managing through disruption for business resilience...managing through disruption for business...

Noel Tagoe & CompanyAdvisory|Research|Training

Managing through

disruption for

business resilience

Noel Tagoe, PhD, FCMA, CGMA

Professor, University of Nottingham

CEO, Noel Tagoe & Company

Former Exec Vice President, AICPA-CIMA



Some people make things happen.

Some people watch things happen.

And then there are those who wonder

“what the hell just happened

Carroll Bryant

Crises destroy bad companies.

Good companies survive them.

Great companies are improved

by them.

Andy GroveFormer CEO, Intel



1Frame

disruption and

its impact

3Take practical

steps toward

resilience

2Manage

through

disruption

4A cautionary

tale about

resilience



Frame disruption

and its impact







Carroll BryantImpact of

Disruption

Framework of

disruption and

its impact







Carroll Bryant

Organization

Ecosystem

Business Model

Wider Environment

Generate &

collect data

Store and

refine

data

Analyze &

interpret

data

Report &

share

insights

Financial

Strategy

Financial

Planning

Resource

Allocation

Risk

Management

Financial

Performance

Model of

Organizations

Physical

Events

Information

Flows

Financial

Flows







Carroll Bryant

Organization

Disruption Vulnerable

Impact of

disruption







Carroll Bryant

Near term (6 months)

Medium –term (18 months)

Long-term (3 years)

Timeline for organization’s

response to disruption



Manage through

disruption







Carroll BryantAre rare

Have

extreme

impact

Cannot be

predicted

in advance







Carroll Bryant

Assess our

vulnerability

Maintain

vigilance

Achieve

viability

Manage disruption

in three steps







Carroll Bryant

Assess our

vulnerability







Carroll Bryant

We need to understand our

exposure, vulnerabilities and

potential losses to inform our

resilience strategies

!







Carroll Bryant

Impact on macro variables Specific impact on organization

• 6 months’ impact (near-term)• V-curve rebound. Effective pandemic

economic response

• 18 months’ impact (medium-term)• U-curve recovery. Pandemic prolongs;

economy recovers

• 3 years’ impact (long-term)• L-curve recovery. Pandemic spreads;

economy struggles

• Positive• Revenue growth through a surge in

demand (e.g. E-commerce)

• Mildly negative• Sustained revenue loss of 0-15% for the

rest of 2020 (e.g. consumer goods)

• Severe• Sustained revenue loss of 15-50% for

the rest of 2020 (e.g. Oil & Gas)

• Catastrophic• Sustained revenue loss of over 50% for

the rest of 2020 (e.g. tourism)

Impact of Covid-19 on the organization







Carroll Bryant

Impact

MatrixPositive

Revenue growth due to demand surge

Mildly NegativeSustained revenue loss

of 0-15%

SevereSustained revenue loss

of 15-50%

CatastrophicSustained revenue loss

of over 50%

SPECIFIC IMPACT ON THE ORGANIZATION

0.5 yearsV-curve rebound.

Effective pandemic economic response

1.5 yearsU-curve recovery.

Pandemic prolongs; economy recovers

3 yearsL-curve recovery.

Pandemic spreads; economy struggles SEV

ER

ITY

AN

D D

UR

ATI

ON

OF

EC

ON

OM

IC I

MP

AC

T







Carroll Bryant

PositiveRevenue growth due

to demand surge


of 0-15%


of 15-50%


of over 50%







Pandemic spreads; economy struggles

Push for growth and

market share

WinnersSEV

ER

ITY

AN

D D

UR

ATI

ON

OF

EC

ON

OM

IC I

MP

AC

T







Carroll Bryant

At risk


to demand surge


of 0-15%


of 15-50%


of over 50%








Survive and prepare for

back to normal

recovery

SEV

ER

ITY

AN

D D

UR

ATI

ON

OF

EC

ON

OM

IC I

MP

AC

T







Carroll Bryant

In Danger


to demand surge


of 0-15%


of 15-50%


of over 50%








Look for alternative

growth paths

SEV

ER

ITY

AN

D D

UR

ATI

ON

OF

EC

ON

OM

IC I

MP

AC

T







Carroll Bryant

Maintain

vigilance







Carroll Bryant

See sooner

Act faster







Carroll Bryant

see sooner

• Don’t be caught by surprise

• Plan and prepare for action

• Don’t be wrong-footed







Carroll Bryant

act faster

• Execute our plan

• Separate ourselves from

the rest

• Seek to acquire first

mover advantage







Carroll Bryant

Spot and manage

weak signals

!







