Brexit What Next - Fifth Step's Brexit Framework

No matter which way you voted in the Brexit referendum if you are involved with a business that operates internationally (and most businesses these days have some international element), then you're going to be looking at what Brexit means for your organisation, what the risks may be, but also what the opportunities may be.

Before going to much further, I feel it is important to say that this won't be another article suggesting that we all curl up into a ball until it is all over, or run around like headless chickens because the world is about to end - I really don't believe that is the case, or that those kinds or articles help companies approach things in a positive way that allows them to move forward.

Friday, 23rd June 2017 marks the first anniversary of the referendum vote, and whilst there has been a lot of talk and some might say posturing by all parties; negotiations have only just begun this week, but as businesses we are looking to understand, plan for and mitigate the risks of the future, as someone who spends a lot of time meeting with members of C-Suites and Boards talking about business resiliency I felt I had to write this post to put some advice and guidance out for firms of all sizes that would help them frame their approach and thinking. I won’t be able to identify all the factors that your organisation will consider important, different organisations will experience Brexit differently, my intention is to offer a framework and help ensure that as many businesses are prepared for and taking advantage of the opportunities that accompanies change of this scale.

1.What are you protecting against - What are the risks

Brexit, as we all know is not a simple issue. There are and will be challenges that to your business that you may not be able to see from the current vantage point, there may be challenges that are part of a chain.
The following are some of the common challenges that companies are considering, and those that you should start with:
What would the impact on your business be if you didn't have the same access to staff from other EU countries?
Think about the skills, attributes and reasons why staff from different countries is important, this will help in the mitigation phase.
What would happen if you couldn't sell your organisation's products and services to the EU without additional tariffs
This can be a more challenging question to consider than it might at first appear, and you may need to consider sub-questions such as:

• Is our market position such that companies will pay more for our products or services?
• Will charging more encourage or increase the opportunities for competitors

What would happen if the raw materials required by your business that come from the EU would be more expensive due to import tariffs?
Thinking about your supply chain is going to be an important part of your planning and mitigation, are there other locations or providers who can provide similar products with the same/better quality?
What would happen if your EU based vendors charged more because of tariffs?
This is very like the raw materials question; to make your organisation more resilient it is always a good idea to have a list of alternative vendors, their location should now be a factor, or at least part of the information that you should capture.
Remember some of the risks may be conditional
Not all risks are going to take place in all situations, if there are some that are very obviously conditional then note this, along with what the conditions are.
CIOs will be called upon here both as part of the wider business (as a consumer and purchaser of resources), but as the holder of data, CIOs and their teams are very often in the ideal position to understand, and to be able to extract the information that the rest of the business is going to need to make informed, data led decisions.

2. Score and Prioritise

Walk through each of the risks giving them a score of low, medium or high of how big the impact will be if the risk becomes a reality.
For each risk, score (low, medium and high) the complexity of the mitigation, the current likelihood, and the impact on the business.
Finally give a sentence (or more if needed) to any conditions or chains of events that would need to occur for the risk or issue to have an elevated risk.

3. Mitigation Planning

Starting with those that have the highest risk score (risks with most highs) provide at least one mitigation action that could be done to reduce the risk. Include as much detail as is appropriate, spending less time on the risks that are less likely to happen.
The combination of this information provides a high-level priority plan, the mitigation actions may need to be turned into projects to be fully actionable, but this high-level plan should be sufficient for your organisation to start taking positive action to protect itself, and to be able to agree the priorities with the others within the business as needed.
IT is likely to play a major part in the mitigation steps that companies take. In some organisations this may be through their responsibility to manage change, but obviously if there are changes to or additions to the location of offices then the CIO and their team are going to be working closely with all parts of the business throughout these stages.

4. Identify Opportunities

Some organisations will have been spotting opportunities from the early stages of Brexit. This stage of the process adds some structure for those who have been doing it already, and an opportunity for those who haven’t started to make that change.
This is an ideal stage for the innovative CIO to add value, and to demonstrate their value as they work with their C-suite and board colleagues, as well as with the wider business.
The process of identifying opportunities may vary from business to business; what should will be similar is the information that should be captured and shared, if your organisation has a sales, CRM or other system then it may dictate the information captured, I suggest the following as a minimum:

• Details of the opportunity
• Value of the opportunity
• The resource requirements to recognise the opportunity

Capturing this information should allow the opportunity to be reviewed for either additional research, action to be taken, it to be put into monitoring, or closed.

5. Implement a Monitoring Cycle

The purpose of the monitoring and review cycle has four purposes:

Purpose 1 – Ensure Mitigation Project Process
This purpose may be fulfilled by an existing project board process, if not implementing an independent method of ensuring that the Brexit projects are running to plan, have the resources required, and providing the final point of information provision or escalation should that be required,

Purpose 2 – Ensure Conditions are Monitored
Monitoring the progress of Brexit discussions, and ensuring that any assumptions made during the risk planning and project planning processes are holding true, or not is a vital role given that Brexit is an evolving situation.

Purpose 3 – Ensure that Changes are Monitored
As conditions change, decisions are made by the UK government and the EU Commission, it is very likely that some of your plans may change, this may be changes in assumptions or in the likelihood that a risk will occur.

Purpose 4 – Identify New Opportunities
Change and disruption offer opportunities for the nimble and astute organisation. Making identifying new opportunities something that is monitored on a regular basis not only creates a checkpoint, but can help instil a sense of being opportunistic within an organisation.

Some within larger companies might think that this is only possible within smaller companies, that is not the case though. It is amazing the difference that empowering people to spot and suggest opportunities for the business can bring.

Your Next Steps

I hope that I have met my objective to provide a useful framework, a lens through which Brexit can be viewed, de-risked opportunities identified and hopefully ceased. If you would like a copy of a spreadsheet to help you capture your company's Brexit risks and opportunities, you can download our template from here: https://www.fifthstep.com/uploads/Brexit Risk Capture Template.xlsx

Fifth Step is helping organisations in the UK, Europe and further afield address the challenges and opportunities that Brexit brings. To find out more about Fifth Step, our current thinking and how to get in contact with us then please:

Subscribe to our Podcasts: https://www.fifthstep.com/Podcasts
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I look forward to speaking with you.