Work now to develop your organizational agility

Posted on Monday, March 30, 2020 by Gary Hunt

By Tiffany Crosby, CPA, CGMA, MBA, OSCPA learning director

I’ve found that a focus on developing operational agility is useful when it comes to navigating through the unpredictable.

Some might argue that a pandemic is not unpredictable, given the globally connected world in which we live. But much like hurricanes, earthquakes, and fires, the timing and extent of the catastrophe is very unpredictable. It’s not unreasonable to expect that your business might lose access to your physical operations, or that you might lose a key employee, or that a key supplier or customer may go bankrupt. It is difficult, however, to predict when such an event may happen and the magnitude of the event when it happens. And it is against this uncertainty that we must plan from a contingency standpoint.

So how do you do it? I look at operational agility from four angles:

  1. How would we operate if we no longer had access to our physical facilities, but everyone else did?
  2. How would we operate if a key vendor(s) no longer had access to their physical facilities (or otherwise couldn’t fulfill their contract)?
  3. How would we operate if our customers no longer had access to their physical facilities (or otherwise couldn’t interact with us through their normal channels)?
  4. How would we operate if physical access was lost by all?

Those four questions need to be answered for each major product or service offered. The assumptions within those answers also must be scrutinized to determine whether they are legitimate. For example, a common answer to the first question is that our employees will work from home. However, the viability of that answer is contingent upon several key assumptions, each of which would need validated. These assumptions include:

  • Critical functions can be performed remotely (capability)
  • Employees can access all necessary systems remotely (infrastructure)
  • Employees know how to access all necessary systems remotely (knowledge)

If we skip to question #3, a company may assume that their customers will switch over to remote (or digital) operations. The same types of questions arise: Do they have the capability, infrastructure, and knowledge to do so? Within a business-to-business setting, these questions can be built into the due diligence process as contracts are negotiated. However, it is much more difficult to access in a business-to-consumer environment, especially if it is a diverse, high-volume consumer business model.

Over the past two weeks, issues are surfacing that will cause organizations to strengthen their contingency planning for the next disruption that will certainly come. There might be uncertainty as to when it will come and what it will be, but there is no uncertainty as to its inevitability. As we all understand more clearly today, that is the nature of the world in which we live and work.

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