26 May 2020

How Businesses Can Weather the Storm

COVID-19
How Businesses Can Weather the Storm

COVID-19 is having a huge impact on all our lives, beyond what we ever imagined, and the disruption to business has been at the very core, sending a ripple effect to our livelihoods and the global economy. 

More than ever, organisations are being pushed to think differently about business and operating models, risk management frameworks and crisis management to allow for agility at a time when there is a high level of uncertainty.

To cover this issue and more, we caught up with Richard Fechner, Global Advisory Leader at GHD about how businesses can make effective decisions in the current climate and weather the storm.

 

What are the key factors driving business continuity in the current pandemic?

Businesses are having to present agility with a ‘response’ (rather than ‘plan’) mindset, relying on moving a number of levers to remain viable. Re-imagining the future and focusing on business critical dependencies such as processes and assets can have a material impact. Those businesses that have been proactive in devising Business Continuity Management (BCM) plans find themselves in a much better position to respond to the unprecedented circumstances we find ourselves in today.

For example, GHD was able to move from office based working to a fully virtual environment in just three days, across the globe with over 10,000 employees. Beyond this, the firm has also introduced a wellbeing program, designed to support our people, which is also being offered to our clients to support them with this unchartered territory.

If we look at the green energy space, some organisations have been forward thinking in actively planning their activities and investing in the energy transition. GHD Advisory partnered with a global mining client to consider the feasibility of producing hydrogen; and this strategically important project is continuing without disruption.

 

What trends are you observing as COVID-19 unfolds and businesses scramble to respond on a daily basis?

In the early days of COVID-19 the initial challenges were around the transition to work from home, allowing businesses to remain operational. This has been transformational for most sectors, and the single biggest push in digital transformation over the last three years.

A few months on however, we are seeing a variety of scenarios unfolding:

  • from the aviation sector which is in distress as people are unable to travel

  • to the retail sector which has shifted to emphasising online services, and adjusting supply chains, and

  • in the mining sector where they are looking at proactively shutting down operations to sustain their business long-term while preserving the wellbeing of their people, all with a view to seamlessly get up and running in the future.

Other businesses are repurposing their operations to produce different products (e.g. distilleries producing hand sanitiser), offer different services that are in demand at present, some of which are for the short-term and others for the longer term as they look to futureproof additional revenue streams.

Taking it a step further, for a number of businesses/ sectors it is going to mean re-thinking the norm, re-engineering the business, their projects and people to suit the new norm. I expect that some industries are potentially preparing for a complete overhaul and transformation such as in the logistics space where direct port calls (between trade partners) create faster delivery times (by 20-60%) and a means for shipping lines to differentiate their service offering.

Furthermore, the consideration of a ‘Just In time’ versus ‘Just In Case’ model will drive local investment and a move towards a more nationalistic approach for sectors such as food security, national security, border controls, fuel reserves – historically reliant on a global economy. This in turn will have a positive impact on the economy as we look to support local supply chains and gear up projects that deliver changes in this environment.

 

You mentioned re-purposing as a form of business continuity, can you elaborate?

Asset stranding and closing the door to business is a real risk faced by infrastructure owners during unprecedented times, such as the current COVID-19 pandemic. By exploring alternatives to continue operations, businesses can safeguard themselves. In order to do so, it is important to:

  • Determine repurposing objectives ( i.e. best use of future surplus sites e.g. coal mines)

  • Identify the risks to the current state environment (i.e. change of fuels over next 10 to 20 years)

  • Assess commercial impacts and account for future costs

  • Define scope of work to repurpose and demobilise

  • Develop cost estimate reflecting scope of work in each domain

By understanding the repurposing requirement and evaluating the costs of doing so, business owners can make informed data based decisions to support the business case for investment and assist with supply chain logistics.
 

How do you envisage business continuity affecting people?

People are the heartbeat of businesses and in some respects need to be at the very core of decision-making. Their wellbeing will be imperative to the ultimate long-term success of any business.

Many businesses already acknowledge that remote working will form part of the new norm given it has now been tried, tested and proven. On the one hand this will mean increased flexibility for all where on the other it can be more demanding with longer meetings, as we miss the opportunity to have ad hoc conversation by the water cooler. So we have to be mindful of these impacts and support the workforce in managing the balancing act.

In addition, as many businesses have sought to implement a shorter working week, as they navigate their way through the impacts of this pandemic, employees may opt to maintain these sorts of arrangements in a post COVID environment if it suits and meets their lifestyle choices. People are now in a position to make informed decisions about their working arrangements having potentially trialled different options. On the flip side, businesses will need to plan how this can be managed to maintain effective operations/ production/ service delivery.

The other change I envisage is in relation to skills development and a faster move towards career changes supported by micro accreditations as people diversify their abilities and respond to dynamic environments.

 

As businesses try to remain operational and viable, what are your recommendations?

The best risk management processes are proactive. They consider what might happen, actively monitor the environment, and embed continuous improvements processes. Anticipating events and scenario planning can be an effective perspective with which to reflect on some testing questions such as:

  • Does your organisation understand its critical business dependencies?

  • Do actual recovery time frames align with business expectations?

  • How significant are the gaps and what will it cost to remediate?

  • How robust are the financial models – stress testing your business and finance models for a range of scenarios (e.g. for debt coverage)

  • ​Do your Business Continuity Plans make unwarranted assumptions?

  • Is the operating regime optimised and cost effective?

Ultimately it’s about playing the long game and effectively balancing the trade-offs of investing in aspects such as research and innovation, business development as well as recruitment and training, so that you can carve out the path to remain/get back on track.
 

Richard Fechner has spent more than 30 years’ in senior leadership roles, specialising in strategic planning, business management and capital transactions. Having worked both in the public and private sector, within Australian and Vanuatu Governments, commercial and strategy leadership within integrated energy businesses, Richard currently leads GHD’s Advisory arm globally. You can follow Richard on LinkedIn @RichardFechner.



CTA-org-partners.png