This past year has shown us what it takes to be resilient and keep your business going. While it has been deemed an “unprecedented” time, 2020 is but one example of a business disruption we must plan for and take swift action to address. Whether a force of nature or man-made, we have lived through countless other disruptions including fires, floods, tornadoes, earthquakes, snowstorms, and more. We have also survived strikes, trade wars, workplace violence, military and police intervention, changes in government and policies, regulations, and taxes. None of this is going to get easier going forward. In fact, life will only get more volatile, uncertain, complex, and ambiguous (“VUCA”). The question we must answer then is, “How can we make our businesses more resilient to survive in a VUCA world?”
Business continuity must be viewed not only as a risk mitigation strategy but also as a growth strategy. In any industry, leaders must de-risk their businesses before growing them to avoid creating a “house of cards.” De-risking the business means planning and preparing to ensure the organization is capable of operating critical business functions, even in the face of an emergency. With business continuity plans in place and recovery plans stress tested on a regular basis, businesses can focus on growth and increased profitability.
You may ask, “Why is this important to do right now when business is hot, and we’re already stretched thin trying to keep up with day-to-day demands?” Things happen, often outside our control. How many of the businesses that failed last year had a plan? On an annual basis, half of all business exits are involuntary, forced by dramatic external factors such as death, disability, divorce, disagreement, and distress. Business continuity planning is simply a good strategy to be prepared.
Consider the following two key aspects of a business continuity program – Planning and Testing.
Business continuity planning does not have to be complicated. The idea is to prepare for an issue before it becomes an issue and to know what to do when something does happen. Keep it simple when developing your plan and refine it as your business matures.
Begin by identifying the critical processes and interdependencies within your organization. Build a simple process map that shows how work flows through the company from end to end, across functions, and with customers and vendors. Mark key hand-offs and potential break points. Note anything that could stop or hinder the flow of business and keep a running log of potential issues.
Once you identify the potential issues, create a chart with three columns. In the first column, list the issues. In the second column, list the potential impacts to the business should the issues occur. In the third column, list the likelihood of these issues occurring. Use a simple scale like 1=Low, 2=Medium, and 3=High for both the impact and likelihood. Then, multiply those two numbers for each issue to get a total score.
Now rank the issues from high to low to prioritize those to address first and create your mitigation plan. Bucketing like issues may be easier to manage. Assign the issues/buckets to individuals in the organization to be responsible for creating a plan, and give your team a set timeframe (e.g., four weeks) to create a draft plan for others to review.
Now that you have your business continuity plan drafted, you need to test that it works. The number of stories I’ve heard lately about plans failing because no one bothered to test them could fill volumes. Here is one example.
A company with onsite servers decided to create a backup file storage location, in case something should happen at its main facility, and they couldn’t access critical files. The company built a new physical location, outfitted it with redundant servers and all new modern equipment. It had plenty of storage capacity and could back up its files. A year after the backup location was up and running, disaster struck. The main office was destroyed by fire, and all onsite files were lost. When the company went to retrieve its backup files, it found that nothing was there. No one took the time to test whether the backups were working. Millions of dollars in billings were lost due to this oversight!
This may seem an extreme example. Just to be safe, though, take the time to test your plan and verify that your mitigation strategy works. As part of the Planning and Testing, we regularly conduct tabletop exercises with clients. Role playing with the persons responsible for executing the plan is a good way to keep skills sharp. On the technology side, we might also conduct a full stack assessment and pen testing.
Make business continuity a priority for your business and perform an annual checkup to test the plans from end to end. The minor inconvenience of an annual test could save you millions for that one time something really bad happens. And by the way, having a robust business continuity plan in place is a good strategy to drive up the value of your business.
Are you concerned about the current exposure of your business? Do you need help developing a more rigorous business continuity plan? Or simply stress-testing your plan to ensure your business is ready for a “what-if”? Give me a call at 310.589.4600 or email me directly for some additional thoughts on how best to de-risk and grow your business. You can also visit the Performance Improvement page of our website for more on how we regularly enable business leaders to address their greatest business challenges and increase the value of their businesses.