Nobody is planning to fail, but many companies are failing because of lack of planning. This has never been more evident as I see various companies trying to cope with the present economic crisis.
As we all know by now, when a crisis hits, it brings with it an intense level of pressure and under these conditions there is no time or room for mistakes. Delays, losing focus and lack of planning will bring a company one step away from failure. The right way to deal with crisis, if required measures are not done in time, is to minimize the losses and reposition in the best way possible. Analysing the success stories of some of the biggest and strongest companies in the world, led to an important conclusion: the majority of these companies were in the situation to face huge crises which threatened their ability to survive in certain moments, on their way to success. With the right planning and by setting a proper organisational structure, the negative aspects of the crisis can be turned into benefits and opportunities for the company. However you need to get the basics right, to stand a chance to survive.
Thus, the most critical challenge for management is to assess the level of exposure to risk of the company and identify the key points to focus on in order to overcome the crisis and create value. In order to set up a strong plan in dealing with crisis, a business organisation needs reliable, efficient and effective tools.
In essence this crisis brought to the surface various issues and problems that where always there but well hidden during more buoyant times. These are the common pitfalls:-
• Internal Environment – Lack of a professional, corporate governance culture and discipline, with an ingrained organisational system of checks and balances.
• Objective Setting – Lack of proper objective setting from an operational, efficiency and financial perspective in order to support the company’s overall strategic objectives.
• External Analysis – Lack of a continuous analysis of the external environment the company is operating in and thus analysing potential new upcoming risks and/or opportunities.
• Risk Assessment – Lack of proper analysis of the risks facing the company to fully understand the impact of such risks and establish how these should be managed and mitigated.
• Reporting, Control & Monitoring – Lacking the tools for a company to make sure that it is abiding by all its legal requirements and that overall the company is following the strategy set, objectives, targets and decisions taken. This cannot be possible if financial reports and key KPIs are not reported in a timely manner.
• Information and Communication – A complete failure in the leadership and communication system within the company as the objectives are not well communicated and hence employees end up getting a cocktail of mixed messages.
Not abiding by the above basic requirements means that the Company will likely not be in a position to benefit from several assistance schemes that have been announced, whilst finding it much harder to pick up on new opportunities during the recovery period.