Our news feeds nowadays are filled with: COVID-19, statistics and rising death rates, unemployment issues, isolations & social panic. In these tough times entrepreneurs are faced with crucial dilemmas of harsh decisions. I face them myself and I thought to make that decision-making process easier than it is.
Companies that are successfully exploring and securing present opportunities and searching for future innovations, all the while managing risk, have been called “ambidextrous organizations.” These organizations are able to attend to the products and processes of past successes while capturing the opportunities that will define the future. Creating an ambidextrous organization that: 1) manages the downside risks and 2) focuses on value creation by capitalizing on opportunities, requires a system to identify, manage, measure, and monitor both risks and opportunities within the existing management structure. Such a system includes:
1) Effective identification of risks and opportunities, including:
Sources of risk
Sources of opportunity
2) Effective management of risks and opportunities, including:
Assessing and altering risk appetite
Assessing risks and opportunities
Monitoring and a management control system to review the strategy, costs and benefits, structure, systems, and appetite for risk.
3) Effective evaluation of risks and opportunities through ROI coupled with real options analysis and/or scenario analysis.
Aggressively seeking opportunities can be considered a “play to win” (PTW) strategy. PTW has the explicit goal of investing in innovation to produce significant advantage that the competition will not be able to easily or quickly match. In the PTW innovation format, a company invests in changes in technology, products, and business models, intending to outpace its competition. Currently we observe so many organizations trying to adapt to the current trend and the necessity of remote working, however, most companies in developing countries face a lot of challenges with this particular format. Because even though they are forced to operate in isolation, their management format is not adapted to such working process.
A company uses innovation as a key part of its business strategy, taking risks and managing them effectively. However, when the main objective is to preserve value and bring risks back within an acceptable range, this can be considered a “play not to lose”(PNTL). In Azerbaijan the majority of companies have adopted this strategy, due to the fact that since 2008 no single company has been able to foresee, plan and construct a strategy which can be applied for the next 5 years, due to many instabilities in the region and worldwide.
Regardless of whether a company is following a PTW or PNTL strategy, formal analysis can aid in managing risk and in identifying and capitalizing on opportunities. Exhibit above depicts the process of risk and opportunity management. Which I found useful in March, in terms of thought direction and organization.
From another angle if we look at a process and break it down it would look like this. The long-term view:
Address the immediate challenges that COVID-19 represents to the institution’s workforce, customers. technology, and business partners.
2. FLEXIBILITY (cash is king)
Address near-term cash management challenges and broader resiliency issues during virus-related shutdowns and economic knock-on effects.
Create detailed plan to return business to scale quickly as COVID-19 situation evolves and knock-on effects become clearer.
Reimagine the next normal; and think of what kind of shifts you have to make.
Be clear about how regulatory and competitive environments in industry may shift.
& finally, the “DON’Ts” of crisis:
Keep your cool, do not crawl up in potentially fatal scenarios.
Keep your mind open for drastic changes
Do not limit communication with the team, increase communication x3 (in comparison to your regular communication levels).
Do not be vague about your statements, cut to the chase and explain to your team what the company is facing.
Do not be negative, your positivity should be far more contagious than COVID-19 itself.
I would like to state that, my countrymen are being quite negligent about the current crisis and I truly advise to stick to the rules and guidelines stated by government officials.
Stay safe & #evdeqal