blackstroke

29/05/2020

As countries across the world take unprecedented measures to control the COVID-19 virus, businesses have fired up their crisis management and contingency plans. However, the crisis has a degree of severity, velocity and uncertainty which transcends many of the scenarios that were previously envisaged. For some sectors the challenges are literally about survival, for others they mean maintaining operational continuity, and for still others they involve responding to sudden huge increases in demand.

CEOs and leaders of businesses have a crucial role to play in helping the world get through this crisis, and the decisions they are taking today will have a major impact on the future.

Over the last two weeks, we have facilitated a series of virtual meetings with nearly 20 CEOs and business leaders from top companies in the medium tech industry, transport and travel, and service sectors headquartered in EU. These meetings have focused on the measures being taken to respond to the crisis, in particular:

  • What is the impact of COVID-19 on your company so far?
  • What have you done, and do you still intend to do, to respond to the challenges?
  • What key learnings have you identified – especially things that are turning out differently to your expectations and plans?
  • What personal leadership challenges are there, and how are you tackling these?
  • What are you doing to work towards a rapid recovery, including any positives that could ultimately emerge from the crisis?

We have presented the highlights in terms of five key priorities

  1. Crisis steering
  2. Employees and customers
  3. Operational and business continuity
  4. Other stakeholders
  5. Recovery and regrowth

At the end of this article, we have summarized some key areas where leaders found that the reality was different to their expectations and plans, and drawn some conclusions in terms of takeaways for business leaders both now and in the future.

1

CRISIS STEERING: MOBILIZE THE CRISIS-RESPONSE LEADERSHIP VEHICLE IMMEDIATELY, USING TESTED AND DRILLED PLANS

The difference between Asian and European crisis management is stark: Asian companies learned tough lessons from the SARS outbreak in 2002, and many already had regularly drilled business continuity plans in place, specifically for epidemics. In contrast, most European companies were not prepared for the scale and impact of COVID-19, so many had to resort to emergency crisis management without having the necessary structure in place. Indeed, properly testing and drilling plans in “peacetime” is seen by leaders as essential; otherwise, you can be fairly certain that your crisis response will be inadequate.

The most important immediate priority is to mobilize a crisis management “war room” to manage the first few days of the response. Most companies aim to focus on two things during the initial phase: first, securing safety; and second, maintaining an appropriate level of operational continuity, with other actions following on from this. Nearly all of the interviewed companies also have recovery-planning activities built into their crisis management procedures, which spring into action once the initial responses are underway and broadly under control.

In implementing crisis response, some companies follow underlying frameworks to guide efforts when, as with COVID-19, situations are changing rapidly and a rigid plan is insufficient.

2

EMPLOYEES AND CUSTOMERS: FOCUS FIRST ON EMPLOYEE AND CUSTOMER SAFETY, AND COMMUNICATE INTENSIVELY TO ENABLE BEHAVIOR ADAPTATION

All the business leaders highlighted the importance of securing employee and customer safety ahead of any other business considerations. In the first instance, this means making the right personal protective equipment and other materials, such as sanitizers, available to all staff – not just those with critical tasks. It also involves setting clear and unambiguous rules to ensure social distancing that cover all the company’s business activities, so there is no room for doubt. Virtual working needs to be properly enabled with adequate IT equipment. Communication to staff needs to be ramped up significantly – many companies have daily communications updates from top management. At one company, the CEO spends most of the week calling and talking to a prioritized list of 40 people.

He also sample-calls mid-level managers. He has no agenda for these calls, other than taking in and understanding the situation from colleagues’ perspectives. At another company, the CEO personally addresses employees first thing each Monday morning and last thing every Friday evening, as well as holding videoconferences to touch base with employees and promote well-being for remote working.

Many leaders highlight the need for keeping staff constantly informed in some detail, so that staff understand, rather than just comply. The HR function has a key role to play in communicating these messages, in order to ensure full staff understanding of what’s behind them, as well as access to the right equipment. Staff are the most critical group because they interact with customers and are the most effective educators of other stakeholders. Leaders also emphasize that delegation and trust are essential – you cannot make the necessary changes rapidly and effectively with a commandand-control approach. CEOs need to act as role models to encourage the required behaviors.

Maintaining positivity and morale is a major concern for CEOs. One aspect of this involves allaying fears of job and income losses, and many companies have sought to provide guarantees, admittedly sometimes with time limits.

3

OPERATIONAL AND BUSINESS CONTINUITY: PHYSICALLY SEPARATE OPERATIONAL TEAMS, MANAGE CASH FLOW AND ENSURE PARTNERS AND SUPPLIERS ARE EQUALLY ALIGNED

One of the key learnings is that companies need to physically separate teams to ensure operational continuity. Many companies create separate A and B teams for critical operations, so that if one team becomes infected, the other can take over, with all communication between the A and B teams strictly virtual. Importantly, this includes the leadership itself. Many leaders emphasize the need for increased delegation to safeguard continuity. For example, one company delegated significantly more authority to in-country engineers across its 17 overseas subsidiaries, eliminating reliance on central command.

Suppliers and partners are equally as important as in-house staff, especially as many businesses have extensive partner ecosystems to deliver their operations. Companies need to support ecosystem partners in a variety of ways, including, for example, through technology solutions, safety equipment, guidance and, if required, new commercial arrangements to help support partners or secure future supply.

For the many companies whose revenues are adversely affected by the crisis, managing cash flow is critical. It involves innovating rapidly in ways to generate new income, putting measures in place to secure staff salaries (including helping them access government support) and minimize cash-out.