Business reactivity cycle

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"Restaurant responsiveness in times of crisis"
- making strategic decisions and implementing them in day-to-day business operations in a short
time and with reduced resources -
author: Enrik Gjoka
Introduction
The aim of this project is to develop rapidly and in a structured way the adaptability of the catering
sector.
One of the critical factors for a company is its ability to react and adapt to changing environments,
especially when dealing with a crisis as complex as the present one. These forced changes of
direction represent crucial moments in the life cycle of an economic activity. It is essential that these
changes take place according to a strategic process restructured and internalized in a short time.
Facing the consequences of the crisis in the restaurant sector (my daily work), I realized that
difficult moments and complex situations, such as the present ones, cannot be overcome with
buffer solutions or with ordinary tools.
Only Decision Making and Problem Solving skills are insufficient to deal with a sprawling crisis that
evolves quickly and unpredictably. Even making use of the theories on organizational resilience and
the various tools or methodologies inherent to it such as Enterprise Risk Management (ERM),
Business Continuous Management (BCM), Supply Chain Resilience Assessment and Management
(SCRAM), etc., I realized that they are quite ineffective when it comes to measuring and mitigating
the systemic risk associated with the occurrence of unlikely and difficult to predict events (black
swans) and during chain stop and go / up and down like those we are suffering in this period.
Processes such as ERM and BCM can help to avoid disruptions in production capacity, but they also
have some rather serious limitations: are almost entirely aimed at the mere identification of the risk
and its prevention but do not lead to a rapid restoration of normal business activities.
What I needed was a practical method for analytically defining strategies/tactics of
adaptation/change and for the structured application of these decisions in business operations.
Furthermore, this tool had to give me the opportunity to:
• update and adapt rapidly the strategic and tactical choices based on the change in the
context caused by the evolution of the crisis;
• transform strategic and tactical choices into a concrete and easily practicable operational
plan;
• execute such a plan in a short time and with the few resources available.

At this point I tried to make a conceptual synthesis, amalgamating various analysis systems and
planning models, in the focus of Lean Management, with the aim of developing a lean method to
make quick strategic choices (adapting to the context and situation in which the company operates)
and implement these choices profitably, optimizing time and resources. The method further
synthesizes and develops tools such as Risk Management, Business Continuity Plan, Rings
Framework for Strategy Development, etc. combining them with the theory of organizational
resilience through a reactive and concrete approach from the operational point of view. This mode
of reaction is suitable in situations where time is tyrannical and where concrete actions are needed
that produce positive results in the short term.
Figure 1. The Business Reactivity Cycle (BRC)
To begin, I carried out (1) the Strategic Analysis of the situation and context in which the restaurant
company operates in a SWOT analysis key. Then I adjusted (2) the Business Model to the emergency
considering the results of the strategic analysis. Consequently, the revision of the Business Plan to
convert the Business Model vision into strategic choices and tactical options has become mandatory
(3). I preferred to use Porter’s Value Chain (a version previously adapted to the restaurant industry)
to (4) map the actions defined by the Business Plan and turn them into an operational plan. I
(1)
Strategic
Analysis
(2)
Business
Model
Adaptation
(3)
Business
Plan
Review
(4)
Mapping
of Actions
(5)
Executive
Cycle

