Sonny Ali, Director, Digital Transformation, GHD
This day and age, businesses face more significant risks in the way operations are carried out due to the ability to extend business relationships and networks throughout the globe. Business processes are far more dependent on outside parties and providers with this enhanced, widespread communication, unlike the industrial age.The operations can be interrupted rather quickly. For instance, if you have a call center remotely operated in Jakarta, if there is an earthquake, this could sever communications with this location and your ability to serve your customers. You might manufacture vehicles, and an essential component is unable to be shipped to the plant due to a flood in the supplier’s location.
Because of such risks, business owners and managers need to develop new perspectives and approachesconcerning the development of disaster relief and recovery plans and business continuity in those contexts.Additionally, more business owners must arrive at the understanding that these processes should be directly informed by customer value and experience.
The best practice that can be used to accomplish this is that of business resilience. Business resilience is known asthe ability of any organization to anticipate, prepare for, respond to, and adapt to incremental change as well as sudden disruptions, to survive and prosper.
The primary concerns of your business resilience plan should include:
Pandemics
Cyber-attacks
Weather
Economic cycles
Still, not many businesses have procedures in place to recover from these events. Below you will find an in-depth overview of how to manage your business resilience while holding the customer as a primary focal point.
You Know Your Business
[Pyramid Visual #1]
To determine your business’s resilience and develop an effective response and recovery plan, you must first be familiar with how your business presently functions. The first step to knowing this information is identifying your business’s goals and KPIs.
Now, you may have heard KPIs and “goals” used interchangeably – this is quite misleading, as the two are quite different. The term “goal” represents the ultimate outcome toward which your firm is working. This is informed by your business’s vision and mission – but this doesn’t mean that it has to be overly complex. Keep it simple!
The KPIs, on the other hand, are metrics by which you can measure how well your company is performing in its efforts to reach the aforementioned goals.Note that these metrics should not be goals themselves, however! Each KPI should be:
Measurable
Specific
Achievable
Realistic
[KPI Visual]
KPIs that reach these standards are ideal in helping business owners know whether they are making informed decisions regarding business operations. They will also alert you to whether anything in your process needs to change. Recognize that not all metrics are KPIs, however. This is why “key” is the functioning word here. (For instance, between the size of an email list and the conversion rate it results in, the conversion rate would be the KPI.)
In addition to KPIs, there are also targets – these are another type of metric you can use to monitor your business’s progress toward the defined goal. Targets are essentially smaller goals – milestones you can mark on your company’s way toward the ultimate goal.
Once you have these down, you must develop a goal-based approach to your efforts to model your business process. This process should involve:
Goal modeling
Activity modeling
Role modeling
Object modeling Evaluation.
This involves the simulation and prototyping of critical elements to the desired business processes. Secondly, this will be addressed by inspection of the models you have created individually and as a collective system.
When your company is poised to achieve your goals more effectively with these models in hand, you can then maximize your return on investment (ROI) – particularly concerning assets, labor, and suppliers. To complete the above models, you must answer the following questions, allowing you to center each step around goal-oriented perspectives.
Why must this work be done? For this, you must define your goals.
What work needs to be done? Here, you must then define the necessary activities and desired output in consideration of the previously defined goals.
When does this work have to be done?Develop a timeline by which you envision this work being completed and the dependencies that will influence these activities.
By whom does this work have to be done?Define the roles necessary to meet these needs – whether they are automated or carried out by an employee – and assign them to specific activities.
Lastly, you must recognize that your staff and dependencies must understand their role in your business process and resiliency. Studies show that only 14% of a given firm’s employees have a somewhat thorough understanding of their company’s strategy and goals.This means that the majority of employees are spending their time and effort without knowing why or how their work contributes to the company’s future.
To resolve this, you must integrate a concept known as “cascading goals.”This is when the goal-setting process beings at the top of a company – starting with the owner, then to executive management, eventually to the employees. At each stage, your staff should all be able to understand and answer the following: How does my work contribute to the company’s objectives?
What am I going to do to contribute to the company’s efforts to meet those objectives?
What skills does this work require presently and potentially into the future?
Businesses Have Dependencies
[Pyramid Visual #2]
Every business has dependencies. Dependencies are simply the relationships between events and tasks that cannot be completed without other specific events and tasks (and are by far some of the most difficult things to plan for).
Returning to the manufacturing example: Your plant cannot construct a whole vehicle unless the tires are imported from your plant in South Korea. One of the most common manifestations of these dependencies is in the case of company leadership being unable to come into work due to sickness, unexpected events, etc. These events can negatively impact the supply chain and have lasting consequences on business processes.
