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Business readiness is important for companies operating in today’s volatile environment
There are three critical business readiness levers that companies use to curb the effects of volatile elements
Companies should assess the readiness of these levers by conducting both internal and external benchmarking
When the credit and housing bubble burst in 2008 and opened the floodgates to a recession from which we are yet to recover completely, some companies changed their operating strategies. Macy’s eased the process for its customers to shop both online and in-store. Ford dealers were encouraged to build bigger dealerships in better locations. Starbucks revamped its supply chain operations and adopted new technology, among other things.
Business readiness in the face of volatility is a crucial element for all companies operating in today’s environment. While understanding the critical Business Stability Disruptors (BSDs) that cause a company’s plans to crash and burn is one thing, being ready to confront the BSDs head on calls for a complete overhaul of existing strategies. As mentioned in the earlier blog on business volatility, a WNS study has identified the top three BSDs that can impact businesses across various industries.
The study found that retailers who took the omni-channel route were ready to tackle the primary BSD in their industry — evolving customer expectations and need for ‘omni-channel’ experience. As a result, during 2011-14, these retailers added 2.9 percentage points of economic value compared to the 0.65 percentage points conceded by those who were less ready for this particular BSD.
Similarly, insurers who managed their risks optimally to keep up with the ever-changing and increasing burden of regulatory compliance — a major BSD — saw an improvement of 92.9 percent in their share price in 2011-15. Those insurers who had embraced partially optimal/sub-optimal risk management strategies saw only approximately 30 percent change.
The study also identified the three critical business readiness levers that companies use to adapt to volatile conditions. They are:
Shared services operating model transformation (such as finance and accounting, human resources, procurement and information technology)
New technologies to enable major business improvements
Actionable analytics for predictable and improved business outcomes
According to the study, 62 percent of respondents in the insurance industry are highly focused on digital transformation as against 61 percent retailers. Actionable analytics was a high focus area for 60 percent insurance companies and 48 percent retail companies surveyed. More retailers (57 percent) were highly focused on operating model transformation compared to insurers (49 percent).
Companies should assess the readiness of the three levers by conducting both internal and external benchmarking in terms of vision, strategy and execution capabilities. By assessing these measures, they can develop transformation strategies to achieve the desired level, and realign people, process and technology investments accordingly. However, while the internal assessment is easy, assessing what the competitors are doing and their maturity level is a formidable task by itself.