When news of COVID-19 spread, organizations began considering how it would affect supply chain access, product launches, employee well-being and business continuity. But many failed to consider the importance of a resilient business model.
Business model resilience is often missing from traditional business continuity plans. Organizations plan for disruptions to resources and processes, but don’t recognize that business models can be just as big a threat to continuity of operations. The key is to ensure that your business model is as resilient to outside disruptions as the rest of the business.
“Companies need to leverage a systematic approach to strengthen the resilience of their current business models to ensure their ongoing operation during COVID-19,” says Daniel Sun, VP Analyst, Gartner. “CIOs can play a key role in this process, since digital technologies and capabilities influence every aspect of business models.”
Gartner recommends a five-phase approach to ensuring business model resilience.
Phase 1: Define the current business model
Start by identifying the core customer base that is essential to the business and its core needs. Then expand that thinking to value propositions, capabilities and financial models. For example:
- Customers: Who are the key customers?
- Value Proposition: What do we offer to fulfill their key needs ?
- Capabilities: What ecosystem partners are needed to deliver the value propositions?
- Financial Models: What revenue models do we use for our core customers?
Although this is not a traditional CIO activity, it’s important to engage with your senior leadership as they consider the current business model.
Phase 2: Identify uncertainties
Gather a diverse group of people from across the organization to identify uncertainties that are the most likely to be detrimental to the business. This is not an exact science, and the format can vary, but the goal should be to identify potential disruptions of known COVID-19 factors.
For example, for a retail store, this would include scenarios in which fewer customers can come into the store or where customers don’t want to have physical contact with employees during payment. The CIO can organize this meeting and focus on any uncertainties that would affect IT like infrastructure or software systems.
Phase 3: Assess the impact
Once you’ve identified the uncertainties, consider how each one would impact the business. A Business Impact Analysis is a separate framework outside of business model resilience that consists of six parts:
- Developing impact categories
- Developing impact time frames
- Defining cyclical impacts
- Defining business impact scales and scoring
- Weighting impact parameters
- Identifying and assessing risk dependencies
The CIO will not lead this process, but should work alongside other parts of the business and specifically assess critical IT infrastructure and software systems.
Phase 4: Design changes
Consider what would need to change to address potential impacts. Don’t be discouraged at this point by feasibility. Record any potential solutions and assess them later. Focus on how IT solutions could facilitate these changes. For example, when governments close physical spaces or people aren’t willing to come into a brick-and-mortar retail shop, the potential impact is high. A change strategy would focus on changing how the business uses the physical space.
In China, retailers converted pieces of stores into warehouses and distribution centers. This both limits the impact of the closed physical stores and increases storage and operations for online retail. For IT, the challenge would be supporting increases in e-commerce solutions. Establishing plans for such changes in advance is vital to organizations, where quick reactions and flexibility make a huge difference.
Phase 5: Execute changes
Ultimately, decisions will be made by senior leadership, but phases 1 through 4 of scenario planning will act as essential input for those decisions. Once those decisions are made, focus on an agile approach to execution. Ensure that business-unit leaders are kept aware of changes and have final approval. This will help achieve business and IT alignment and result in speedy delivery and results.