The rapid global spread of the Coronavirus has quickly overshadowed other recent epidemics in both size and scope.
In addition to its deadly human toll and disruption to billions of people’s lives, the economic damage is already far-reaching and significant. Goldman Sachs estimates that global economic growth will be zero in 2020, due to the virus.
The pandemic is already making its way through the business landscape as well. It has already cost many business organisations billions of dollars in lost revenue, and that could potentially rise to $1.1 trillion before this year is over according to financial analysts. Business leaders throughout the world are beginning to panic at the thought of the grave consequences this crisis could pose.
The crisis seems like one that would last a very long time and possibly pose a threat to the existence of several organisations. It is an inflexion point, beyond which the business landscape will be changed in ways we can’t fully comprehend yet.
However, organisations must persevere. Forging a new normal and building business resilience rests mostly on the shoulders of business leaders.
Effective business leadership through crises with such grave consequences is paramount for a business organisation and its people and requires psychological, emotional and physical endurance.
The decisions made by leaders and the actions they take now will resonate through their organisation’s response to this pandemic, and into its recovery and beyond.
Leadership will have to guide their organisations through many challenges, with huge implications for their organisation’s whole system — customers, clients, financial partners, suppliers, employees, investors, and other stakeholders— as well as the society as a whole. Communications, decision-making and clarity of thinking will have to be at its peak in leading through crisis.
Leaders who can best exhibit these characteristics — and lead from the head and the heart— will steer their organisations to persevere through the crisis, positioning their organisations to emerge in a better place post-crisis, prepared for whatever the future holds.
A crisis like this, with diverse challenges to be navigated, will also lead to lots of learning opportunities and deepen the confidence of stakeholders while equipping organisations for a change that creates value for the organisation and its shareholders.
While it is too soon to completely comprehend the severity of this crisis and its long haul ramifications, there are several steps business leaders can start taking now to ensure that their organisations perseveres through the crisis and come out unscathed. We have detailed research and information on past similar crises, provided practical insights to help business leaders lead through crisis.
7 Things Every Business Leader Should Do When Leading Through Crisis
Support Your People and Keep Them Informed
Resilient leaders recognise that people drive the organisation and are deliberate in helping their employees through the pandemic. Leaders need to protect the health and boost the morale of their employees while developing a support model for remote working.
Ensure that you have the right employees in your organisation to manage the crisis. Establish a team that focuses on managing the crisis and mitigates the impact of the crisis on your business. At the same time, other employees continue to drive the organisation, ensuring it stays operational and focused.
Also, ensure that your staff understands what is happening in real-time, how it affects the future of your organisation, and more specifically, their role. By understanding how their leaders plan to weather the storm, employees feel more at ease, and they know how their effort contributes to the overall well-being of the organisation.
Develop a Strategic Foresight through the Right Information and Keep Yourself Updated
An ability to anticipate the unexpected faster than others is the keystone of resilient organisations. Research shows that future-prepared firms outperformed ill-prepared firms by a 33% higher profitability.
Future preparedness is, therefore, crucial to becoming an outperformer during crises. Developing strategic foresight helps gain superior market capitalisation growth and attain superior profitability. Leaders should scan their environment to detect critical potential developments and create multiple plans for different scenarios.
This ensures that your organisation has alternative courses of action and allows you not only to act faster to mitigate potential harm but also to react better when dealing with an emergency. Envision how the crisis is likely to affect your business, and take actions now to be well-positioned in the post-crisis environment.
Re-examine your Corporate Strategy
Often, in the wake of a crisis, your strategy to achieve the goals and objectives of your organisation would not be feasible any longer. Therefore there would be a need to re-strategise.
Refocus your strategy on priority markets and core capabilities, and shift away from distracting, or excessively risky markets or projects. This step necessarily requires engaging your board of directors.
Manage Cost Strategically
According to a McKinsey survey, 79 per cent of all companies cut costs in response to the 2008 global economic crisis—but only 53 per cent of executives think that doing so helped their companies weather the crisis. Yet organisations continue to cut costs.
In the heat of a financial crisis, companies must avoid cutting costs without first considering their strategic needs and long term implications. A quick cost-cutting often comes at the price of missing the opportunities that crises can create to improve business systems or to strengthen parts of an organisation selectively.
We suggest that leaders should begin any cost-cutting initiative by first determining how they could restructure the business to take full advantage of current and projected market trends (for instance, withdrawing from relatively low-growth or low-profit businesses and investing their resources in high-growth or high-profit businesses).
A significant part of this analysis is to first understand a company’s financial situation and the range of possible outcomes under a number of different external economic scenarios. Within the resulting strategy, take time to understand which activities drive value and which actions could make the organisation competitively distinctive.
Leaders should invest in value-creating activities and cut costs in others while meeting clear financial goals in a set time frame.
Stabilise your Supply Chain
Ensure you develop a clear understanding of your supply chain from raw materials to end product. This will help you identify where you are most vulnerable.
There would be weak links in supply chains, as some vendors and suppliers would also be affected by the pandemic, and have financial and operational downfalls of their own.
Therefore, ensure you are in constant communication with your vendors and suppliers to understand how their experiences could affect your business. Start searching for alternative suppliers and vendors, especially if your vendors are in places that have been severely affected by the pandemic.
Embrace Innovation
Invest strategically in innovation and automate as much as you can — the cost for labour is continuously on the rise while technology costs are rapidly declining.
Determine the kind of technological innovation that can immediately change your organisation’s structure, Identify opportunities for technological intervention at all levels — from acquiring consumers to the supply chain— and eliminate tasks that are costly, repetitive, burdening your talent and keeping them from innovating. Also, consider the opportunities that a crisis may afford in terms of emerging technologies.
Communicate Appropriately
A solid communications strategy is essential during the response phase of a crisis and keeping both internal and external stakeholder groups well informed is the most crucial part of it.
Avoid spreading information that can cause panic and damage trust. Ensure that you carefully manage the messages you send to your staff and stakeholders.
Leaders should also recognise that customer engagement could make or break the business during this period. Ensure you keep in touch with your customers during this period.
The chances are that the crisis has also affected their businesses and their lives in different ways. Position yourself as a friend and partner to their businesses and personal life. This is a strategy you could also leverage to acquire potential customers.
In conclusion
The COVID-19 crisis will pose an enormous challenge to several businesses and change our business environment in diverse ways as business outcomes depend on several fast-changing variables.
However, leaders need to help their organisations in leading through crisis. Leaders need to start taking actions in advance to mitigate the impact of the pandemic and position their organisations to build momentum rapidly in the post-pandemic phase.
Every crisis comes to an end eventually; One thing that organisations left standing beyond this crisis will have in common will be intuitive leaders, who took the necessary steps to ensure business continuity and survival.
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