recover effectively, and you can prioritise recovery strategies to support your business regaining efficient operations as quickly as possible.
• Use this questionnaire to help you understand the impact of challenging environments and identify potentially affected areas in advance.
An effective business resilience plan must include an integrated and synchronised approach across all stages of a disaster event timeline.
A business continuity plan helps you revive your business operations when incidents occur. It increases resilience and your chance of survival following disruption.
• Business continuity capabilities are a business’s ability to protect and sustain critical business processes during disruption. Effective business continuity management (BCM) ensures that businesses are equipped with the ability to prevent, respond to and recover from various operational disruptions.
• A good business continuity plan would ensure that resources are not consumed faster than they can be regenerated and also the ability to sustain during and rebound following a period of prolonged interruption.
• To ensure your business is ready to rapidly resume critical processes and restore data in the event of a disaster, download the business continuity plan template to help you prepare or update your plan.
Your business continuity plan should incorporate following steps:
• Identify and understand key risks across your operations and supply chains.
• Mobilise teams to navigate the crisis response and then focus on supply chain assessment and risk management.
• Consider whether your governance is positioned to rapidly make key decisions.
• Conduct business and financial scenario planning for a quick recovery, a global slowdown and a possible recession.
• Plan mitigating actions across operations and supply chains, assessing impacts on sea, air and land transport.
• Ensure communications are made with principal customers and stakeholders.
• Review and assess what impact this will have on workforce planning and management.
• Review phasing impacts (Preparation, Respond and/or Relocation, Continuity Operations, and Reconstitution Operations) depending on your sector and the foreseeable situations.
• Create a visible and agile global supply chain.
• Understand and deploy digital and process automation to mitigate the impact of disruption, if possible.
• Develop and implement enhanced risk management practices.
Confirm mission-critical outcomes are well understood from end to end and contingency plans are in place to keep them operating. In particular, key dependencies (processes, locations, people, suppliers, and IT systems) need to be confirmed and documented. This is typically achieved through a business impact assessment (BIA).
• Make sure business continuity plans (BCPs) reflect critical outcomes. Businesses should have BCPs and continuity strategies that reflect critical business outcomes and dependencies mapped out in a business impact analysis (BIA). If possible, these plans should be pressure-tested, either immediately or using data from the recent past and applying figures from worst case scenarios, to ensure they remain fit for purpose in the face of a potential challenging environment.
Validate the business continuity plan annually, through tabletop exercises, functional exercises, tests and similar, so employees understand their roles and responsibilities. Your validation should ensure your critical business processes can continue with the necessary internal and external support available, and confirm your communication tools are available and operational.
Your business may incur significant costs when not operating during a period of downtime. It can suffer not only financial, but reputational and operational damage. For example, loss, damage or denial of access to key IT services may cause delays in the provision of key services a business offers.
• You need a robust programme and strategy for recovering critical IT services and business operations in the event of catastrophic business failure. To achieve this, your business continuity plan could include tools like a BIA, process mapping and testing.
• Business impact analysis (BIA) will help you quantify the impact following the loss of key people, premises, technologies, equipment and suppliers.
• Process mapping can identify single points of failure, the interconnected nature of processes, and provide understanding about how incidents holistically impact the business.
• Testing and exercises put incident response capabilities to the test through engaging and interactive live and tabletop scenarios, in which employees discuss their roles in potential emergencies.
• Explore further details on business continuity frameworks.
Use a cash forecast to underpin resilience strategies and determine response priorities. Confirm whether business continuity insurance arrangements provide adequate coverage
In an increasingly volatile business environment, businesses not only have to prepare for crises, but expect them. A business’s ability to not only detect incidents and crises as they occur but effectively respond to and recover from them is increasingly under scrutiny.
To safeguard the effectiveness of a business’s strategic response to significant business and performance challenges, it is important that crisis management arrangements are formalised. This includes clear, repeatable, processes for activating an executive leadership team steering the strategic direction of the business, and communicating clearly internally and externally.
A business’s crisis management framework (CMF) is the foundation which enables escalation, communication and co-ordination during a challenging environment. It also provides the structure through which to train and exercise stakeholders with crisis management responsibilities. Exercises leverage tailored risk-based scenarios designed to simulate the pressures on and expectations of individuals and the organisation during a challenging environment.
• Design reporting mechanisms that are fit for purpose.
• Empower key stakeholders to know when and how to act during a crisis.
• Test the response and recovery capabilities by conducting exercises throughout the year.
Continually monitor evolving changes in government restrictions, regulations, customer demand and behaviour. Review your product and service portfolio, keeping in mind the implications of a disruption in demand for a longer period of time, across markets, customer segments, products and services. Consider collaborations and partnerships in order to share resources and capabilities.
• Think about material shifts in resources and capabilities towards newly identified priorities, and the impact of these on core processes, governance and control.
• Understand the cost of complexity versus the value of variety. While there is value in meeting growing customer demand for choice, offering too wide a range of products and services is often not profitable.
• After the crisis, re-evaluate your commercial arrangements, including sales, distribution and marketing strategies, to suit any changes in customer demand and behaviour that have arisen. Revisit your assumptions about existing customer relationships as their needs might have changed.
• Use the technology and tools available for capacity building and upskilling your workforce.
A crisis can have a lasting impact on market dynamics. Beyond immediate actions, you can use disruption as an opportunity to reflect on your ability to understand and meet rapidly changing customer demand and behaviours. Consider the plans you can make within your business model to increase responsiveness and resilience, in the short, medium and long term.