Opportunity has come knocking at the door for some businesses and has left town altogether for others. Depending on what has happened over the last 4 months you may now be asking a number of questions. Should we move forward with the current portfolio of projects or should we use the cash to acquire an over leveraged company. Should we press on with projects or shelve them. Can we continue with our current staffing levels or is there a way to sustain safe operations with reduced numbers of staff.
The good, opportunity is everywhere you have managed to remain fairly true to your annual and/or long term plan, external factors have not impacted your business as critically as your competitors and now you have more opportunities than you have cash to chase them with.
The bad, you are barely holding your own and are faced with decisions as to which projects to cut, which projects to place on hold and indecision is running rampant as to whether the projects you are progressing will even be viable by the time they reach completion.
The downright ugly, you have no plan and no line of sight as to how you will remain in business; to date you have been carried along on a bullish market that did not give any indication of an abrupt stop. Alternatively your long term strategy was missing key elements and now your strategy is try to stay in business by cutting back on discretionary spend and keep cutting until the balance sheet levels out, which ultimately results in less cash flow and more cutting.
So with a crystal ball and a time machine, what could have been done to exploit the good and avoid the bad and the downright ugly. The following provides a methodology to give the best defence against the unknown unknowns. It could be argued that there was no way of telling of a world wide pandemic. That every company is going through the turmoil social distancing and shuttering of businesses creates;
By examining the way you view strategy, the way you plan and operate your business and operating models.
By constantly seeking new ideas both internally and externally and asking where the next challenge will come from then prepare for this eventuality.
By avoiding complacency and ensuring that your quietest voice is given enough volume to be heard (and listened to) at the top and choosing to be agile as an organisational strategy for redevelopment and future growth.
In my years of experience the best prepared companies invest in and sustain both a business plan, an operating plan and an opportunity progression process that supports the long term viability of the company.
The business plan should at a minimum contain a vision of where the leadership see the the company at a point in the future supported by; a long term profile of the markets they want to operate in developed from, an analysis of the external business environment, economic funding choices based on assumptions for the both the growth and sustainment of the company's operations underpinned by financial evaluation and short term targets. Did I mention that there also needs to be a number of scenarios developed based on an understanding of the risks that will come from changing economic, competition, regulatory, political factors and technology disruptors.
The Operating plan will contain; a technical analysis of required resources, annual financial and budget forecasts for each asset and/or product line, an integrated plan that incorporates technical/ functional and project plans into operations and maintenance activities along with a balanced scorecard to provide a leading indication of the operating performance of the company.
To ensure that both the business plan and the operating plan function correctly and deliver the desired outcomes the wisest of companies have seen the importance of an Operating Management System and implemented a cyclical management program with frequent assessment of its core elements to provide assurance that both plans are on track.
So where does the opportunity progression process fit into the jigsaw. The opportunity progression process functions outside of the business plan and the operating plan however it is informed by and provides input to both plans. The key principles of the opportunity progression process are;
A strong understanding of the companies strengths and weaknesses provides the necessary insight as to which opportunities are right to be included in the opportunity progression process.
Recognition that strong adherence to the process is critical in ensuring only the highest value choices are progressed and that a repository of opportunities is maintained for value and priority.
Time and effort is invested in the identification and creation of opportunities. This is achieved through regular multi-discipline team meetings to review; potential disruptors,
Each opportunity is rigorously challenged against the business and the operating plans and a table of opportunities with clear understood value to the company is developed
The high level view of the process is;
Create - Capture ideas and developed an understanding of how the opportunity will support the growth of the company and the risks of progressing the opportunity through execution to deliver.
Business Case and Economic Justification - Challenge the opportunity against a set of predefined criteria that supports the business plan intent and the feasibility of delivering the opportunity within operating constraints of the asset and/or product line. To determine which opportunities to develop.
Prioritisation and Impact Ranking - Determine the sequencing of opportunities and decide when each opportunities development should commence so that it will deliver the highest value impact.
Roadmap and Milestone Development - Develop and implement a Project Execution Plan to manage the delivery of the opportunity through project execution to operation.
History is littered with examples of companies that have failed to adopt the above mindset, a key failing of Kodak was its unwillingness to plan for market disruptors. Its refusal to look at digital disruptors and identify them as both risk and opportunities led to it working to maintain the status quo.
If you would like to know more with regard to how we can support your company in this area please book a meeting