designed the operationalization of the plan as a (5) executive cycle by implementing the operational
plan, measuring the results achieved, analyzing the deviations between the budget and the final
balance, and taking the necessary corrective actions. The analysis of deviations leads to a review of
the new business situation and, in case of significant deviations, would bring us back to the module
(1) Strategic Analysis, thus closing a cycle that I would like to define as the Business Reactivity Cycle
(BRC).
I say reactivity (understood as adapting to a constantly changing situation) and not renewal
because every now and then I used strategies, techniques, and tools outdated or disused but that
have regained value because of the current situation. Returning to the traditional working methods
does not mean going back but using tools already tested and that guarantee the achievement of the
desired results.
I designed the cycle as a concrete means that allows you to connect one module to another in a
constructive and profitable way. I designed the cycle as a concrete means of connecting one module
to another in a constructive and profitable way. I will try to avoid going into particular theoretical
details and to explain in detail the analyses and models that make up the five modules. There is a
great deal of literature on this subject and I will occasionally give advice on the texts that I consider
most complete. My goal is to better explain the concatenation and the connection between the
modules and how to make this relationship useful and profitable.
To streamline the cycle path, I would suggest using all the documentation already in the company's
possession, making adjustments and changes only where necessary. Drafting from the scratch
documents such as Business Plan, SWOT analysis, Operational Plan, etc. would lead to a waste of
time and resources. In addition, the depth of these analyses and adaptations depends on the size
of the company, the time available, and above all, the size of the team that will deal with it.
Let us now examine in detail the composition of each of the modules, making examples (taken
from the restaurant sector) where possible (we must also consider industrial/business secrecy) to
simplify the understanding and use.
1. Strategic Analysis
The Business Reactivity Cycle begins with the Strategic Analysis in a SWOT analysis key (strengths,
weaknesses, opportunities, threats), through which information are obtained that gives rise to the
basic strategic orientation. This, in turn, being intrinsic to the business model and the business plan,
is useful for identifying and implementing strategies.

The investigation components of the strategic analysis are:
• analysis of the macro-market or macro-environment;
• analysis of the competitive environment or micro-environment;
• analysis of the company’s internal resources.
Figure 2. The Strategic Analysis Module
For further information I would recommend the text of Robert Grant "Strategic analysis for business
decisions".
As a tool to carry out the analysis of the macro-market or microenvironment I chose the PESTLE
analysis, highlighting the changes induced by the crisis in the following environments:
• political (situation of uncertainty, sudden and unforeseeable changes, etc.);
• economic (slowdown in economic growth, decrease in average expenditure, etc.);
• socio-demographic (change in habits of travelling, evening outings concentrated on the
weekends, lowering employment levels, etc.);
• technological (digital menu, online reservations, etc.);
• legal (sudden decrees, ordinances and anti-Covid regulations, etc.);
• environmental (reduction of pollution causing reduced travel, etc.).
Strategic Analysis
internal
resources
macro-
market
competitive
environment

For the analysis of the competitive environment or microenvironment I used Porter's Five Forces
analysis:
1. rivalry among existing competitors;
2. potential of new entrants into the industry;
3. bargaining power of suppliers:
4. bargaining power of buyers;
5. threat of substitute products;
For each of the 5 forces I noticed and highlighted changes, novelties, behaviors, and I began to write
down any strategies and tactics of reaction.
Internal resources are generally classified into four categories: physical resources (plant,
equipment, sites, brands, logos), human resources (skills and knowledge of employees),
organizational resources (culture and routines) and intellectual resources (company know-how,
patents, etc.). The Resource Based View and the VRIO framework are the tools I preferred to use in
a complementary way for their analysis.
Through the Resource Based View I have identified those resources, skills, and competences, which
can represent a source of sustainable adaptation for the company. I have integrated the results
through the VRIO framework, which analyzes the strategy of internal resources and therefore, the
relative ability to generate sustainable adaptation, identifying the essential attributes of the
resources able to generate it.
2. Adaptation of the Business Model
The Business Model describes how a catering company generates value for its customers and turns
that value into revenue. For the adaptation of the Business Model, you can use different schemes.
The Business Model Canvas (by the way, I highly recommend the text "Business Model Generation"
by Alexander Ostervalder and Yves Pigneur) is structured in 9 blocks:
1. Customer Segments;
2. Value propositions;
3. Channels;
4. Customers Relationships;
5. Revenue Stream;
6. Key Resources;
7. Key Activities;

8. Key Partnerships;
9. Cost Structure.
“Luigi Bocconi” University of Milan has revised Ostervalder’s model as follows:
1. Offer = Value offer;
2. Customers = Market segmentation + Channels + Relationship with customers;
3. Infrastructure = Key Resources + Key Activities + Key Partnerships + Strategic Partnerships;
4. Financial soundness = Cost structure + Revenue flows.
The elements of Vittorio Coda’s business model are the following:
1. System of offer;
2. Target market;
3. Necessary structure;
4. Information and communication policies;
5. Competitive environment;
6. Operating model;
7. Financial model.
This business model does not consider human resources, relegating this task to the Business Plan,
the Business Model Canvas instead does not devote a space to competition.
Figure 3. Our Business Model Canvas Processing

