RSM New Zealand

2020 in Review - a Message from our Chairman

What a year it has been.  This time last year, if you had read about the events of 2020 you could well have thought you were reading a science fiction novel. 

The disruption and uncertainty we have lived through this year has been colossal and looking ahead to next year there seems to be no relief in sight from this unusual level of uncertainty.

The effects of the pandemic will persist. Whilst things are looking more optimistic on the vaccine front, our health continues to be at risk.   We have no real appreciation of how quickly economies will bounce back and what they will look like once they do. 

Our tourism industry may need to be completely reinvented.   

Social instability is causing uncertainty. Millennials are now a huge economic force and are advocating for social justice.  They are expecting their employers to respond and are making consumer choices with social issues in mind.

Consumers are bringing to bear pressure on entities to address their environmental impact.  Regulators are fully on board and are driving policies aimed at alleviating climate change.

Let’s not forget the US/China trade war.  That’s not going away with a change of president in the United States.   If anything, there may be greater impact on NZ with more pressure applied to pick a side.

The best lesson that we can take from 2020 is that we need to be able to live and prosper in an environment of heightened uncertainty. Resilience deals with what is unknown, changeable, unpredictable, and improbable.  Resilience is the ability to rapidly adapt and respond to disruptions.

Many organisations demonstrated a degree of agility and resilience this year when faced with the consequences of Covid, particularly the lockdown.    Many shifted their business online, had their workers operate from home and then coordinated their recovery and the return as we moved back down the levels.  

But whilst many of us are proud of what we have achieved – should we be?  Many organisations that are now back up in running are only still here because of the government assistance and many are gone, or will be, notwithstanding the help they received.

So what does a resilient organisation look like? 

Businesses that are resilient have a safety buffer which affords them time to manoeuvre and gives them choices.  They have healthy balance sheets with sufficient working capital to continue through an initial period of disruption.  They have the operational flexibility to stay in business uninterrupted if a key person, supplier, customer or facility is incapacitated.  They have looked ahead and prepared accordingly and have plans and budgets which include contingency plans for material risks.   

However this is not enough.

These are the only the rudiments of resilient organisations.

Planning and setting a course is vitally important but we cannot foresee and build a plan for every possibility.  We plan for the optimistic likelihood and we can build in some contingency planning.  But what happens if we are presented with opportunities or threats that are not in the plan? Do we even see them coming, and if we do, are we able to adapt and respond quickly enough to take advantage or minimise damage?  Or do we freeze up and hope for another cheque from the government?

A resilient organisation is prepared for the unexpected.  It is ahead of the game in seeing events on the horizon.  It is able to quickly adapt, manoeuvre and respond positively to the unanticipated

Resilient organisations are aware of what is going on around them.

They are alert. They have consistent, timely and relevant insights. They are talking to their customers and suppliers.  They are keeping up to date with what’s going on in their industry, their economy and their supply chains. 

Supply chains in particular are being rethought as a result of the global pandemic.  There will be shifts in the way businesses deal with one another and their customers.  A resilient organisation is alert to these shifts and capable of quickly adjusting to them.

A resilient organisation is able to make fast, sound decisions.

They cut out the nonsense and get rid of slow-moving committees and red tape.  They have more people taking action and fewer people creating obstacles, briefing each other and sitting in meetings. 

Resilient businesses employ flatter structures and take more radical approaches to decision making and ways of working.  They recognise that a slow decision can often be worse than an imperfect one and can tolerate non-critical mistakes.

They have less hui and more do-ey

Resilient organisations have people with ability and willingness to get the job done

In resilient organisations employees are capable, motivated, and empowered to take on responsibility for putting plans into action.

An organisation full of people waiting to be told what to do, resisting change, and not looking for  better way of doing things is not a resilient organisation. 

Employees in resilient organisations are equipped with the right skills and importantly mind-sets to solve problems, take initiative and get the job done whatever is thrown at them.  

Resilient organisations are utilising digital and technology.

Resilient organizations are looking for ways to insulate themselves against uncertainty and are taking best advantage of digital innovations.

Businesses were pushed to adapt to working digitally quicker during 2020 than ever before. In many instances this has driven real productivity gains they do not want to lose.

Is unknown how the shift to digital among consumers will play out.  It’s unclear whether customers will revert to their old ways or if there is a permanent shift

Resilient organisations are utilising digital technologies that promote flexibility and agility and that  can be quickly adapted to changing expectations from suppliers and customers in how they want to interact with them. 

It’s with a backdrop of unusual uncertainty that we approach the final few weeks of 2020 and prepare for next year and the opportunities and potential horrors that 2021 may bring.

We would be well served by preparing ourselves for those uncertainties. 

We can do that by building our resilience.

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Authors

Charles Worth
Chairman, Partner