Carroll Bryant

Faint signals with

lots of noiseEmergence of a

validated modelCritical mass

adopts disruptionAt scale and

mature

Detectable Clearer Inevitable New Normal

Innovators and Early

Adopters

Early Majority Late Majority Laggards

Four phases of disruption







Carroll Bryant

Time

Sig

na

l Str

en

gth

Threshold at which

mainstream

become aware

Weak SignalZone of highest

opportunity and

greatest risk

Zone of diminishing

returns

Importance of weak early warning signals







Carroll Bryant

Spotting & managing early signals enhances performance

Innovators and Early

AdoptersEarly Majority Late Majority Laggards

Increasing revenue and

profitability

Falling revenue and low

profitability/losses







Carroll Bryant

Scan for weak

signalsMake sense

Probe and

act

Actively unearth weak signals

Amplify interesting weak signals

Probe further and clarify

• Tap local

intelligence

• Leverage extended

networks

• Mobilize search

parties

• Test multiple

hypotheses

• Consult widely but

quickly

• Develop diverse

scenarios

• Face reality

• Encourage

constructive

debate

• Trust seasoned

intuition

How we spot and

manage weak signals







Carroll Bryant

DESCRIPTIVE

What happened

DIAGNOSTIC

Why it happened

PREDICTIVE

What will happen

PRESCRIPTIVE

What should be done

Scan for weak signals

Make sense Probe and act

How we communicate weak

signals to the organization







Carroll Bryant

Achieve

viability







Carroll Bryant

ThriveReviveSurvive

During the crisis Emerging from

the crisis

After the crisis

Resilience Agility Innovation

Three states of viability







Carroll Bryant

3

1

4

2

Find new

clients/market

Keep existing

clients/market

Keep existing

offering

Find new

offering

Today

Future business

Four zones

of viability







Carroll Bryant

3

1

4

2

Find new clients/market

Keep existing

clients/market

Keep existing offering

Find new offering

e.g. improved

logistics process

e.g. alternative

branding

e.g. switch from

B2B to B2C

e.g. to a similar but

digital remote/service

e.g. create new product

for another need of your

existing client

White space

Innovate in the

core organization

Explore adjacent

opportunity spaces

Innovate in the

core organization

Seize white space

opportunities







Carroll Bryant

In Danger


to demand surge


of 0-15%


of 15-50%


of over 50%








Look for alternative

growth paths

SEV

ER

ITY

AN

D D

UR

ATI

ON

OF

EC

ON

OM

IC I

MP

AC

T







Carroll Bryant

Seizing white space

opportunities

A B C+ +

Reposition today’s

business to maximize its resilience

Create tomorrow’s

growth engineUse unique skills and

resources that give

you an advantage

(Transformation A) (Transformation B) (Capabilities Link)







Carroll Bryant

A BCReposition

Today

Create

tomorrow

Use Unique Assets

Seizing white space

opportunities



Take practical steps

toward resilience







Carroll Bryant

Resilience is about springing back

from a crisis and springing forward

to a new reality

!