Since I consider fundamental the human resources for a labor-intensive company (like those of the
catering) but on the other hand I consider the analysis of the competitive forces’ indispensable for
the strategic vision of an enterprise, I resolved it all adding the block "competitive environment" to
the Business Model Canvas (dividing in two the block "Value Offered"). It is a personal choice; you
can add the "Human Resources" element to the Coda’s model or the "Competition" item to the
Bocconi’s model.
The Business Model describes the logic with which an organization creates, distributes, and
captures value (as Osterwalder defines it) synthesizing the set of corporate objectives in a strategic
vision and transforming the latter into market positioning.
To speed up the adaptation of the Business Model I used an existing file modifying objectives and
decisions for each block based on the results of the strategic analysis. There was no need to apply
significant changes in blocks 1, 7 and 8. By contrast, blocks 2, 4, 6, 5 and 9 absorbed more time and
effort than expected.
3. Review of the Business Plan
The business model describes how the company positions itself within the value chain of its industry
and arranges relationships with suppliers, customers, and partners to generate profits. The Business
Plan translates this positioning into a series of strategic/tactical actions and quantifies their
economic and financial impact over time.
The Business Plan, however well done, is just a snapshot of a business model. In essence, the
Business Plan indicates how much is necessary, in terms of assets, timing and budget, to put the
business model into practice. It follows that the best suggestion is to revise it only after adapting
the business model. The text by Cinzia Parolini, "Business Planning", dedicates a chapter to the
transition from the business model to the Business Plan (in case you would like to deepen), however
the literature on the subject is very wide and you can find different structures or different schemes
in other texts.
At this point I had the necessary for the review of the Business Plan, which was structured as
follows:
1. business summary;
2. the enterprise, the business team and key positions;
3. the target market;
4. competition environment;

5. supply markets;
6. the bidding system;
7. the marketing plan;
8. the technical-industrial, R&D, logistics and commercial structure;
9. organizational aspects;
10. network;
11. legal aspects.
To speed up the review of the Business Plan I used an existing file retouching the strategic choices
and tactical decisions for each chapter based on the changes of the Business Model. I quickly flew
over the first two chapters and focused on the salient features of the remaining, retouching and
correcting only where necessary.
As far as strategic choices are concerned, I would suggest developing more than one, defining the
tactical choices that follow and drawing up the corresponding operational plans. In case it does not
work the first one would immediately pass to the following strategic action optimizing in this way
the reaction timing. Just having a strategic choice will lead to an executive block in case this does
not work.
4. Mapping of Actions
At this point I found myself with a considerable amount of data, objectives, strategies, and tactics.
To orient myself in their implementation and turn it all into actions with measurable results I used
Porter’s Value Chain.
The Value Chain is a model theorized by Michael Porter in 1985 that allows to describe the
structure of a company organization as a limited set of processes or activities. The Value Chain
allows you to represent all the activities carried out by the company to acquire, design, produce,
sell, deliver and assist its products/services and reflects the vision and strategies of the company.
The original Porter’s model is mainly suitable for large companies that deal with the production of
goods. For its use in catering companies (characterized by simultaneous production and sale of the
product/service) I had arranged for its adaptation in 2016 and used it as a reference scheme to map
strategic and tactical choices and turn them into actions of an operational plan.

Figure 4. Our elaboration of Porter (1985) and Della Corte (2009)
The term "chain" indicates that the Value Chain is not a succession of activities that are independent
and isolated from each other, and the activities, although analyzed separately, are linked in a way
that depends on the context, the history, peoples, and strategies of the organization/enterprise. For
the same reason, a change in one of the areas of the Business Model applied to a specific primary
or support activity can have a transversal effect on the entire Value Chain.
For each of the activities I initially listed the aspects of the Strategic Analysis, the objectives of the
Business Model and the strategic/tactical choices of the Business Plan inherent to its operation.
Subsequently, I compared this list with the current performance of the activity, and I compiled the
list of operational actions related to it. As a final step I considered the cascading effect of each action
on the other activities.
I will give an example to explain myself better. In the programming (or better, reprogramming) of
the menu I kept in mind:
• the results of the PESTLE analysis (macro-market analysis) to understand how the market
has changed;
• the results of the analysis of the Porter’s Five Forces (analysis of the micro-market) in order
to know the reaction of the competitive environment;
• the change of the system of offer (based on data, objectives, strategies and tactics
extrapolated from the Business Model and the Business Plan).

