Preparing for change in a time of uncertainty

In the weeks and months that followed the UK's vote to leave the European Union in June 2016, John Byrne began to realise that the way his company does business was going to have to change.

Hygeia, an 80-year-old agri-chemical and garden care company in Oranmore, Co Galway, operates in a highly regulated market and sources up to 80 per cent of the components for its products from the UK.

“We were all working very hard towards the March 29th deadline,” says Byrne. “That was very much the line in the sand. A lot of focus and pressure had built up around that. That was the release valve - the process over and we move on to the next phase.”

What that meant for Byrne was that he had to tear up his agenda for the year and cram six months of work into three, getting as much product in as possible in case tariffs were introduced after a crash-out Brexit.

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“One of the key things that we required was continuity of supply chain and to ensure we had no interruption of supply,” he says.

“We brought all the stakeholders and key people together. That’s on the supply chain side, the manufacturing side, and the commercial side and involving them in the whole process.

“We had meetings, surveys and audits with all our suppliers to understand their supply chain issues and how Brexit could potentially impact them. By us understanding that, we were better able to prepare ourselves.

“We then put a plan together in respect of what materials we would need to stock up on and by how many months to ensure that we had adequate raw materials in stock to ensure we had adequate finished product available to place on the market.”

That then had to be backed up by a financial plan to ensure the company could get the materials it needed earlier than it had budgeted for.

“We went to our financial institutions and had that discussion with them around how we were preparing for Brexit and work with them to ensure we had sufficient financial overhead to go and cover the costs,” he says, adding that a major burden was that the business was seasonal, and the volume of manufacturing had to complete early in the year, when other years that burden would have been spread over a longer period.

“That was on the understanding that Brexit was happening on March 29th and we had to make sure we had as much finished product as possible. That was also challenging from a warehousing perspective and what was available to us,” he says.

In the end, Hgyeia’s preparations are set to go on a little longer on the back of the Brexit “flextension”, but dealing with this kind of uncertainty and unforeseen change is a major challenge for all companies.

Uncertainty

Events, like Brexit, are happening "more frequently", says Deloitte head of consulting Cormac Hughes, which is forcing companies to be more adaptable to change.

“It’s not that long since the great financial crisis, which drove a lot of change, a lot of which felt very negative at the time,” he says. “I feel people came through that and now feel change is a bit more of a constant. People are a bit better equipped to deal with it than they were back then. The same principles apply. Managers have to try and anticipate what is going to happen and what the changes are.”

But, he says, in the context of Brexit, that becomes really difficult. People have done a lot of planning, but at the core it’s down to managers to try and anticipate what is coming, he says, and they need to address issues like what is going to happen to the supply chain and with customers?

“Then you have to try to articulate that well and communicate that well to your people and organisation. I think that’s a key skill: making sense of the change and bringing it to the front line is very important. That really comes to the classic thing of communication.

“The thing that is a little different now is that rather than talking about change over big long periods, a lot more of the time now you’re trying to do it in a more agile manner. You’re taking shorter sprints.”

Paul Toner, head of consulting with KPMG, says the challenge for companies is to become "proactive rather than reactive", but that some rush to deal with change, and, as a consequence, a lack of preparedness means they underachieve.

“That can be underwhelming and a have a dramatic impact on morale,” he says. “You set out a target of what you want to achieve and if you don’t achieve it, it has a demoralising effect and reduces confidence in leadership.

“When you look at something like Brexit, how do you plan for something that’s coming when you don’t understand the circumstances? As clarity emerges bit by bit, you can refine your plan and the level of unknown unknowns should reduce.”

The other major vehicle for change in companies these days is the onset of artificial intelligence (AI) and robotics.

“Digital change is going to be constant now,” says Hughes. “The pace of change is changing. Years ago, we would look at change and say that it has a beginning and an end. You’d change your systems and then go back to work and it would be a new normal.

“What’s different now is that it’s actually coming in waves. It’s a constant. Technology is being introduced bit by bit by bit by bit. It’s not about one big systems change, and that’s very unnerving for people who are not used to that.”

Toner, however, says AI is “overhyped” right now. “It needs to settle,” he says. “It’s not to be ignored but to be watched and assessed in every company where what they do is on the curve. It’s not just a threat. It can be an opportunity.”

In terms of who drives change in a company, Hughes says the CEO or head will express the need, the urgency and maybe the direction for change, but it is then generated more from the middle of the group.

“One of the problems is that there are a lot of project teams and what we call side of the desk activity that people are picking up,” he says. “It’s not their main job but they’re getting pulled in, and that can actually create a bit of burnout for the best people.”