In a recent blog post, I set out the reasons for you to move from simply managing the immediate people, operational and financial challenges of the COVID-19 crisis, and to start to think about how your business can succeed in the longer-term https://morgancross.co.uk/strategy/preparing-to-succeed-in-the-post-covid-world/. In this post, I will share how you can develop a coherent and winning business strategy through the uncertainty and turbulence of the next few months and, most likely, years.
There are five steps in the strategy development process (Figure 1), but the key is to work through this process quickly. There are two factors that will help you to gain value and success from this process.
First, you need to work at pace. You haven’t got months to make your first decisions; you should be aiming to complete the work in no more than two or three weeks. As we’ll discuss in Step 5, you will then need to update and refresh your assumptions and plans as you go through the coming months and new information and insights become available.
Second, you need to be willing to confront the big issues head-on, accepting the world as it is now, not how you’d like it to be. You can’t assume that everything will work out for the best; you will need to face into many issues and challenges that seemed impossible just a few short weeks ago.
Figure 1: Strategy Development Process
Step1: New Attitudes and Behaviours
During the lockdown period, attitudes and behaviours are already changing. People who have previously avoided on-line shopping are now using that channel to buy groceries and other goods, for instance, while managers are realising that it is possible to use technology to run meetings, rather than travelling across the globe to have a face-to-face session.
Your objective at this stage is to try and understand, as best you can, what these changes in behaviours will be and how long they’re likely last. More specifically, you should seek to identify which of these behaviours will stick beyond the crisis.
The attitudes and behaviours are not just about consumers. They cover a variety of sources, including:
- Government policy. What new policies and regulations are likely to be introduced by governments? For instance, will there be incentives for greater local manufacturing in certain industries?
- Ways of working. How will working practices change, including issues such as working from home and business travel?
- Consumer behaviours. What attitudes will drive consumer choices and how will people change the way they shop for different products and categories?
- Social attitudes and behaviours. How will people’s general lives evolve? For example, will people look to eat more healthily than before the crisis, and will having a strong immune system become more important to us?
- Business operations and activities. Will companies change their operating models and supply chains? For example, will companies look to widen their sourcing base and reduce their reliance on single-source suppliers?
For each of these sources of behaviour, you should determine your best view of how the world will change both in the short term (next 6-9 months) and longer term (9-18 months). You should then assess the potential impact of these new attitudes and behaviours on your business model – operations, supply chain, marketing, sales, finance, technology and people management etc. – and also against your strategy and priorities.
As a result, you will now have a starting point for how your business may need to change and evolve in the coming months, highlighting critical challenges and opportunities.
Step 2: Scenario Planning
Most strategy development work makes a single set of assumptions about how markets will develop. That is no longer possible; there is simply too much uncertainty. Instead, developing a range of future scenarios and testing your business model and strategy against each one is needed to identify your critical priorities.
Using scenarios will force you to face into difficult issues that you might otherwise avoid. Importantly, using scenarios isn’t about deciding which future is most likely. Instead, the work should be focused on understanding the robustness of your strategy in a range of possible futures, and what you need to do now to have the best chance of succeeding whatever happens in the wider world in the months ahead.
You may wish to develop your own scenarios. If so, they should be based on thinking through the biggest uncertainties facing your business environment. As a starter, I have built on some work by McKinsey to create four possible futures, each with a different outcome on two dimensions: (1) how well government policies will support a rapid economic recovery; and (2) for how long the pandemic will have a significant impact on our daily lives (Figure 2).
Figure 2: Four Covid-19 Scenarios
Each of the four scenarios set out in Figure 2 is possible, but it’s impossible at this stage to determine which will happen. Instead, you should focus on undertaking the following work:
- Flesh out the impact of each scenario on your markets, your customers and your wider business environment;
- Take each of the scenarios in turn and identify where your business will face significant risks and challenges, as well as any major opportunities;
- Filter your current strategic initiatives against each scenario, establishing whether they would still be relevant in those circumstances and whether should be accelerated, slowed or even dropped; and
- Likewise, identify what other new initiatives you would want to pursue under each scenario.
Step 3: Refine and restructure the strategy
The outputs of the scenario analysis will enable you to determine whether your overall strategy – your key goals, objectives and overall direction – remain broadly valid or need significant amendment. If you assess that you need a more radical strategic shift, you should focus on what this means for your target customers, your key products and services and your preferred channels and markets, as well as your competitive strategy and how you are seeking to win.
The work will also give you a view of the relevance of your big strategic initiatives. The assessment you’ve made will now enable you to develop three initiative ‘buckets’:
- “No regret” initiatives. These are major initiatives that deliver positive results in all scenarios and should therefore form the backbone of your new strategic agenda.
- “Bigger bets”. These are initiatives that deliver a strong positive impact in some scenarios, but may lead to negative results in others. Your approach here should be to establish and implement action plans that enable you, if possible, to get going while limiting your risk. For instance, you could start these projects in a small way, but also establish a series of stage-gates on your investment and actions, so that you only release resources if conditions are favourable for the initiative.
- “Watching briefs”. These are options and higher-risk, high-potential initiatives that you may pursue – depending on how conditions evolve – but where you don’t need or wish to make a call at this point. Thinking through these possible initiatives up front will enable you to act with greater pace and focus in the future.
Step 4: Organisational implications
In addition to your business strategy, the outputs of this work will also have implications for your organisation. Establishing changes to both your ‘hard’ organisation – structures, systems and processes – and your ‘soft’ organisation – skills and capabilities, leadership style and communication and engagement – will be required, both to deliver the revised strategy effectively, but also to operate effectively in a post-COVID world.
This is also a good point to understand how you wish to evolve the organisation’s role in its communities and, if appropriate, to reset the company’s corporate social responsibility agenda.
Step 5: Implement, review and refresh
The final step of this process is really the first for the wider organisation: it is to get going. Creating a clear communication and engagement plan and establishing a governance and performance management systems that can operate through the uncertainty and turbulence are both critical steps.
It is essential that you move at pace, but you must also ensure that you keep all your teams updated on progress and changes in the plan. As a result, you should:
- Establish a series of focused 90-day plans for each initiative, with clear outputs, KPIs and milestones;
- Build a wider corporate scorecard, based on your scenario analysis, that enables you to understand both the performance of the business as well as the evolution of the wider environment. That way, you can determine which of your scenarios is emerging as a ‘winner’;
- Review progress regularly (at least two-weekly), so that you can shift focus, priorities and resources depending on external conditions and internal performance; and
- Be prepared to update this work if circumstances materially change. Staying on top of what is happening in your markets is critical to plotting a course through the crisis and delivering the best possible results for your customers, your people and your business.
The COVID-19 virus has created a level of business and societal change and uncertainty that exceeds anything most of us have ever experienced. Your initial priority is, of course, to keep your people and the business safe in the short term. But the winners in the post-crisis world will be those that were also able to sense, develop and deliver a longer-term plan.
These five steps offer you a road map to win both through and beyond the crisis, enabling your business to get ahead of the emerging economic emergency and deliver market-leading results over the next few years.
© Stuart Cross 2020. All rights reserved.