Later I looked at the menu still in use to understand which dishes were in line with the changes
listed above.
I continued with the drafting of the actions to be taken, for example:
1. adapt the menu to the Italian clientele considering the decline in tourist presence;
2. reduce references and design plates based on the same raw materials to streamline the need
for raw materials;
3. in view of the economic uncertainty, the decline in purchasing power and the decrease in
the average level of expenditure, lower prices to maintain competitiveness on the market.
Subsequently I proceeded with the evaluation of the cascade effect generated by each action, for
example:
1. the adaptation of the menu to Italian customers will affect the methods of communication
and consequently the marketing activity at an induced level and CRM (Customer
Relationship Management);
2. the decrease in references will affect purchase costs (decrease in the need for raw materials)
and labor cost (decreasing references helps to decrease the volume of work in the kitchen)
and consequently will affect the procurement of raw materials and warehouse
management, food processing and preparation & food cost control, and administration,
accounting, and finance.
3. etc.
Once the mapping of the actions has been completed, I have compiled a synthetic list of operational
actions for the following reasons:
• to avoid duplication, conflict or overlapping of actions;
• to easily sequence the implementation of actions based on their importance and priority;
• to identify the departments involved in the implementation of each action and those
responsible for implementation for each of them.
• to have the possibility to review or discard the actions that do not produce positive results
without risking to consider them again (this can happen when the analytical phases repeat
and overlap or when the list of actions is particularly long).
After the sequencing of the actions and the attribution of responsibility, I defined the
implementation times, thus completing the operational plan. In the case of numerous actions to be
implemented, I would recommend organizing the operations via PERT diagram and Gantt chart.

5. Executive Cycle
Figure 5. Extended Cycle of Business Reactivity
I conceived the Executive Cycle module as a cycle within a cycle, consisting of four sub-modules as
follows:
5.1. implementation of the operational plan;
5.2. measurement of results - verification action;
5.3. gap analysis - direction review and readjustment through the executive cycle or retracing
the Business Reactivity Cycle (BRC);
5.4. corrective actions.
After the implementation of the operational plan, a verification action is required, measuring the
results achieved (through the main Key Performance Indicators - KPIs) and an analysis of any
deviations between the expected and current data. Based on the thickness of the deviations, we
proceed with a direction review, evaluating whether to continue with corrective actions remaining
within the Executive Cycle in the event of slight deviations or retrace the Business Reactivity Cycle
(passing to the 1st module of the Strategic Analysis) in case of significant deviations. This
conceptualization of the Executive Cycle allows maximum flexibility both in the implementation of

the operational plan and in the direction review and involves significant savings in terms of time and
resources involved.
The Business Reactivity Cycle creates resilience only if the modules that compose it come together
harmoniously: excessive separation would lead to the collapse of the system, while excessive
bonding would result in the loss of adaptive capabilities.
Closing consideration
As you can see, the path of the Business Reactivity Cycle requires a considerable amount of energy
both in physical terms and in terms of intellectual effort. Personally, I used the company’s most
important asset, the Team.
I shared with colleagues and collaborators the weight of the situation by deciding together
objectives, strategies to reach them and the action plan. Those who know me or have worked closely
with me know that I apply the principle of "shared decision making" with conviction, as it facilitates
the understanding of the strategic vision and the implementation of the operational plan,
minimizing resistance to change, the errors during the implementation of the plan and the times of
implementation. The adoption of the "shared decision making" broadens the base of know-how and
the necessary experience drawing on the skills and competences of the entire team. This sharing
generates motivation and at this difficult time I consider motivation to be a key factor for economic
and social recovery.
Good work to everyone.

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