Leading During Times of Volatility: “Time Moves in Dog Years”

Early in my career, I reported to a Vice President who recognized the importance of proactively identifying potential risks and ensuring that plans were developed and tested. In a contingency planning update meeting, she shared a thought with our team that echoes in my ears close to thirty years later. Her words to the team were “when a significant risk comes to life, remember that time will move in dog years where one minute equals one hour, one hour equals one day, one day equals one week, and one week equals one month”. These words have guided my thinking, coaching, and mentoring with the teams I have worked with.

The specific plans and solutions will differ for each company, whether diversifying into new markets, building inventories, managing currency, and interest rate risks. However, some strategies apply to all organizations to minimize or even eliminate risk.

At a recent event, the President of one of BC’s largest building developers spoke about the importance of organizational resilience. One of the statements she made was “resilience is built, not given”. These words resonated with me as her message highlights that creating resilience requires investment ranging from organizational time and focus to infrastructure and technology. The responsibility to create, test, and enact plans to deal with risk firmly resides with the Board of Directors (i.e. in publicly traded companies) and the Executive team. This responsibility cannot be delegated to junior levels in the organization. Of note, the same principle applies to your supply chain partners.

The following are actions organizations must take to build resilience and mitigate risk:

1. Build a comprehensive risk management plan, including potential political, economic, environmental and market disruptions. Identify the most probable, highest-impact risks and develop detailed plans. The following chart is a simple but valuable tool for identifying the most significant risks.

2. After developing contingency plans, create real-world scenarios for the risks most likely to occur and have the highest impact. To assess the organization’s risk readiness, execute a test that requires your team to complete a role-play simulation to determine whether the action plan can be implemented within an appropriate timeframe. The following are two real-world scenarios, neither of which you would want to occur. If you had to choose, which of the two situations would you prefer to find yourself in?

• One organization I worked with had just completed an update to their enterprise risk management plan. A significant risk identified in the planning and testing related to the need to withdraw a food product from the market in case of serious contamination. Within a month of successfully completing the assessment of our readiness to deal with this type of an issue, we were advised that listeria had been found in some of our products. In addition to removing the product from the market, the remediation plan was fully implemented with the result being no consumers getting sick and limited incremental costs incurred. I firmly believe that the potential consumer and financial impacts would have been immeasurable if we did not have a fully tested plan.
• In early 2020, I was in Asia a handful of days before the world closed due to the COVID-19 pandemic. I received a call from a North American client who single-sourced a key ingredient from a supplier in China. This client was operating with one to two weeks of safety stock. With shipments grinding to a halt and the timeframe to qualify new suppliers being six to twelve months, the organization faced an existential risk as they would be out of stock on approximately 40% of their volume. While we could find a temporary solution to immediately move inventory and expedite the new supplier qualification process, the incremental cost to the client was close to ten million dollars. After stabilizing the immediate risk, the client engaged Lighthouse NINE Group to complete an enterprise-wide risk management assessment, where we found many single sourcing situations that could create similar issues.

Communications with Key Stakeholders

A company’s stakeholders all have different communication and relationship needs. For instance, uncertainty can create stress for an organization’s employees. Offer support through wellness programs and clear communications. Also, it is important to develop leaders at all levels to identify behaviors that may require helpful intervention.

A board of directors, employees, customers and investors require different types of communication, including timely and clear messaging on contingency plans. Further, there may be a need to adapt products and services based on the actual or potential impacts of the volatility.

Operate from a Position of Strength

It is impossible to predict every risk a company will face. However, organizations can take the following proactive steps to ease the impact when the unexpected occurs.

1. Strengthen Financial Stability: Maintain cash reserves, cut unnecessary costs, and diversify revenue streams.

2. Adapt Business Models: Be flexible in operations, offerings, and service delivery to meet evolving demands.

3. Stay Ahead of the Crisis-Curve: Create a (leading indicator) Crisis-Scorecard and regularly assess political and market conditions, competitor actions, and industry trends.

4. Enhance leadership agility, including making decisive but informed choices. Foster a culture of adaptability, encourage innovation and continuous learning within the organization.

5. Manage Supply Chain and Operational Risks:

• Diversify suppliers and partners: Avoid over-reliance on a single supplier or sourcing region.
• Strengthen logistics and inventory management: Optimize supply chain processes to reduce delays and disruptions.
• If geopolitical risks are high, consider local sourcing and production. Automate for Efficiency: Reduce operational costs by investing in automation and AI.

6. When uncertain about what to do, leverage external expertise: When your organization is experiencing a challenge and you do not have the required internal expertise to find timely solutions, leverage external expertise to avoid making significant missteps. Typical external expertise includes lawyers, customs brokers, tax professionals, communications specialists, and consultants with the required expertise. While utilizing these types of resources comes with a cost, it typically will pale compared to the impact of a costly mistake.

While you can not predict every disruption, you can control your organization’s readiness to deal with a crisis. Organizations that invest in rigorous, tested risk management strategies will survive a crisis and emerge stronger, more competitive, and more trusted. Disruptions are not a matter of if, but when. Will your company be overwhelmed by the dog-year pace of a crisis or respond with confidence? The choice is yours.

Warren Sarafinchan

Warren Sarafinchan leads the firm’s Supply Chain Effectiveness Discipline. He also serves clients in the areas of business strategy, negotiation, and leadership coaching. Warren has extensive experience working with leading organizations to design and implement solutions to complex business challenges. Warren’s facilitative approach has allowed teams he has worked with to accomplish ‘impossible dreams.’In addition to Warren’s experience leading Supply Chain functions, he has implemented multiple ERP solutions, led a Sales organization through a period of significant challenge and change as well as heading Information Technology functions. This broad-ranging experience allows Warren to bring total business solutions to his clients. Warren works from the initial problem-solving / visioning through to successful implementation.Most recently, Warren was the President and Chief Executive Officer for the largest Tree Fruit Cooperative in Canada, where he completely changed the strategic trajectory of the business. Prior to working for BC Tree Fruits, Warren was the Executive Vice President of Supply Chain and Sales at SunRype Products Limited. Before SunRype, Warren worked in senior leadership roles for Mars Canada, Maple Leaf Foods and Labatt Breweries of Canada. Under his leadership, the teams Warren worked with have developed and implemented strategies that have delivered significant financial improvements, increased customer collaboration, and improved overall team engagement. Additionally, Warren has developed and implemented a Negotiation professional development program that enables organizations to create significant value for both customers and suppliers.Warren’s practice will bring his clients a broad spectrum of industry-leading resources that can create the right solutions for their businesses.Warren and the Lighthouse NINE team are extraordinarily dedicated to ensuring that clients are thrilled with the services and solutions provided.

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