The key to getting a business back on its feet as quickly as possible with as little damage as possible, is not the recovery. Much of what is being recovered, risks not being appropriate for the new context.
Over the past few months, markets have been constantly changing without warning and have been unpredictable, leaving us with limited margin for control. The only option is to maximise efforts and adapt as fast as possible.
Several countries are now easing their lockdown measures to get back to (new) normal, however many small businesses and organizations face a difficult task of evaluating the risks, costs and opportunities associated with ‘opening for business’ in a context which is no longer the same.
In the formulation of a post Covid-19 strategy to prepare for the new normal there are 4 actions that should be included:
1. Leadership: prepare top management for post COVID-19
Are boards ready to mitigate the economic damage the crisis is creating? Are they correctly interpreting the implications of the pandemic? In many cases, the answer is no.
Leadership is the first area which needs to be addressed. Addressing the new context requires adopting an interrogative position and questioning different aspects of how the company’s decision making process is lead.
Many organizations planning agenda has been caught off guard. “I felt like the captain of a ship hit on the side by a torpedo” Brian Chesky, co-founder and CEO of Airbnb said in an interview.
Effective succession planning for example, is crucial in extreme situations such as this, but in many cases it is inadequate, boards and management teams rarely have a succession plan in case a leader becomes ill or is unable to fully operate.
Rarely is there a contingency plan with guidelines to communicating during a crisis, least of all one for a pandemic event. It is therefore essential to refocus your leadership in order to quickly but efficiently address a wide range of issues from the health and safety of the corporate workforce (priority number one) to the likelihood of a deep global recession.
Regardless of what the current configuration of the Board is, companies need to think carefully about how they want the organization to be steered into the new normal before taking any other actions.
Effective leadership distinguishes itself by the ability to interpret in a coherent and objective basis the surrounding environment, themselves, employees and business objectives. The aim is to make better decisions by recognizing early enough the signs of change.
Top management of most companies are currently operating under high levels of stress, that is, with the least favourable conditions to make the right decisions. Before making decisions and taking action, a plan is required to ensure that effective leadership is in place.
The resilience of systems is being put to the test like never before due to the huge increase in demand. IT managers and CIO’s must ensure that the company continues to operate seamlessly in an unprecedented environment, keeping the information flows that support critical business processes and underlying systems operational and stable.
This means preventing outages, mitigating their impact, or restoring them quickly, i.e. applications, architecture, data, cloud, infrastructure and network.
In the new normal, the immediate challenge is not just about continuity of operations. Above all, there is a need to use the existing information correctly and create the information that is missing to meet the growing need for support when making strategic and tactical decisions in this time of change and crisis.
The main focus points are:
- Monitoring, reporting, and decision-making with real-time data to meet immediate business needs in a dynamic environment.
- Modification of volume and transactions due to, for example, the conversion of purchasing behaviours, to channel preference, online instead of in person or to the radical contraction regarding non-priority goods.
- Risks of interruption of business processes including possible interruptions of the supply chain, changes in the POC with end customers, unavailability of resources, abnormal fluctuations in the price of raw materials.
- Cybersecurity has been threatened by the wave of attacks facilitated by the context of severe difficulty and economic uncertainty.
- Robust systems available to the workforce to facilitate employee productivity who are working remotely, coupled with sufficient connectivity and security.
As the crisis continues to threaten lives, companies are struggling to fully understand the impact on their businesses and how best to respond.
Marketing and sales managers need to work together to effectively navigate the current crisis, plan recovery and drive the new normal. At the same time, there needs to be a tangible solution that aids acceleration of the company’s production and the actions required to recuperate revenue.
The crisis has impacted purchasing behaviour and how it occurs. The substitution factors of non-durable goods can be radical. Consumers are likely to position themselves on mid-range products in this first phase of post-COVID-19 reopening. The most sought-after products are the essential items and the products with the best value for money. The most to suffer are luxury goods and services and low-cost products, if not linked to a unanticipated need.
Brands who have not yet made the change, now more than ever need to reposition themselves and move onto Digital channels, products and services which will in turn increase competition in terms of acquisition of new and existing online customers. In this new context, speed is essential.
In order to recuperate margin, combined action needs to be taken on multiple levels. Regardless of the specifics of each company, there are some steps that the big organizations are already implementing with rigor and discipline:
- Identify priorities.
- Act urgently.
- Take action to speed up decision-making.
The logic with which to proceed is to take into account all business elements that have an impact in terms of EBIT and time. It is also important to have a clear idea of how prepared your sales team is.
The areas in which actions should be taken regarding the current sales structure:
Within these areas, therefore, one should reason in a logic “now or never”.
Companies that are succeeding in unlocking the decision-making process required to manage the “state of emergency” define first of all the actions which are a priority, putting on hold ongoing projects that will not create value in the new context, quickly reallocating resources thereby obtaining results in a matter of weeks.
While it is true that some actions require significant investment and long technical time frames, it is also true that many actions in the past have not found rapid application due to organizational issues, relating to the approval process, information asymmetries or due to unexplained economic reasons. It is the company in its entireness, taking into consideration its complexities, that must make the effort to change pace so that these essential actions can move the company forward.
While these actions are put into practice, we must not overlook the impact on human resources and organizational dynamics. Increasing speed does not mean employees can be dragged forward at any cost.
Moreover, for some companies, the risk that a resource with strategic expertise may become ill or become positive for COVID-19 is very high. It is not always possible to replace the people who allow the company to continue operating. The issue is not just about people from a certain hierarchical level, or highly skilled workers. The problem can arise because of the lack of a salesperson who has business dealings with an important part of the customer portfolio or because of the absence of a secretary who, because of their nationality, has always facilitated relations with suppliers from a specific country.
Restarting operations means responding to the market at the speed needed to meet the demand accumulated during the lock down, but without exceeding the limits imposed by the new context. Several prerequisites must be met to consolidate the company’s competitive position:
Analysis of the new consumer needs: new dynamics have been created. A good part of consumers, for example, changed their food brand during the lock-down, many of which will continue to buy that brand in the future.
Analyze stock: protect your supply chain, for example by verifying your fleets capacity from the customer order to delivery. Companies may have to convert some of their production to cover their needs for essential equipment such as masks, gloves, or antibacterial gel.
Strengthen the company’s ability to anticipate and meet demand. This includes adjusting working capital to avoid generating new stocks of finished products in the absence of customers. In some cases, you may need to establish a control team with end-to-end visibility across different scenarios of demand, inventory movements, production distribution, and associated logistics. This makes it easier to identify and track strategic stock indicators to avoid further stressing the infrastructure.
For multi-business or geographically dispersed businesses, starting production can mean activating many production sites. The process must be done gradually considering the regional regulatory environment and its distribution centres, the level of local demand, the capacity of the site in terms of production volumes, availability of the workforce and protective equipment. The gradual resuming of activity should be an opportunity to eliminate the stock of partially finished products and use non-productive time for maintenance and care of the plants.
Maintain a daily dialogue with suppliers and workers. Share a weekly schedule and review it weekly. Create mathematical/digital models that simulate the impact that each variation of the program has on the site, before considering it.
In the medium term, however, for some companies, the crisis may have created the conditions for a Reshoring plan to protect the business in the future in the case of events impacting global transport. In these cases, it is time to carefully evaluate which operation could have important benefits for the company.