The effects of the coronavirus pandemic are being felt in communities and companies around the globe. Markets are reeling, businesses are closing—and executives need to make strategic decisions that will set their companies up for success not just in the coming weeks but long into the future.
In the latest episode of Insights on Demand, a podcast about the future of work and other pressing business issues, we talk to Steve Wunker, an innovation expert and entrepreneur who led the development of one of the world’s first smart phones, worked with the late Clayton Christensen, and now advises companies on creating and executing bold plans for growth.
Steve has already written several articles about adapting business strategies to the coronavirus pandemic. Listen to the podcast below to hear his advice for assessing—and addressing—the impacts the pandemic will have on your operations. You can also read our lightly edited transcript of the chat.
You’ve identified four distinct phases to this crisis that business leaders need to address. What are they?
Unlike the financial crisis, which went through an erratic and very gradual trajectory, this pandemic is compressed, and it is going to go through four very discreet, specific phases.
We are currently in the first phase, which is awaiting the major impacts. The economy is shutting down. The number of cases is growing, but we haven’t really been hit hard yet by the repercussions. For purposes of this discussion, I’ll focus on the economic side of things. But we also have to be conscious that the human toll is going to impact consumer’s psyches, and that will have economic consequences, as well.
The second phase will come when we feel that initial impact. As people lose their jobs and run out of financial coping mechanisms, as businesses shut down and aren’t able to pay their bills, and as we start seeing the human consequences of the disease, people’s behavior and psychology is going to shift, even as government funds materialize. For instance, people may be reluctant to spend those funds because they are hunkered down amidst a deluge of bad news.
Then that phase will pass, either because there’s drug progress, or most of us get the disease and develop immunity, or perhaps we’re able to stamp the disease out. There will be a third phase in which things start to return to normal, and that’s when all that cash is actually going to get spent. Some people will get their jobs back, and others will to be searching for totally new jobs because the economy has shifted towards more online and virtual consumption. Competitive positions will be reestablished, customer relationships will reform, and it’s going to be a really critical time of transition. It’s important to plan for that now, because when it happens, things are going to go really, really quickly.
Finally, the fourth phase is sorting out new industry dynamics. A lot of behaviors will have changed. People will be accustomed to totally new ways of working and buying. And companies will have to adapt the way that they’ve done business to succeed in a reordered competitive environment.
What’s your advice about handling each of those four phases?
There are two key things that executives should do. First, they should think through the uncertainties that they’ll face during each phase. They should be questioning some of those long-held assumptions. There are things that the organization might know, but the executive suite might not be aware of, like how are customers faring right now, how are vendors and competitors holding up.
There are also things executives know they don’t know. It’s very tempting to cut market research right now because it’s sort of a discretionary expense. That’s a really bad idea—you don’t want to be flying blind at a time like this. So by all means, focus on urgent short-term research, but get it done to address those known unknowns.
Most dangerous are the things you don’t know you don’t know. There, it’s important to ask yourself the hard questions about how each phase of this crisis might unfold for your business.
Once you’ve laid out the uncertainties, you’ve got to create a plan for getting through each of those phases. What are the specific challenges that your business is going to be confronting, and what are some clear options that relate to those challenges? You won’t be able to anticipate everything, but you can work through different scenarios to figure out the repercussions to your strategies, your financial health, and your operations.
In your articles, you pointed out that executives tend to include too many people in decision-making during times of crisis and try too hard to reach consensus. Can you tell us why that’s a problem and talk about some other common missteps?
Usually, consensus is a desirable thing in a strategic plan. Right now, that’s not going to be very easy to accomplish. If you can get there, great. But you need to make some hard decisions and get on with things. Often, that precludes the ability to reach consensus. That’s okay. This is a time even for leaders with an inclusive, lead-from-behind style to go a little bit further and force these hard decisions.
Equally, though, you need to think about scenarios. We look back to a week ago and think, “Oh, what we didn’t know then that we know now.” And I guarantee that a week from now, we’ll be thinking the same thing. So we need to force ourselves to work through different scenarios and different types of uncertainty.
Finally, and this is a hard one in the current environment, you can’t be too rushed about it. There is urgency, but it’s very dangerous to make all these decisions in one crisis meeting. Events are going to unfold over time. It’s important to get a quick sense of what people throughout an organization are thinking, but you can’t just retreat into a boardroom with half a dozen people. There has to be a means to get input so that decisions are not bounded by groupthink but rooted in the realities that the organization is confronting.
Another danger you’ve identified is having to too little focus and committing to a bunch of vague strategic priorities.
I’ve talked to CEOs in the past few days who want to generate a lot of ideas about how they can seem responsive to their customers. And look, ideas are great, but executing on them is a challenge when there are fires burning in every corner of the business. There are basic operational challenges of getting people to work well remotely, especially when folks have their kids hanging around their legs as they’re trying to do an important conference call. You’ve got to be realistic about the number of decisions that can be executed well.
You’ve also got to think about what’s going to register in customer’s minds when they, too, are beseeched by 20 million things. What coherent message can you send? The stakes are really high, and if you take on too much and don’t execute well, it could lead to really major problems down the road.
You spoke earlier about the fact that some pretty big shifts are coming to the economy—and that executives need to start mapping out and planning for different scenarios. Can you take us through some specific examples that you’re seeing in the market?
Look, the bricks-and-mortar world is expensive. It’s expensive to have real estate. It’s expensive to pay salespeople to go around to different locations, whether they’re retail stores or physicians’ offices. This crisis is an opportunity to accelerate some of trends we’ve already seen around the virtualization of sales and service. For some, there’s also a significant downside, but that’s got to be embraced and managed at the moment.
Earlier this morning, I spoke with a company that sells school textbooks. Textbooks sales have already been declining, but now they are very likely to go into free-fall. So what’s that company going to do? They’ve got to embrace the disruption. They can no longer ignore what’s happening around them. As you look ahead at how these scenarios are going to play out, it’s easy to focus on the downsides and how to mitigate the risks. You also need to think creatively about how you might be able to supercharge some forms of change and really seize the upside.
People are still going to be learning, right? They are still going to be eating. So how can you shift your business to something still fills those needs?
There aren’t a lot of precedents to this pandemic in the contemporary business world, but there are plenty companies that have thrived in uncertain times. What lessons can we draw from them?
You’ve got to look ahead in a timeframe that’s meaningful for your company and your industry. Then, set some meaningful goals about what you’re going to be able to accomplish in that timeframe, and work backwards. We work with a big social media company that has a very clear five-year revenue goal. They’ve translated that into numbers of users, engagements per user, and not just the amount but the type of ads they’re selling, which translates back to the present day.
The danger with a lot of strategies is that they paint a future world that’s a little fuzzy. There’s no connective tissue to link them to what people need to accomplish in the next six months. This is a wonderful time to concentrate lines and to say, “The future is probably going to be a little nearer term than we expected, but we need a plan to get there in a time-bounded and metrics-driven way.” That’s going to force hard decisions, but this the time to make them.
About the AuthorMore Content by Leah Hoffmann