15 Apr Coronavirus is grounding business continuity management plans
When disaster strikes, the Business Continuity Management Plan is your friend. When everything you rely on has become unstable, when smooth operations have turned into a clusterbomb of uncertainty, the BCM plan is your pre-digested manual of calm, sensible order, the checklist out of chaos. It’s the way back to normal, of finding the shortest route to your home airport, “Business-as-Usualville”.
At least that’s the ideal we dreamt of. Many businesses are finding that the BCM plan they’d been keeping in their fire-proof safes and digitally ‘squirrelled away’ in obscure bits of cloud infrastructure, isn’t quite as useful as they’d hoped it would be.
Businesses thrive on processes, supplies of goods and services, liquidity, infrastructure and engaged people. BCM plans function when one or two of those things have been taken away for a limited period. They bridge the gap whilst resources are unavailable, plotting a course back to normal, stable operations.
The COVID-19 virus has smashed our understanding of what it means for business to be interrupted. It has shown our planning assumptions to be wildly optimistic. Why is that?
Capacity for hire
A normal assumption in times of emergency is that we can readily absorb some kind of recovery capacity from what exists in the world at large – capacity for hire, other branch offices, stockpiles in barely lit warehouses, neighbouring countries even. We rarely plan for all that capacity to be simultaneously sucked up, leaving no reserves to tap into. Creating new capacity – and the time and quality issues that throws up – is rarely a part of the contingency we foresee. We like to run on leaner safety margins; we believe it’ll be available. We assume cooperation or good will but didn’t realise we’d face cut-throat competition.
Coronavirus has not been limited to any country, sector, organisation. It may have a sense of ‘roll-out’ to different regions over time, but the effect has been the same everywhere. In fact, we have yet to see just how hard this virus will hit countries with very little system of national healthcare. It has been 101 years since the last true pandemic fell upon humanity and it has revealed how optimistic we have been in our risk assumptions. We need to learn from that.
BCM plans should also include a contingency for the non-availability (in the short term) of new capacity. Stockpiled inventory, workarounds, service suspensions, revolving credit lines; these could all fit in that place. That means undoing some of our lean philosophy which might feel ‘wrong-headed’ to begin with.
‘Circle until notified’
The role of coordinating BCM decisions and follow-up actions, is typically undervalued. In times of crisis, perfect decisions are a luxury or a temptation. But good or better decisions, taken and implemented at speed, are more valuable. Executives who are used to working at one speed, may find themselves utterly unprepared for this new mode of action. People whose careers are built upon establishment of stable controls don’t always do so well in times of volatility, when adaptability and agility are more useful.
Just as licensed pilots are not trained how to fly planes but how to stop them crashing, so business leaders need to preparation on how to perform during a crisis. It’s a different mindset that needs rehearsing. Incidentally, strong BCM plans help execs to do well because they’ve pre-determined the first few steps, helping leaders to unfreeze and get into their stride.
Politicians whose actions and policies are determined by how they affect their election prospects are particularly slow to act, because they often need to do some kind of polling or feedback exercise, to determine what is best for them at each step. When their intuition is blank, and they have distanced themselves from expertise, building trusted relationships with people who can steer a way out is needed. That burns the most precious resource in a crisis; time.
Having the ability to delegate powers to expert groups in a crisis, is a critical success factor. However, giving advice to CEOs that they should plan to relinquish some of their powers when things are bad, almost always feels as if this is giving up control or admitting failure, when stakeholders need to feel confidence. It is a cognitive dissonance that is hard to counter, especially when so much executive status is tied up in the culture of the hero leader myth. But if this is presented as part of a tested plan, it looks like competent delegation of authority.
Any risk or BCM manager who has struggled to pull together groups of organisational leaders to put effort into writing, testing and improving these plans will know just how difficult it is to get traction. Optimism bias, the pursuit of bonus-providing objectives, always lures people away from the serious business of developing resilience against future failure.
Whilst Coronavirus hasn’t prevented any prior planning from taking place, what it has done is remove the idea that we can make good decisions for the future.
BCM plans understand normal state, incident and crisis management phases, business restoration activity and then steady-state operations. What Coronavirus is requiring, is an interim position, just like pilots who are required to ‘stack’ or ‘circle’ round an airport before they can land (during incidents or interruptions).
Our organisations need to find a place of temporary stability because grindingly slow recovery seems the most likely scenario at the moment. From that ‘safe stack’ we will need to quickly move to whatever the new future will require of us. We need to be prepared.
What the Greek man said
Maybe the greatest factor in seeing that our BCM plans have limited value right now can be extracted from the famous Heraclitus quote:
“No man ever steps in the same river twice, for it’s not the same river and he’s not the same man.”
BCM plans assume that we return to where we left off, usually because they are short-term, localised incidents, affecting a narrow group of people. Normal is still out there and it is our duty to find it again.
Except that with this Coronavirus, normal has been obliterated. In Heraclitus’s words, the river has gone and so has our understanding of who we are and what we want. Everything has changed and we don’t know where to go back to. There is no normal; we are living in the perpetual present.
Quite simply, BCM plans for longer term outages must lead to re-invention of the organisational strategy. Our organisations should already be asking questions such as these:
- How have our clients/customers/markets changed in their appetite/requirements/needs?
- What price are they now willing to pay compared to before?
- Can we adapt our offerings temporarily and quickly, or will we need to do a wholesale revision of our product and service portfolio?
- Will our distribution and delivery methods have to change? Can we strike new strategic partnerships?
- Does our supply chain meet our needs or should we consider shrinking/extending/duplicating any parts of it?
- Which of our planning assumptions have been shown to be valid/bogus?
- Is this the time to develop an insourcing strategy?
- What were the speedy adaptations we wished we had done and why were we unable to do so previously?
- Is it possible that we can skip a stage in the innovation pathway we previously imagined and leap forward?
- Did we have to play catch-up with any competitors who got a head-start on us and if so, how did they get to do things better: was it luck, organisation, supplier intelligence, regulatory relationships, culture, prior experience…?
- Do we need different resources, different tools, different processes, different approach to most effectively implement our new strategy in the shortest possible time and if so, how are we going to undo our previous methods to move to new ones?
So whilst our BCM plans may have got us through the initial shocks to supply chain interruptions, staff working from home, maybe even liquidity pressure, they will not help us deal with Coronavirus in its entirety. Any experienced risk manager will know that our risk experience should always bring us back to the inherent risks in our strategy and help trigger review processes.
I hope your BCM plans get you to the point where that is possible. Not everyone is going to make it there but a strong understanding of your risk portfolio will allow for exceptional decision-making.