Businesses, governments and individuals have ability to change the trajectory of our future by embedding resilience into our business models, says Ramesh Raghavan, Tata Consultancy Services, Partner Strategy & Transformation, Australia and New Zealand.
Having spent more than 20 years’ working with private and public enterprises, mostly Fortune 500 firms, I can see just how strategy and transformation can change the future trajectory of an enterprise in our unusual business environment.
One thing which is clear is that businesses need to focus on their technological capabilities, innovation and disruptive models. While some businesses are taking a radical approach to re-configuring their business models and cost structures, others are simply aiming to maintain optimum operations. The most important thing for organisations to avoid, is relying on regular strategic planning approaches which expect business-as-usual.
By investing in the three stages of enterprise: “Recover, Revive, Repurpose” your business can embed resilience and drive innovation for the future. What it comes down to is executing multiple strategy and transformations, demonstrating value and building strong relationships.
New challenges to our ecosystems
Today’s unique business environment reveals the importance of pursuing efficiency to gain the cost advantage in a highly competitive market. Our complex systems, with multiple layers and inter-dependencies, create chain reactions within and without enterprises. Those that have concentrated on optimising for centralisation and reduced costs will be finding it tougher to adapt.
A recent analysis by Harvard Business Review revealed that the world’s biggest companies or their suppliers maintain more than 12,000 facilities in designated areas. This indicates just how big an impact the centralisation of supply or services or even source of demand can have as it cascades down business value chains, even impacting companies in the ecosystem who themselves don’t directly interface with an enterprise itself.
But our ecosystems can be strengthened to be more responsive and robust when challenges arise.
New ways of working
In the current environment, businesses are revisiting their current operating model and associated work practices in terms of flexibility and adaptability. Business leaders are all asking the same question: what is the real role of time and place in our business?
As Chistiana Figueres, a former United Nations official, said in February: “We may realise that we don’t have to travel as much. And I am sure the market will jump into the opportunity, even perfect even more technologies so that we can communicate and participate in meetings, almost as though we were physically present.”
Solving an unknown challenge
It’s very difficult for enterprises to see the patterns of impact beyond the immediacy of today let alone draw out inferences for way forward. The amazing nature of the human brain is that we cannot help compulsively seeking out solutions despite that the problem is not completely understood. While we are in the eye of the storm, it’s hard to fight this human nature of reasoning and see what companies might take away and plan for things ahead.
By putting in place a solid strategy that prioritises the three stages of enterprise delivery “Recover, Revive, Repurpose” , we can help counter the challenges of our new business environment and build resilience into our models.
Organisations may confront unpredictable variability in demand and growth, but you can mitigate the impacts through strong strategic planning. Business continuity management covers infrastructure, cyber, employee, business, operational and communication risks, with the aim of ensuring continuity and managing new challenges and risks production.
The biggest drawback of traditional models of resiliency is that they incorporate a certain level of predictability across the set of considered variables and do not factor in extreme events of a random nature which are likely to cause maximum disruption (see Theory of Black Swan Events).
This unpredictability requires organisations and leaders to have a paradigm shift in approach. We need a mechanism by which the system regenerates itself continuously, rather than be resistant to random events, unpredictable shocks and volatility. Companies need to now shift from traditional business continuity strategies and plans that focus on the continuity of the resources and processes, towards a business model continuity plan. This entails creating alternate operating models to strengthen the business value chain. Enterprises can adapt to variability in demand and growth by building in some duplication and diversity into their value chains. For example, in the short run, multiple supply chain and production pathways may seem less than efficient, but they come in handy in an emergency.
This approach builds resilience and risk reduction into your model when it comes to planning and investment calculations, instead of focusing on whatever gets you the lowest cost today.
Fast track change
Enterprises need to put their planning models into turbo mode. This requires constantly re-framing of business model to respond to variable impacts. Organisations need to a have a high sense of agility and strong leadership to react quickly and effectively in response to changing circumstances.
Some enterprises are even able to use the challenges of the current environment to their advantage. For example, some retailers have adapted from a traditional offline retail channels to omni-channel, eCommerce and smaller stores. Many have also successfully adapted their ecosystem partners, normalising supply more effectively than their competitors.
Future of business
We may find that today’s business environment leads to an inevitable remodeling of the global economic ecosystem. Enterprises across the globe are now re-purposing business assets (tangible and intangible) and redesign how they need to do business. Today’s circumstances will create a seismic shift in the way all stakeholders in the ecosystem react or act, provide or consume. Clearly the channel strategy of enterprises will be re-modeled or aligned to the consumer behavior.
Embedding resiliency into your business models means fundamentally shifting the way cost efficiency is weighed against effectiveness. Technology is front and center in driving change with the role of artificial intelligence and automation ever more critical to innovation.
Digital strategy is not only enabling business to realise their capabilities but to re-imagine the business model.
Looking ahead with resilience
Responding quickly with a “Recover, Revive, Repurpose” approach can unlock value by putting your resources towards strong initiatives.
Assessing and planning for not only for today but putting in place an adaptive and resilience business strategy will help you reimagine your business model for the future.