“KPIs that reach these standards are ideal in helping business owners know whether they are making informed decisions regarding business operations.”
So how do you manage these dependencies?
Identify the sources that supply vital support to your company.
Assess and rate the risks (scale of 1 to 10) of potentially losing these support services.
Develop contingency plans.
Test those plans.
Manage the current dependencies. Focus on the following steps:
Strengthen relationships with third parties.
Improve communications between your company and these organizations.
Streamline processes between your company and these suppliers.
Not All Events Are the Same and Your Plans Should Reflect All Possibilities
[2×2 Visual #1]
As you make these changes, keep in mind that not all dependencies and unexpected events are created equal. You must be ready for any event that comes your way. There are two primary types of events you will be planning for:
Predictable:You may have some knowledge of the event in advance. For example,you would be aware of a hurricane or the possibility of a flood ahead of time. (Most organizations are heavily focused on these types of events, as they are easier to imagine, and a bit more straight forward for developing contingency plans.)
Unpredictable:You will most likely have no knowledge of the event in advance.The best example of this is a sudden fire in an office, manufacturing plant, etc. (These are much harder to plan for and firms do not spend enough time on this!)
When planning for unexpected events, most organizations make alternate plans for their supply chain but do not actively plan resiliency as a joint endeavor. This places uneven emphasis on separate points of your business process and can easily leave certain aspects overlooked. To avoid such oversights, you must ensure resiliency across the value chain. This is also where you begin taking the customer experience into account. As you first prioritize your assets, workflow, and planning, do so while considering these aspects from the perspective of a customer.
Below are some general guidelines on how to develop a business recovery plan.
Compile a list of all the critical jobs.
Take inventory of the most important office, manufacturing, etc. equipment.
Follow this up with an inventory of supporting equipment.
Plan for alternatives to office space.
Review your insurance and budget.
Share this with your team and store it offsite. (No need to leave this documentation in the office where things may go wrong!)
Though the probability of a disastrous event is low, you’ll need to spend more time planning for such high-impact scenarios, as these can result in the most value destruction. For each event type, including both the best- and worst-case scenarios. This will allow you to create a threshold that determines when you execute resiliency plans. Your preparedness for these impacts will directly influence customer success or failure and, therefore, business continuity.
The US Federal Emergency Management Agency (FEMA) discovered that approximately 40% of all small businesses are unable to recover when they are affected by a disastrous event.
The top three threats to business resiliency are:
Cyber-attacks
Data breaches
Unplanned complications with IT
Natural disasters comprise only the very bottom 5% of threats to business continuity! You must be prepared for any type of unexpected event that may come your way, illustrated by the example below. Here, you can see the above guidelines in action.
The Missing Dimension
[2×2 Visual #2 – the cube]
So how does this all relate to your customer’s value? Throughout each of these steps, you must consider what your customers are concerned with by answering the following questions:
What are their priorities?This will help you in defining your critical jobs. Are your customers most in need of correspondence with customer service staff? Do they expect swift delivery times due to the sensitivity of your product? These questions will allow you to determine what elements of your process to cut and what to invest in, in order to effectively renew your business.
What impact will your customers have when you encounter unexpected issues?Ideally, it should be similar to the customer experience in the example recovery plan illustrated above. This was executed so well that the customers hardly knew that anything happened to the facility at all.
How do you need to redesign your disaster/ recovery plan to meet your client needs?After having answered all the questions above, are there areas in your resiliency plan that need redesigning? Is it possible that your current plan neglects customer priorities?
Having a customer-centric view will allow you to prioritize your resiliency efforts and expose high-value assets and workflows, leading you to invest wisely. This is part of what defines the concept of Business Continuity Management (BCM). BCMhelps you to maintain your customer’s trust, even if your company were to experience a catastrophic event. This ensures that you will continue to meet customer needs, even while your typical processes and resources may not be operating as they usually do.
As you improve and streamline your business resiliency, you can prioritize your customers’ needs and experience by analyzing how various scenarios mightimpactthese factors. (One bonus of an effective BCM is that it can give you a leg up on your competition. For instance, if you can recover more quickly than your competitors following a natural disaster, more customers will visit your business to meet their specific needs.)
Far too many organizations overlook the importance of not only a thorough business resiliency plan but how it impacts their customers. Once you review the critical elements of your plan from a customer perspective, you’ll be equipped to design a plan that allows you to maintain customer trust and appreciation, all while maintaining business continuity.
