For many owners and executives, that’s exactly how things have felt during the first half of the year. Now that the dust is beginning to settle and they adjust to a new paradigm, many are starting to ask where things will land over the longer-term and what they should be doing in preparation. In fact, if you wait a few minutes you are bound to get a solicitation from someone telling you what the ‘new normal’ will be and how they’ll help you succeed in that environment. Beyond the phrase being an oxymoron, we shouldn’t forget the adage that forecasting is the art of saying what will happen and then explaining why it didn’t.
“Life comes at us in waves. We can’t predict or control those waves, but we can learn to surf.” — Dan Millman
Much focus, including significant SEO investment, has centered on business continuity during the first half of 2020. This attention on ensuring critical items such as people, operations, and technology aren’t interrupted and that businesses continue to function as they did before a disruption is important but doesn’t address an even bigger challenge. What happens when situations arise that fundamentally reshape the environment to one that no longer supports your business model? No matter how great Blockbuster’s business continuity plan might have been, the future of video content just wasn’t going to support a trip to the store to rent a DVD.
If predicting the future is a fool’s errand and business continuity isn’t enough, is there hope? The answer lies not in reactive efforts, but proactive ones that allow companies to remain agile. Business resilience is the ability of an organization to rapidly adapt and respond to business disruptions while remaining in operation. The criticality of this is highlighted in a long-term research study performed by Alesch & Holly that found the following common causes for why businesses fail during disruption:
- Unable to act in response to the new environment
- Customers no longer purchase the goods or services
- Loss of inventory and inability to maintain a suitable supply chain
- Poor financial health prior to event
- Failure to understand the post-event environments
“Resilience is a culture of preparedness.” — Center for Strategic & International Studies
The process of strengthening and improving your business resilience requires a broader focus and can’t be done haphazardly. There is an effective method that can be used by all businesses that includes three fundamental tenets.
Mentality & Approach
Like any change in behavior or perspective, success lies in an ongoing commitment to how you approach things and then the steps you take to achieve it. Improving one’s individual health doesn’t occur after a single workout or one day of good eating but requires an ongoing focus and willingness to trade certain short-term opportunities for longer-term results. To reinforce their commitment, a company must undertake the following:
- Commit time to preparation
- Accept change is a possibility and remain flexible
- Consider possible scenarios and what impact they could have
- Practice and test potential contingencies
- Have trust in the people you work with
- Evaluate how your company is structured and the overall management style
- Determine how well staff adapt and what happens if you are out of communication for a while
Nimble Structure
No matter how good your preparation is, situations will arise that you couldn’t plan for or predict. Your business needs to be in a position where it can respond quickly. If you are committed to improving your health and attend a single gym for all your physical activities, what happens if it closes? Will you find another way to approach things, or have you painted yourself into a corner and now have no other alternative? Businesses need to do the same things and not when times are bad as often it’s too late.
- Evaluate their different components and assess their adaptability
- Avoid conditions locking them into a single approach or requiring significant time to change
- Remove complexity where it doesn’t add value and automate when possible
- Improve their financial and in particular cashflow position
- Review items such as contracts to determine where they have flexibility
- Determine if enabling capabilities such as technology will support different scenarios
Consider the challenge many faced recently. If your business was based on store traffic and many competitors started offering curbside pickup while you struggled to provide it, you need to ask yourself why.
Business Model
Focus on one thing and do it well. It’s sage advice many owners have followed and produced wonderful results through differentiation and quality. While spreading yourself thin can hurt performance, failing to take a step back, look at the bigger picture, and consider how you might adjust your business model can have worse consequences. This doesn’t require a fundamental pivot in the way you do business, but at a minimum, positions you to adjust if needed more on your own terms.
Consider the tour bus company that had certain emergency agreements in place. When the industry turned and tourism all but stopped, they were able to re-allocate their buses to be used to ship goods during a time when supply chain disruption was increasing. Reaching this level of resilience is a result of businesses subscribing to a particular method.
- Change their perspective and how they look at things
- Think creatively
- Evaluate the level of risk key practices and items might be under
- Connect and focus on the consumer’s pulse
- Look more broadly at what the company does and how it could be re-envisioned
- Approach things incrementally without trying to do it all at the same time
- Consider what trends are on the rise and how it might impact your approach and behaviors
“In preparing for battle, I have always found that plans are useless, but planning is indispensable.” — Dwight Eisenhower
By addressing business resilience, you give yourself more flexibility and increase your speed to act. It doesn’t require intensive, perpetual effort and with commitment can dramatically improve how you handle disruption and reduce the stress of needing to make split-second decisions when you’re not prepared and lack good information. As a result, your business is in a position to become:
- More responsive
- Able to move with speed
- Targeted on the things that bring value and matter most
- Efficient in the way it works
- Aligned and focused on priorities
Ryan Walter
I am the founder and principal at Parrels Advisory helping owners and executives who want more for their business and feel stuck trying to reach their critical goals. Our model overcomes the hurdles that often stop progress and provides the focus and clarity needed to reach the objectives.
