27 May 2020
By Oliver Wight Partner, Catherine Schmitt-Weber
Within the last three months the coronavirus pandemic has drastically impacted not only our daily lives from a personal perspective but from a business standpoint too. Whilst no one can predict black swan events such as COVID-19 and the following lockdown restrictions, many businesses across the globe are finding themselves navigating unchartered waters. The majority of my clients have responded quickly, putting in place a crisis mode plan focusing first on protecting the workforce and then ensuring daily operations continue – all whilst constantly adjusting and then re-adjusting to the new normal. When we reflect on the period between March and May 2020, what lessons have we learnt?
The crisis has certainly forced companies to change the way they manage their business with increased focus on the short term. What we have seen recently is leadership becoming more involved in these short-term governance processes to pilot the business through daily uncertainty. Daily and weekly governance processes have to be in place and robust enough to manage the short-term efficiently.
However, now that lockdown restrictions are beginning to ease for some countries, business leaders need to shift their focus to full short, medium, and long-term planning. This will require numerous checks. For example, if you use a statistical forecast model for demand planning, the actual data since mid-March must be cleaned to ensure any drastic changes in demand are not reflected in future forecasts. In addition, the demand expected over the coming months will most likely not be the same as the forecasting model predicts. Businesses should plan for several scenarios; what is the best that could happen, what is the worst that could happen, and what is most likely to happen?
Businesses should also assess capacity - what does your capacity look like for the next few days, weeks, and months? Many companies have seen their capacities drop to a lower level and were, as a result, forced to prioritise orders because they simply could not answer all of them. The plan to return to full capacity could be jeopardized by the distance measures required to protect the workforce. To combat this challenge, some of my clients have spilt the workforce into two shifts instead of one to ensure safety measures are met. Here too, scenario planning for the short, medium, and long-term can be useful in understanding what is feasible and how quickly capacity can be recovered.
In summary, to successfully regain control of your business, the integration of short, medium, and long-term planning is key. Leadership teams should be prepared to understand and navigate between the three horizons with ease, to ensure the right decisions are made and risks are appropriately managed. Focusing only on the short term will not prepare your business for a future once we reach the end of the pandemic, whilst concentrating too much on the long-term view will stunt the business’ ability to exit the crisis smoothly. There should be a transition period running on the three horizons.
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