CEOs are living in “interesting times.” They are currently being battered by economic, supply chain, and workflow disruptions that, in the U.S., are likely just getting started. Although executives with a few years under their belts will likely have some experience to help inform their strategies, the reality is, we don’t know when recovery will occur. The COVID-19 virus is simply something we haven’t seen before. CEOs will have a major impact on economic recovery and the long-term brand resilience of their companies. What strategies will help our executive leadership weather this storm?
Assessing and responding to coronavirus damage
This is an uncertain time. The economic fallout from COVID-19 has just begun and traditional crisis communication strategies simply will not go deep enough to help businesses weather what’s likely ahead. Crain’s points out what is increasingly obvious, “Pretty much everything a CEO wants to know before deciding how to respond is unknown.” What can CEOs do to shore up their business when coping with this level of uncertainty?
We have a two-fold answer.
First and foremost, take care of your people. Support the workers and customers you have by implementing strategies to build their loyalty. This loyalty will become increasingly important when times get harder — as we anticipate they will.
The second answer is to take care of revenues. The problem with this strategy is that we are at the mercy of an unseen virus whose global economic impact is simply guesswork right now. Therefore, CEOs must plan for three levels of revenue hardship, from the least to the worst, developing aggressive, agile strategies to fit a fluid financial market.
Level 1: missed projections
The first sign of missed projections lies within the behavioral changes of customers. COVID-19’s social distancing requirements correlated almost immediately. The impact on the enterprise was noticeable but certainly not catastrophic—at least at first.
Potential responses:
- Eliminate or shift unnecessary spending.
- Preserve cash on hand via conservation measures.
- Stabilize supply chain.
Level 2: economic downturn:
Economic downturn planning considers a longer-term effect on profit and loss. Harder decisions must be made to cut business units that are no longer cash flow positive.
Potential responses:
- Swing into high gear on promotion strategies but be cautious with excessive product cost cuts.
- Suspend operations in some locations.
- Be more aggressive in your cost cutting efforts.
Level 3: bankruptcy liquidations
With the long-term global impact of COVID-19, liquidity issues will spread from the small business to mid-market and enterprise organizations. Survival will require business model restructuring and possible bankruptcy protection.
Potential responses:
- Temporary closures will evolve to permanent.
- Right-sizing staff is almost inevitable.
- Continue to conserve cash wherever possible.
While these basic suggestions can help push the reset button for CEOs struggling to chart a path through some very uncertain terrain, it’s important for organizations to plan for the inevitable economic rebound. How can business prepare for staying relevant long after COVID-19 is just a bad memory?
Staying relevant after COVID-19
Great adversity also brings opportunity. Businesses can emerge with stronger customer relationships and a leaner, more efficient service line. The post COVID-19 world will be filled with businesses that have learned the art of relevance, staying top of mind with customers while they emerge with a more committed workforce. Consider these strategies:
- Reestablish the value proposition. Consider how your products and services will add value to your customers in the post COVID-19 market.
- Solve distribution crises. The temporary shutdown of many supply and distribution channels will force corporate survivors to the top of the pile.
- Communicate carefully. Your customers and internal talent are paying close attention to how you handle this global crisis. Make certain your messaging reflects your commitment to taking care of your workers and keeping your customers satisfied.
Now is the time to lead and some CEOs are already stepping up even in the midst of great uncertainty.
Playbook for an uncertain time
Everyone is being tested right now, but CEOs can borrow some courage and learn how to structure their response from some of the biggest names in industry. For example:
- Automotive company Ford is teaming up with GE and 3M to step up production on respirators, face shields, and ventilators.
- Retail companies like Amazon are leading in the battle to keep at-home families supplied with necessary goods, while companies like Walmart and Target have invested heavily in their workers to mitigate the damage of COVID-19.
- Technology leaders Amazon, Apple, and Microsoft announced their efforts to donate front line medical supplies as well as building applications to track the spread of the virus.
CEOs must continue to make tough decisions as we respond to the most serious global health crisis we’ve seen in our lifetimes.
The Windsor Group Sourcing Advisory can provide trusted, proven counsel during challenging times. We can help your organization realign during disruption and successfully emerge on the other side. Talk to our team.