The global disruption caused by COVID-19 has found a lot of businesses rethinking their business models and given them a pause. The disruption can be turned into a Pit Stop – an opportunity to relook, replan and refresh businesses akin to the motorsports racing team using their pit stops during a competition. I will look at the Pit Stop topic with some of the typical questions along with my take on it – What, Why, How, When and Who should do a pit stop?
What is a Pit Stop?
In Motorsports “a stop at a pit for servicing and refuelling, especially during a race
A Pit Stop is time and space to relook, replan and refresh the purpose, goals, business model and priorities for your business leading to a re-invigoration of all the stakeholders.
Taking the analogy of personal finance, pit stop is akin to re-balancing your investment portfolio to keep your risk in line with your risk profile. In investment parlance, it is about building a sustainable investment portfolio. Similarly, Pit Stops are about actions or activities to build a sustainable business.
Why a Pit Stop?
Although most businesses set aside time to do a strategic planning (offsite, meetings etc) exercise every year followed/supported by planning and budgeting cycles, these are often done while running the existing business model. Hence, these planning exercises are mostly about incremental growth and extending the status quo.
The pit stop are essential because they help organisations in:
- building a sustainable business in line with your business’ purpose
- Re-energizing the business with new ideas and reiterate the purpose
How do you do a Pit Stop? The 3 Rs Approach
There could be several frameworks and approaches based on organisational maturity and current state of the business or industry. A generic approach is what I term the 3 Rs (not related to the 3Rs of education introduced in the 1800s) for organisational renewal, which is a step-by-step sequential approach which builds upon each other and is a continuous cycle.
Step 1: Relook
This is the Analysis phase of the Pit Stop. Thinking back to our analogy of motor sports, relook is based on data generated during the race (with the best race teams, combining this with past race data, competitor behaviour and additional vehicle/driver/environmental insights).
In the case of organisations, it is about reviewing the financial data along with insights and progress on Customer NPS, Employee engagement scores, contribution to society, environment (UNSDGs are a good list of goals lot of good organisations are supporting) and wider stakeholders. These insights need to cascade down the organisations to get everything thinking and contributing to the next step.
Some of the best pivots in the tech industry have come from a fresh look at the business model, customer behaviours and other insights from the previous business model – example mentioned in the Business Insider article include Youtube pivoting from a dating site to its widely successful model today; Instagram from a foursquare-like app to photosharing; Twitter from podcast sharing to microblogging.
Step 2: Replan
This is the Strategy and Planning part of the Pit Stop. Although the business may already have a hypothesis/idea on how to improve and build a sustainable future, the entire workforce taking the time to relook and replan can bring about surprising insights. The replan can be undertaken either with a cascaded down approach or ideas from individual employees or teams being collated up by a central team or a combination of the two.
As mentioned by Daniel Pink in Drive, autonomy, mastery and purpose are essential to motivating individuals. The Autonomy and engagement in involving employees across the organisation can be critical to the success of any organisational renewal (more on purpose in the next step).
I love this story of HUL transformation under Nitin Paranjpe and great use of the A>>R (Ambition greater than Resources) to revitalise the business and refresh the workforce on a new ambition and purpose. The pit stop due to the 2007-2008 financial crisis was the backdrop against which this transformation was run.
Step 3: Refresh
This is the execution phase of the Pit Stop. From the motorsport analogy, this is when the vehicle heads back into the track taking the relook insights, replanned and refreshed to making an impact in the race.
Put Purpose at the Core of your Strategy – this article in the Sep-Oct 2019 issue of Harvard Business Review highlighted that the organisations making purpose the core of their strategy (as opposed to a CSR led paying lip service to it) drove sustainable profitable growth while remaining relevant and building deeper ties with their stakeholders. The article also highlights the role purpose plays in redefining the playing field and reshaping the value proposition.
In my opinion, Purpose should be the lynchpin of any organisational refresh. It is easy to forget purpose as the focus shifts to quarter end closes, regulatory/industry changes and crises but it is key to building loyalty with customers, employees, partners and the wider ecosystem.
Unlike motor sport, in the organisation context – the refresh can be executed on a small subsidiary/region/function, lessons learnt, cross corrections made and rolled out in other parts of the organisation on a phased or big bang approach.
A number of examples of successful strategy refresh is shared in this HBR article. The one which I would like to highlight is the transformation of Danish Oil & Natural Gas into Ørsted – In ten years, it has transformed from the most fossil fuel intensive utilities in Europe to the most sustainable energy company in the world. A great story about using Purpose to drive your corporate strategy.
When should you take a Pit Stop?
Annually (along with your planning and budgeting cycles) but you may need more frequent considering the pace of change of business. Also, events like COVID which brings a stop to BAU (business as usual) provides a breathing space for forward thinking businesses to take a pit stop.
Who should run Pit Stops?
Like the planning and budgeting cycles which businesses have got used it, Pit Stops are something business can run at the Corporate level, business unit level. It is also a good opportunity for teams and individuals to do Pit Stops of their own – with relook/replan/refresh of purpose, goals and impact (along with alignment with the overall company purpose). Teams with a mission are more collaborative, more engaged and key to a sustainable profitable future.
Although business disruptions and uncertainties caused by pandemics and other crises are a good opportunity for organisations to take a Pit Stop to rethink the business, organisations should regularly relook their business models and insights from current business to replan and refresh (if needed). Using insights from multiple stakeholder perspectives to relook, collaborating organisation wide for ideas for replan and putting Purpose at the core of your strategy to refresh are essential to getting the most out of your Pit Stops.
A few months back, I attended a LBS webinar by Prof Andrew Scott (Do check the Pandemic webinar series by London Business School – Thanks Stuart for sharing this), where the impact of Corona Virus on the global economy was discussed. Prof Scott mentioned using the COVID enforced break for businesses as an opportunity for doing a pit stop. This got me thinking and hence this article. Also, Thanks to Imran & Akhilesh for reviewing and providing feedback on this.
This was originally published on LinkedIn