Whether you are looking at it from an individual, social or economic point of view, there is no doubt this calendar year 2020 is an aberration. As we partied and celebrated into the New Year with our loved ones, families, friends, work and business colleagues, the ambience was positive.
Fast forward a couple of months ahead, the outlook is grim. COVID-19 has changed the structure of just about every experience: how and what we buy, how and where we work, how we interact with other people.
Either because we suffer from micro and macro-economics myopia or we have a natural tendency to exhibit overconfidence bias even when its not necessary, many of us, including experts, failed to infer the implications and gravity of the proliferation of the novel coronavirus in China.
We assumed COVID-19 was transient thus we acted indifferently and continued with our old normal.
Then suddenly, the number of cases reported globally mushroomed. And to stymie the outbreak, governments in greater parts of the world enforced economic lockdowns except for essential businesses and service providers.
Economic activity came to a screeching halt and global supply chains got interrupted. Businesses, that over the years, have moved at a snail’s pace to digitally transform their operating models found it arduous to swiftly transition to online product and service delivery channels.
Many businesses went bankrupt, laying off millions of employees during the process. Overnight, livelihoods were turned upside-down.
Social gatherings have become a distant memory, and as social beings who are accustomed to physical interaction, we have progressively adapted in this new world and somehow learned how to lead a reclusive existence.
Are we there yet?
As of this writing, the vaccine for the novel coronavirus is yet to be discovered. The economic consequences of the pandemic thus far are significantly severe and provided a catalyst for the COVID-19 recession.
Although governments have started to relax lockdown restrictions, and are slowly reopening their economies so that they can start to grow again, what the recovery might look like is unclear.
Economic expert views on the nature of recovery are divergent. There is no consensus on whether COVID-19 economic downturn will ultimately play out to be a V, U, W or L-shaped recession.
Thus, the challenge for the business today is deciding how to effectively and efficiently commit the organization’s stretched resources to service existing and future customers, and also markets that will emerge in a distant and inherently unpredictable future.
Do you plan and prepare for a:
- Sharp economic shock followed by a quick recovery in growth?
- A longer period of slow trading before a rebound, which takes many months or even years for the economy to recover?
- Double-dip recession, in which the economy begins to recover rapidly, but then falls into a second period of decline? or
- An extended downturn, in which growth falls and does not recover for years, creating the long shape of the L?
That volatility, uncertainty, complexity and ambiguity is the norm today is an axiom. Therefore plan and prepare for a future that will be notably different from the one you may have imagined at the beginning of this year. A future that consists of different scenarios panning out.
Sketch scenarios and their outcomes, opportunities, and breakthroughs and consider what they would mean to your business. The exact scenario does not have to materialize for the process to pay off.
However, the process stimulates new thinking, expands imagination, and helps connect various insights and formulate action plans that should be taken today to protect the business’ future.
Don’t focus too narrowly on costs at the expense of innovation
In times of crisis, it’s often easier to focus on the short term future of the business and park long term strategic ambitions. The reason being that organizations find themselves defaulting into the survival mode.
Due to a decline in economic activity, working capital management and cost reduction become top priorities. Although these are necessary, you need to understand that dealing with this crisis is not an either/or question, but rather a case of managing the crisis and managing for the future.
The coronavirus pandemic has changed the experience of being a customer, an employee and a citizen. Hazy is how people’s behavior and underlying values will change for the long term, but what is crystal clear is that your business has to adapt and become agile.
Despite how successful they have made you, your old business model, past competencies and experiences won’t guarantee you success in this new world.
You have probably heard the old adage “Never waste a good crisis.” Use this pandemic as an opportunity to rethink the basics, explore and learn. In other words, revisit the company’s direction in light of external changes.
Look at your business from the outside in and discuss what is changing not only in the competition but also anywhere in the value chain, and in the global geopolitical climate.
The coronavirus pandemic has exposed the frailties of the traditional planning processes and necessitated a paradigm shift in how leaders should prepare and steer the organization to adapt in tune with sudden changes in the environment.
Leaders often miss signals that could be harbingers of change because they are immersed in the daily operating details of the business. Instead, think creatively, and see the bigger picture beyond the transactional details of day-to-day operations in the short term.
Change doesn’t wait for your annual planning cycle, hence it’s vital to regularly go through the process of trying to identify and comprehend various seeds and catalysts for change.
Create change not just learn to live with it
Rather than wait for the COVID-19 tide to turn, a number of companies have pivoted on their existing capabilities to make quick strategic changes.
For example, distilleries started producing hand sanitizer, automotive companies produced ventilators, and a shoe manufacturing company started making stylish face masks.
One key thing the above companies have in common is they were all able to conceive a new need, or redefine an existing need and business model.
Legacy companies often make the grave mistake of ignoring the risk of not embracing a new and dynamic business model and sticking too long with a business that is ripe for transformation.
The mere fact that the change does not fit your core concept of the business including your core capabilities doesn’t mean you should play ignorant.
Track companies that are using new technologies to transform their business, even if they are outside your industry and begin to imagine how some of them might decimate your industry and reshape your market place. For instance:
- Has your business model changed and how are you adapting to that change?
- How are your competitors adapting and re-purposing their businesses into new operating models?
- How are you reorienting your business in a socially distanced operating environment?
- How can you harness the power of technology to create value, at the same time achieve efficiencies that were unimaginable pre-pandemic?
You need to build new capabilities and structurally adjust your business operational model, not only to navigate this crisis effectively and efficiently, but also to reach the new future in a position of strength and more resilience.
Reassess the organization’s process and cultural anchors that are hindering progress to make smart growth bets. Any business transformation requires people to alter their methods of working in big ways and small.
As you navigate through this pandemic, always remember that each crisis reveals a future growth trajectory that your business could explore and exploit as long you widen the lens through which you see the world without being hamstrung by an existing core competency.
Identify the obstacles you need to overcome and the obstructions that are currently standing in your way, develop a growth mindset and get offensive.