Junita Rose, Managing Director, Protean Business Solutions
Where are we now and where are we headed?
Strategy is a long-term plan of action designed to achieve a particular goal or set of objectives and provide direction. When we think about business strategy, we think of the exercise executives carry out every year to determine or review the objectives of an organisation. We use these objectives to measure the performance of business units and individuals through Key Performance Indicators.
One of the key steps in reviewing and setting an organisation’s strategy is understanding the context and uncertainty it is faced with.
As Covid-19 unfolds, everyone agrees that ‘business as usual’ is no more, but we do not yet fully understand the impact and lasting effects of this pandemic. The Asian Development Bank estimates that the global cost of the pandemic could amount to $2 Trillion or more – and that is just the economic impact. The social cost will be significant and harder to quantify.
For business to respond to the crisis, we need to reassess our business strategies. As Covid-19 changes economies, society, government policies, employee relations and more, business has to change in order to remain relevant. We must take all this uncertainty into consideration when relooking strategy.
If you lead an organisation, you need to understand and work with two critical questions in order to adapt:
Where are we now?
Understanding the impact of Covid-19 on your business will make it easier to answer the next question, “Where might we be headed?” In assessing the current impact of Covid-19, we should consider and assess the following:
- Human resources
- Cashflow and financial sustainability
- The supply chain
- Information Technology (IT)
- Organisational culture
- Stakeholder expectations
- Customer behaviour
- Communication strategies
- Legal and ethical considerations
Where might we be headed?
Understanding where we might be headed is a much more difficult question to answer. We need to understand our external operating environment by analysing and assessing the following:
- Economic climate and conditions
- Socio-economic changes and challenges
- Social license to operate expectations
- Geographical changes and challenges
- Global influences
- Healthcare systems
- Industry trends and disruptions
- Government policy changes and new regulations
- Political uncertainty
- Technological advancements
Scenario-planning exercises can assist with this. Scenario planning has proved to be effective in getting to grips with uncertain and disruptive events. During extremely uncertain times, using this method can help you to further review a rapidly changing landscape.
Should we be reassessing our strategies? If so, how?
In order to adapt our strategies to respond to the volatile and uncertain conditions we have to contend with, the following actions can be taken:
- When defining your strategy, assess risks and opportunities as part of the process, integrating risk assessments into your strategic objective-setting process.
- Perform more frequent scenario-planning exercises to not only ‘stress test’ your strategy but also check the completeness of your strategic risk profile.
- Adopt an agile strategy – promote the ongoing adaptation and improvement of evolutionary development.
- Collaborate with all stakeholders to ensure innovative and collaborative solutions.
- Reassess how performance will be measured – consider your contribution to society and employees at this time, and ensure it is not driven by the bottom line only.
- Relook business models and supply chains – assess various business models to support your strategies and reassess the supply chain.
Our response to Covid-19 will require a collective effort. As businesses, we can adapt and change our strategies, but it will take years to recover from the impact of Covid-19. What is most important is for leaders to be compassionate and strong at the same time, changing the strategic focus of the company from profit to purpose. Covid-19 is a game-changer and we need to take a hard look at the direction and purpose of our organisations.