RSM New Zealand

Opportunity Thinking – Thanks COVID 19!

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In every crisis there are also opportunities. So, what possible opportunities are there for you and your organisation?

Firstly, let us just acknowledge that this is an unprecedented crisis.  At its heart is a very serious health issue and we must all take appropriate responsibility and do everything we can to help get this under control with the minimal loss of life. 

Secondly, for almost every organisation it is an unprecedented organisational crisis the likes of which we have never seen before.   It will also affect different organisations very differently.   Some may not survive, and this is very sad.  Our economy will not be the same for some considerable time, if ever. 

However, that is not all necessarily bad.  Change can be good too.   And adversity the mother of invention. 

Thirdly, the fear, uncertainty, loss of normal routines, and constant negative media bombardment can be trying on even the most well-adjusted individual’s personal mental health.   Accordingly, it is very important to also be able to focus on a positive future and what this may hold. 

For these reasons we bring you some thoughts on exploring what may be positive opportunities out of all of this on yourself and your organisation. 

So, once you have done the mahi to focus on your immediate organisational day to day survival (see box at end of article if unsure) then it is time to invest some positive energy into thinking of the future. 

  • Will you take the future you get… Or make the future you want?

This may seem obvious to many, but fundamentally mindset is key.  We always have a choice. A positive future is usually achieved by being proactive.  By rationally considering the likely scenarios, assessing your options (thinking broadly), weighing up pros and cons and likelihoods, and then taking action on your plans. 

The alternative is the appropriate analogy of being a pinball. That is, just reacting to whatever comes at you. A pinball is not in control of its circumstances and only occasionally are the levers of any use. 

Hence when good things happen, they are generally just caused by random luck rather than by any good management. 

Also, constantly being knocked around by events outside your control is mentally very disheartening and disempowering.  It can reinforce an already negative focus, further reducing your energy and hence chances of being able to achieve positive things. 

  • Why does your organisation exist?

Get really clear on the answer to this question. Revisit it. The question is not; what your organisation has been doing and is currently doing. But really pare it back to what is the unique reason your organisation should exist?

If your organisation is perfectly normal, then you may well find you have deviated from your core purpose and find yourself busy with lots of distracting and possibly superfluous activity.   

As human beings we tend to get busy and spend much more time and energy on the “how” and sometimes forget to regularly refocus on the “what” and “why”.   

Being really clear on the what and why of your organisation frees your thinking to a much wider range of possible “hows” to deliver on your purpose.

Maybe this is the time to pivot to a new way of delivering on your why.

  • What process lessons have you learnt from your crisis operating measures? 

For many organisations this is their first real test of implementing a business continuity plan, having to radically rethink their modus operandi.  Trialling things like remote working is an obvious example.  

It highlights the possibility of more employee flexibility, it reduces transportation time and costs, it raises the question of how much office space you may actually need, it puts the spotlight on your use of IT and resources.   

Some of this will have been hard.  Some of it though will have surprised people by how well a different way of operating in crisis works. So, what can you learn from this and adopt as a better more efficient and effective way of working going forward? 

One common observation of operating in a crisis is the extra focus and effectiveness gained from stripping back of some unnecessary, or at least not high priority, activity.  

What have you learnt that can make your organisation’s activities more focused, efficient and effective going forward?  

And remember that every member of your team has been affected and hence has a valuable part to play in identifying possible improvements and different ways forward.  Harness this fantastic resource.

  • What business model lessons have you learnt from your crisis operating measures?

This is also a fantastic opportunity to really consider how resilient your business model is.  Has this crisis proven that it still can be fit for purpose?  Or is it possibly in need of a major rethink?

Has the disruption of supply chains exposed weaknesses in your current business model and/or has it uncovered useful viable alternatives? Has it identified new collaboration opportunities?  Will the competitive market in your area be different?

There is a lot of talk about some aspects of business will be different forever after this experience. Moving to a new normal in order to ensure more resilient sustainable organisations. I’ve noted many discussions of the view that this pandemic event is causing some individuals to reassess their lifestyles and some choices. In many cases this is likely to lead to a return to more localisation rather than globalisation.

For example, with international travel and tourism now seen as much riskier - a switch to more live and travel locally. With food supply chain risk being highlighted - a move to more source and eat local. With questions about climate change and the experience of enforced less travel - a move to live more lightly and living locally.

All of these possible changes will have profound changes on consumer demand and provide threats and opportunities for organisations that exist to satisfy those demands.

How will, could, should your business model change to benefit most from these demand changes?

  • What new resources may now be available to you?

There are two sides to every coin. 

For the human and organisational tragedy of every necessary redundancy there is also now a willing and eager human resource been made available for another organisation. Even if you cannot afford to take people on full time, there is increasingly a host of great short-term skills and experience available. People with some fantastic experience and well placed to help your organisation pivot to a new and more resilient future. What could you do if all of a sudden you have access to fantastic skills and experience?

Technology has been the saviour of many businesses. Countless individuals have been forced to get more personally involved in an area they had thought was too hard previously. 

Only to find actually most if it isn’t too hard, and some of it is fantastic as a new way of operating. How can you best leverage these new insights? 

Summary

This unprecedented event is also an unprecedented opportunity. A time to question. A time to throw out the old that isn’t working and make a better new. Protect the immediate. But then explore possibility and embrace opportunity to make your organisation more flexible, agile, responsive and prepared. And ultimately what we should be seeking for all successful organisation; more resilient and sustainable.

Kia kaha, Kia māia, Kia manawanui!  Be strong, be brave, be steadfast.

Ensuring your organisational survival

There is no use about being Pollyanna’ish about this pandemic crisis.  There is after all, little use in focusing on the future if you haven’t done the work to secure today and your organisation is not likely to survive to make it into the future!

Organisational survival requires an in-depth knowledge of your organisation, its resources, the environment it operates within, and critically its financial engine and model.  Of all that can kill an organisation; the lack of financial sustainability usually kills the fastest. 

As the saying goes; Turnover is vanity, profit is sanity, but cash flow is king!   Or as someone once educated me; Profit can be likened to food.  You can survive for a while without food.  However, cash flow can be likened to oxygen.  Try holding your breath and see how long you survive!

Accordingly, short term organisational survival requires a laser like focus on financial impacts, and your budgets and financial forecasts.  Now is the time for a very detailed understanding of your finances.  And for close and timely monitoring, and revising of these. 

Brutally, organisations only have 2 main operating levers to pull; revenue and costs.  And often revenue is less controllable short term than costs are because it is more outside your immediate control.  Analyse all costs into essential and other and understand what flexibilities you may have.  Also consider implications of breaking contracts. 

At times like this there may be other temporary revenue sources such as Govt subsidies. Understand what may be available.

Then there are the 2 main funding levers; selling assets – albeit sadly in times of stress this can mean fire sale pricing, or raising more debt or equity – again this can come at a much greater cost or discount.  Commitment to additional debt also requires careful thought especially in light of an organisation already under increased financial stress.

All organisations should have a critical cash flow of your receipts and payments for the next 90 days.   Monitor this closely and update as necessary.

Liaise with your key stakeholders such as your bank, any other funders, suppliers and customers and others to keep them appropriately informed.   Good honest communication can save relationships, and all business is done with people at the end of the day.

Focus and stay positive folks!

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Authors

Craig Fisher
Consultant