Carroll Bryant

12

3

4

56

7

8

Financing and

liquidity

Supply chain

resilience

Workforce

well-being

Technology investment

Board

management

Scenario

planning

Risk

management

Operational

improvements

Eight Practical

Steps to

Resilience







Carroll Bryant

Financing and

liquidity

Determine

cash profile

Model cash

flowShore up debt

Work with

current

financing

partners

Diversify

financing

sources

Manage

inventory

closely

Consider

additional

cost cutting

Manage

receivables

Liquidity and cash flow are paramount. We

should identify financial constraints that could

endanger our viability and consider alternatives







Carroll Bryant

Supply chain

resilience

Map supply

chain shocks

Identify

critical

bottlenecks

Prepare for

long term

supplier

disruption

Create

possible

scenarios

Address the

possibility of

shortages

Locate

backup

suppliers

Explore

alternative

operations

Evaluate

current

contracts

We should increase flexibility due to the many

rising costs across the supply chain, from

accessing raw materials to confronting

significant fluctuations in demand.







Carroll Bryant

Workforce

well-being

Support

virtualization

Minimize

worker

exposure

Track well-

being

Identify

minimum

staffing

requirements

Secure critical

IT funding and

support

Train staff in

new work

processes

Rethink

authority for

decision-

making

Maintain

open comms

Staff might not be used to working remotely but there

may not be a choice. We can use technology platforms

to create virtual workplaces to maintain collaboration.

We can use this crisis to re-imagine talent strategy







Carroll Bryant

Technology

investment

Create

dedicated

budgets for

tech needs

Shift to the

cloud

Create

dashboard to

track virtual

tool usage

Secure

business

critical

applications

Evaluate

whether

operations

can be

virtualized

Prepare for IT

supply chain

disruption

Bolster cyber

protections

Provide virtual

employees

with support

We may need to improve digital

capabilities, including cyber security,

to enable virtualization and prepare

for future transformation.







Carroll Bryant

Board

management

Set up crisis

command

centre

Facilitate

information

flow

Streamline

management

reporting to

the board

Devise

internal

comms

strategy

Communicate closely with key external stakeholders

Present

opportunities

for growth

Leverage

technology

Communicate with external

auditors

Senior leaders should communicate to

the board and its committee about how

the we are managing the disruption.







Carroll Bryant

Scenario

planning

Weigh

multiple

futures

Monitor

events

Maintain

strategic

optionality

Fund the most

probable

version of the

future

Prepare for

reshaped

competitive

landscape

Recognize

sector

reorganization

Prepare for

the next

normal

Anticipate

round two

Planning for different economic, health

and big picture scenarios may determine

how well we recover from the disruption.







Carroll Bryant

Risk

management

Be attentive

to internal

controls and

fraud

Monitor

failures of

suppliers and

customers

Guard against

cyber attacks

Monitor

effectiveness

of policy

interventions

Beware of

cascading

risks

Watch for

insider threats

Prepare for

the

unexpected

During a vulnerable time, we should keep a

sharp eye on managing direct and indirect

risks and on protecting our assets







Carroll Bryant

Operational

improvements

Reduce

enterprise

costs

Re-evaluate

outsourcing

Rethink real

estate

agreements

Rationalize

and diversify

procurement

Improve

pricing

discipline

Rethink the

portfolio of

assets

Fund selective

innovation

Beyond virtualization, we must consider what

we may need to change in how we operate

and what opportunities we can seize now



A cautionary tale

about resilience







Carroll Bryant

Choluteca River Bridge

(Honduras)







Carroll Bryant

Where we build resilience is

just as important as why and

how we build resilience

!



Final Words







Carroll BryantImpact of

Disruption

Framing responses

to disruption







Carroll Bryant

Crises destroy bad companies.

Good companies survive them.

Great companies are improved

by them.

Andy GroveFormer CEO, Intel







Carroll Bryant

To learn more about building

business resilience through

mastering disruption enrol on

my e-learning course on:

https://courses.prof-

courses.com/p/disruption-course

https://courses.prof-courses.com/p/disruption-course


Thank you

[email protected]

www.noeltagoe.com

FINANCE | EDUCATION | STRATEGY | TECHNOLOGY

mailto:[email protected]

http://www.noeltagoe.com/

managing through disruption for business resilience...managing through disruption for business...

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