Last week I worked with a CEO who leads a rapid growth multi-site retail business trying to figure out how to “re-launch” after his employees come back “from furlough”. If you are in a similar situation, I propose:
7-step COVID-19 business plan process
Step 1: Bin all previous plans
Don’t be tempted to re-forecast the current financial year’s P&L in the light of COVID-19 using your pre-COVID business plan’s revenue and cost budget. They’re out of date. Everything has changed.
Step 2: Draft a new PSB Statement
Start with a “clean page” and write a “brand new” PSB Statement: by which I mean your reframed business purpose (P), strategy (S) and behaviour plan (B) in the light of COVID-19.
Step 3: Develop a new target operating model (TOM) from “scratch”
A target operating model consists of at least three elements: market needs, strategic resources and processes to meet that need.
Step 4: Draft a zero-based revenue and cost budget
Don’t refer to the previous budget but build a line by line new budget as if a start-up.
Step 5: Circulate the new PSB, TOM and Budget
Gather as much feedback as possible
Step 6: Appoint a Devil’s Advocate
They must have permission to challenge everything.
Step 7: Sign it off
If you have a board, have a formal vote. There should be no hiding place nor should you drive the plan through on the nod.
Developing a COVID-19 PSB Statement
A COVID-19 PSB Statement answers three questions:
First, how will your business purpose (P) change in the light of the pandemic?
You may say that your business purpose hasn’t changed at all. You may say that your purpose remains exactly the same: maximising return for shareholders.
But that assumes that your customers, employees and society are content that your mandate to trade remains the same as before when there’s a strong possibility that it won’t. The environment, society and governance (ESG) movement which was well underway before the virus will, I suspect, resurge if perhaps after an initial falling off in “ethical” investing. Even if you feel that ESG will lose favour in the face of the harsh realities of a recession, you should have the courage to include that prediction in your PSB Statement and be judged on it.
In the case of my CEO client, his business, as it happens, is likely to benefit from increased customer need for his services because of the pandemic but he will have to be very careful indeed how his market proposition articulates that benefit. Any hint of exploitation could be very damaging to his brand.
So we worked together on what language to use to reframe his organisation’s purpose, how that change would feed into his marketing plan; how he would have to change his leadership behaviour in articulating that purpose to customers and all stakeholders, particularly in interviews, blogs and on social media.
Second, how will your business strategy (S) change in the light of your reframed purpose?
If your business purpose changes, even a little, your strategy to achieve that purpose must change at least a little.
In the case of my client, we are exploring a new strategy which focuses on contributing to customers recovery from lockdown.
Third, how will your business behaviour plan (B) change in the light of your new strategy?
This refers to the broad behavioural expectations on everyone in the organisation in implementing the new strategy to achieve the reframed purpose.
In practice, this involves throwing your pre-COVID-19 business plan and operating model in the bin and developing a new COVID Target Operating Model or TOM.
Developing a new COVID Target Operating Model “TOM”
So, three questions:
First, how will your market need change in the light of the pandemic?
- In my client’s case, his customers’ need for his service will potentially increase, but how and where they want to experience it will change.
Second, how will your strategic resources change?
- In my client’s case, these consist of people, sites and kit all of which may need to change for one reason or another. He may need to add new resources or substitute resources because of these changes.
Third, how will your strategic processes change?
- In my client’s case, the main change is likely to be home delivery of the service and significant change in the sales and marketing processes.
When you have drafted your new PSB and TOM statements and zero-based budget circulate these widely and get feedback on them.
Before your board signs off the new budget and operating plan appoint a Devil’s Advocate with explicit permission to pick holes in the plan and don’t sign it off before it passes the Devil’s Advocate’s test.
For the avoidance of doubt, as lawyers like to say, you can’t be the Devil’s Advocate.