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Navigating a Crisis - Part IV

29/07/2009


Strategic Planning Considerations
In an economic downturn, businesses must ensure their customers remain their number one priority. Those that support their customers through these difficult times will gain appreciation and benefit from mutual advantages.

From a strategic planning perspective, organizations may wish to consider the following:

1. Focus on your competitive advantage – Know what you do best and why.

2. Focus on Value Creation – Determine what is important and which products, customers, and channels create or destroy value. Determine which initiatives you could stop or defer.

3. Protect your customers - Understand the changing needs of your customers and react to those needs before your competitors do.

4. Protect your brand – seek out opportunities and continue to invest in innovative solutions.

From extreme weather to terrorist attacks, critical infrastructure disruptions, pandemics and any number of natural or man made threats have made an organization’s operating environment increasingly more demanding and complex. Not only have threat scenarios become more dangerous, but with business issues such as financial pressures; globalization; interdependence; legislative requirements; and fierce competition, the ramifications of a disruption are greater than ever. Moreover, the impacts of a disruption or crisis can have long-term effects on the financial and business health of the company.

Operational Planning Considerations
In recent years, inefficiencies have been tolerated and unnecessary complexities have been built into the way organizations conduct business. For some, the competitive landscape has changed so fundamentally that the previous business model will no longer be appropriate and significant change is required. Operationally, organizations should:

1. Protect their liquidity – Make sure their finances and working capital are in good order and concentrate on effective cash management.

2. Streamline processes – Identify value-added processes and streamline processes and costs by implementing targeted cost reduction strategies.

3. Harness the power of knowledge – Effective crisis management requires “good” business intelligence through clearly defined Key Performance Indicators (KPI), and the capability to make decisions quickly.

4. Protect their suppliers - Understand the changing needs of their suppliers and put in place effective vendor management to secure critical supply chains.

5. Use appropriate reporting templates - In order to make efficient and timely decisions, businesses should use appropriate information. Too often, companies use the same reporting templates and key performance indicators (KPI) regardless of variable changes occurring in the external environment that affects their business models.

Tactical Planning Considerations
Strong companies won’t sit back and wait for the storm to pass. The survivors will be those that act decisively, make tough decisions, and position themselves to take advantage of the upturn when it comes. Most organizations are implementing tactical solutions. If not, they should:

1. Conduct a threat and vulnerability risk assessment to determine the real and current risks to the organization.

2. Perform a Business Impact Analysis to identify critical people, processes and systems.

3. Understand their business – what do you do best and why, what are the threats, vulnerabilities and risks and how is it being impacted by the downturn?

4. Focus on the key drivers of value and key risks across the organization and act decisively.

5. Understand their response under different scenarios – test various scenarios from a financial, operations and workforce perspective to improve agility and the ability to adapt to changing conditions.

6. Protect their people – keep communication channels open, identify critical people associated with critical processes and ensure they are retained and motivated.

While the challenge may seem daunting, true business resilience is achieved by integrating these concepts and linking them to your organization’s overall risk management program. Silos need to be eliminated and plans and programs need to be integrated and mutually supported in order to achieve the synergies that will result in true resiliency and cost efficiency.

Building and maintaining a resilient enterprise will not only provide an organization with the foundation to survive a crisis but will also:

  • Reduce costs
  • Improve performance
  • Improve customer service
  • Maintain competitive advantage
  • Protect brand reputation
  • Achieve tactical, operational, and strategic objectives


For more information on how to help your business weather the economic storm, please contact me or your local MNP advisor.