As we write in late April in the midst of the COVID-19 crisis, knowledge is still developing about how the world can ultimately recover. What seems most likely today is that we will have a series of recoveries and plunges, as different regions and services come back online at the expense of some other areas of the economy.
The duration of this phase is hard to predict, however what is already clear is that the other side of this pandemic will not bring business “back to normal.” Just as the post-9/11 world forever changed security and travel, and the post-2008 world forever changed financial services, COVID-19 will leave permanent marks. Apart from a global recession from which it will take some time to recover, it will usher in new opportunities as well as mark the end of old certainties.
Arthur D. Little engaged its network of global CEOs in constant dialogue throughout the crisis, launching a series of 25 one-hour virtual meetings, on-line surveys and ad-hoc conversations. These exchanges revealed that as CEOs came to terms with the radical disruption that fractured economies locally and worldwide, the first need was to simply understand what was happening on a day to day basis. As the crisis unfolded with breathtaking speed, CEOs needed suddenly to work in completely new ways, and usually in isolation.
Most leadership teams surveyed had multiple plans in place to find steadier footing, but no real clarity about what to execute against. The biggest surprises were the velocity of the crisis and the degree to which decisions had to be made quickly with incomplete information. Many found that their corporate risk management frameworks were inadequate, too rigid, and too backward-looking.
There is a broad consensus that what is needed going forward is a more dynamic and agile business resilience management approach based more on “sensing and responding,” in which the progress of emerging risks is continuously monitored. This can now be done more easily than before with the help of big data analytics and predictive modelling. This type of approach is increasingly possible with the help of AI and ML technologies, and there are some very encouraging early use cases.
CEOs participating in the dialogue identified a number of lessons from the initial stages of the crisis response:
• Act fast but share the leadership burden: Taking fast, decisive action was critical in the early days, even if there were large gaps in information. For those leaders accustomed to having thorough analysis and evidence before making decisions, this was a challenge. As next steps were identified, there was also a need for increased delegation to regional and local levels.
• Assume the worst, safety first, then operational continuity: Employee and customer safety and health were the only priorities in the initial stages. Only after this did leaders focus on securing operational and business continuity, often involving creation of physically separate back-up teams. Clearly cash management was also key. CEOs stressed the need to “assume the worst” and avoiding stepwise partial solutions.
• Spend most of your time on communications: Frequent and detailed communications – especially with staff – proved vital. A significant segment of CEOs spent nearly all their time on this, including listening as well as speaking. This was especially important given the speed of development of the crisis from one day to the next.
• Help your suppliers: It was equally important to support the supplier and partner network, especially as many of these may be smaller or less financially robust organizations
• Reach out to government, unions and the community: CEOs, especially those in critical infrastructure industries such as telecoms and utilities, emphasized the need for regular and frequent interaction with government to enable alignment and cooperation. Union contacts were also key to help secure employee health and safety. Many companies also reached out to local communities to offer help and services, acknowledging that corporate reputations can be built or destroyed through the crisis.
In the midst of the crisis, strategic vision and “readiness for the new world” were at the very bottom of the list of concerns. However now, as some countries are already taking cautious steps towards lifting lock-down restrictions, shaping up for the post-crisis future has moved right to the top of the list. A deep global recession seems inevitable, and for many sectors the future will be challenging. For example, healthcare was traditionally geared to manage operations to the level of predictable capacity. After the pandemic, the industry may be beholden to stress tests gauging the ability to perform in extreme situations – translating into cost and strategic allocations aimed for the worst case scenario. The short- and medium-term prospects for sectors such as tourism, sport, hospitality and performing arts are worrying.
However, despite the challenges, there will undoubtedly be new opportunities for businesses in a range of sectors. In consumer goods, new brands, categories and even services will be able to raise their relevance and firmly establish footing as consumers change their behavior in the climb out from the recession. In sectors such as energy and automotive, the crisis may ultimately accelerate new technology adoption, for example in terms of subsidized low-cost renewable energy and electric vehicles respectively. Even in severely-hit industries such as aviation, there may be opportunities for the value-chain to reinvent itself, for example with new “as-a-service” asset-light business models.
Right now, CEOs are grappling with the shift from being fully engaged with immediate needs to seeking longer term strategic solutions to regain momentum. With every crisis comes opportunity, and there may yet be positives to emerge from the global catastrophe.
 Refer to Prism Special Report “Leading businesses through the COVID-19 crisis First learnings from Hong Kong, Italy and Singapore”