The COVID-19 pandemic saw South Africa’s economic growth rate plunge 16,6% in Q2 of 2020 and while it recovered by an estimated 13,5% in Q3, lockdown restrictions introduced over the course of 2020 have had a significant impact upon South African business. According to Statistics South Africa, the overall number of companies that were liquidated in Q4 of 2020 increased by 20,5% versus the same period in 2019, while year-on-year liquidations rose 14,2%.
In such a constrained economic environment, organisations big and small should deeply consider business continuity planning to ensure survival in a highly difficult and to be better prepared for an uncertain future.
A business continuity programme can come in several forms, with one version built upon three pillars:
- Scenario Planning
- Intervention Identification
- Triggers and Thresholds
Scenario Planning is focused on understanding and modelling possible scenarios, and their likely impact on organisational operations. Intervention Identification considers which intervention programmes should be considered and utilised so that operations can be sustained. Triggers and Thresholds seeks to understand and determine at what point various triggers should be implemented to preserve operations.
Scenario Planning
Scenario Planning is critical in identifying a specific set of uncertainties and “realities” of what may occur in a given context and what may happen in the future. The Scenario Planning process can have three stages:
1. Driving force identification, essential considerations within a business’s operations
2. Identify key unknowns, trivia, challenges, and opportunities. Where the business may suffer and where opportunities may become available
3. Develop a range of plausible scenarios and understand their implications, the “what will happen if X occurs”
Different scenarios can be constructed, ranging from for example “Best Case”, “Status Quo” and “Bad” to “Disaster”. By doing so, business leaders and managers will be better prepared for an uncertain future having considered the different paths it may take. While Scenario Planning is unlikely to identify the characteristics of each scenario perfectly, conceptually, decision makers will be better prepared for every outcome.
Intervention Identification
Intervention Identification priorities singling out and understanding what measures and options are available to implement an effective business continuity strategy. To do so, one method is to figure out which core aspects define the business, and using those aspects as categories to assign applicable drivers.
For example, a business can be divided into Operational and Workforce aspects. From there, each aspect can be broken down into its key driver or drivers, followed by the different levers and/or initiatives to help the business through in these tough circumstances.
Trigger and Threshold Determination
The Trigger and Threshold Determination speaks to the different scenarios that can be used as a threshold to understand when to increase the severity of business continuation levers at the organisation’s disposal.
For example, for the “Status Quo” scenario, a series of measures will be put in place, such as those included in Figure 1. However, if these measures prove insufficient, and the scenario shifts to “Bad”, a series of new initiatives should be available for the business to implement – akin to pulling an untouched lever – which escalates business continuation measures in severity.
Where in Figure 1 it states, “Halt all hiring unless necessary for core function” under the Staff driver for Workforce aspects, for a “Bad” scenario Intervention Identification, this could be replaced by “Furlough all non-essential staff” and so forth. Through using Trigger and Threshold Determination, the business will have a ready set of levers to initiative if a preceding set of measures fails to offer the necessary effect.
Ultimately, all these measures are designed for one purpose and one purpose alone: to ensure the business operations can continue. In extremely difficult market conditions, the worse the scenario, the more difficult the choice or choices needs to be.
While the measured discussed above should ideally be treated as a last resort, it is highly advantageous for a business to have a business continuation plan prepared for worst case scenarios.
If your organisation is seeking to prepare a business continuation plan and seeks expert advice on how such a plan is constructed, contact Letsema’s Strategy & Enablement team at strategy.team@letsema so they can assist your business when it needs it most.
