Business transformation in a crisis [Part 2]Matthew Maguire
Within the next month it is likely the UK government will lift some of the current social distancing restrictions, allowing business to begin rebuilding revenues and profits in a changed environment.
Whilst some businesses have been able to adapt and keep operating, others have been forced to close. In almost all cases, however, there will be a need to adapt previous business models as market conditions are likely to take many months to return to the pre-COVID 19 norm, if they do at all.
Businesses will likely consider adopting an Agile and iterative approach to re-establishing their operating model, continuously improving their understanding of how their stakeholders are responding to the market environment and implementing incremental changes. Making sense of the complexity and uncertainty in the current business environment is challenging and requires a methodical approach.
This article outlines a method to help businesses generate useful intelligence and make evidence-based decisions, combining elements of intelligence analysis and Agile project management frameworks. It proposes that businesses can use the Intelligence Cycle to gather actionable data and information, continuously feeding into a risk-based business playbook to co-ordinate incremental changes.
Step 1 - Gather useful data and evidence to generate insight
To make effective decisions it is key to understand how your business and your stakeholders are being affected today and how this might change in the coming months. A structured approach can help you focus on collecting only data that is relevant to your business and to analyse it in a robust manner to generate useful insights.
The Intelligence Cycle is used by UK intelligence agencies for this very purpose and can be applied in four steps: Direction, Collection, Processing & Dissemination.
To avoid being overwhelmed, you should set clear direction on what information and evidence is required to make decisions so you can reverse-engineer a research plan. As a start, you will want insight (what’s happening now) and foresight (what will happen next) covering the key stakeholders of your business. These stakeholders include your business itself and also your customers, suppliers, partners, shareholders, regulators and the government. Value Chain Analysis can help break down your business operations into component stakeholder parts against which evidence can be collected.
Based on your evidence requirements, you can develop a simple collection plan outlining where and when suitable source data can be obtained and recorded each day; nothing beats a simple spreadsheet. Start by collecting data on your internal business stakeholders – HR, logistics, operations and finance – either through a business intelligence dashboard (if you have one) or by sharing your spreadsheet with appropriate teams.
For wider environmental and market factors you will need to be more creative, searching for online data sources, reports or insights which can be used as a proxy. The UK government Office of National Statistics curates data feeds and reports covering everything from consumer footfall to economic forecasts. Github provides a list of publicly available data sources; from transport to photography. You can also adapt analysis offered by other industries, such as the impact of COVID-19 on digital products and services or law firms.
For each stakeholder component identified, you should use structured analysis techniques to make an assessment about their current and future situation, citing the supporting evidence and making a judgement on how confident you are. Throughout, you should evaluate your sources in terms of their reliability and accuracy.
Finally, you should make your insight available to decision makers in a form that is useful, be that through spreadsheets, written reports, dashboards or charts. Ideally, you want your insight presented through a business intelligence dashboard; if you don’t have one you can improvise a short-term solution using open-source tools like Google Sheets.
Step 2 - Create and maintain a decision playbook
As you collect data and information about the market environment and your stakeholders, it will help to consolidate this into a framework focused on your business. A useful approach is to adapt the traditional RAID register into a business playbook, capturing your understanding of the current situation and how it might change to identify decision points for the coming months.
Start by establishing a standard RAID register breaking out your dependencies, assumptions, issues, risks and potential opportunities; many of these will emerge from your data collection activity. Against each entry, you should include your assessment of the current situation and trends as well as the most likely future situation and most damaging future situation. The register can then serve as guardrails for your decision-making process over time, enabling you to monitor each factor to see if the trend is heading towards the most likely or most damaging situation so you can act accordingly.
To turn this into a playbook you should identify and agree future decision points – actions to be taken if certain market or stakeholder conditions are met. An example could be a decision to re-open certain sales outlets; you should only do this if your assessment suggests the market conditions would make this profitable now rather than later.
Step 3 - Make incremental business changes based on the playbook
Having established the playbook, you can start to make incremental changes to rebuild your business model, expanding your operations into areas where the conditions are favourable and deferring activity where the situation is too uncertain or not yet ready. With each change, you can continue to collect data to monitor your progress and determine if the results were as anticipated, reinforcing the assumptions and assessments in the playbook.
The playbook can also serve as a powerful communication tool for your leaders and wider staff, giving them clear direction and reassurance on the plan and how they must support it. With every part of your business adapting simultaneously, it is important to trust and effectively delegate to your leaders, supporting them with clear objectives and resources.
In a nutshell
As lockdown restrictions are eased, businesses will need to gradually rebuild their operating models. This continuous three-step processes of gathering data, refining a playbook and making incremental changes can help businesses make evidence-based changes.
As the situation changes over the coming months, it can also help businesses get a sense for which areas can realistically return to pre-COVID 19 ways of working and which areas will need fundamental reassessment and business transformation investment.