CEOs rightly focused on tactical execution as we entered the COVID-19 crisis. In a matter of days, company leaders implemented their business continuity plans, dispatched communications to internal and external stakeholders, and braced for a previously unimaginable worldwide shutdown. They made decisions quickly, though painfully.
Leaders will face a very different challenge as they chart the path into and through recovery. They will grapple with many choices having long-term impact on future growth, sometimes with limited relevant data or experience. Companies will need to build agility into their planning and execution processes to ensure the right decisions are being made at the right times.
Sage Partners recommends businesses take these three steps to adjust their strategies and plans and retake control of their futures:
Define the New Normal – Agree on the most important impacts of the crisis on the internal and external business environment to ground strategy development and build alignment within the enterprise
Deconstruct the Uncertainty – As with any other big, complex problem, break the unknowns of the future into smaller pieces that can be attacked strategically
Ignite Growth – Stay highly engaged in rapid recovery initiatives and quickly rebuild plans for growth
Incorporating these aspects into the strategy development process will help businesses to reduce uncertainty, simplify coordination between teams, and chart a path toward future growth. Employees will know what efforts to rally around and feel more confident that they can deliver what is expected of them.
Define the New Normal
The vague term “the new normal” is everywhere. We reject this term because you can’t be mired in the past when looking forward. Leadership teams need to establish and communicate to their employees a point of view on how today’s reality differs from the set of internal and external insights that historically drove the business, and what the implications for the business will be. Without alignment at the top, teams and individuals will make their own assumptions, potentially driving action in conflicting directions.
Starting the strategy development process with a situation analysis is a best practice in strategic planning and is critical for business agility during times of change. A situation analysis consists of conclusions about the internal and external business informed by insights. It establishes a common set of assumptions that underpin strategy development and planning; leaders will reach decisions more easily and employees will be prepared to act more autonomously.
In the early stages of recovery, information will be less concrete, as customers, suppliers, competitors, and investors each face a great deal of their own uncertainty. Leadership teams should plan ongoing external conversations with key stakeholders to develop an evolving, internal fact base for decision making. They should use a wide range of information sources and inputs; a single, pithy quote or appealing data point can be compelling but creates the risk of sending the organization down the wrong path. This process of insight development should be cooperative, with the goal of gaining agreement on the fact-base the enterprise will use for strategy development and planning.
Some key areas to explore include:
What did we learn or are we learning from the crisis? Which of our core business assumptions have changed?
What were the most important drivers of past growth and planned future growth, and what has changed about these drivers?
How might industry trends, success factors, and structure be impacted by the crisis?
What are the implications for our target markets, value proposition, product/service offerings and channel priorities?
What do we control? What is outside our control?
Since the post-crisis environment will continue to evolve, leadership should review, update, and re-communicate the situation analysis regularly as new information becomes available.
Deconstruct the Uncertainty
While the COVID-19 crisis feels like one big bomb went off in the economy, simply recognizing that the future is riskier than we previously understood is not particularly actionable. Deconstructing the general uncertainty that we all feel into more specific components and how these create business risk gives leaders a starting place for planning to mitigate each of the threats.
Business environments will inevitably be more uncertain for the foreseeable future. Two well-established tools that are highly relevant to today’s business environment are scenario planning and a dashboard of leading indicators. The scenario planning process helps companies identify the right set of strategies to address multiple alternative futures they may face. It both broadens a leadership team’s thinking on what the future might look like and focuses them on what is most important for achieving success. A leading indicators dashboard helps monitor the current state of the industry and the business and signals when strategy needs a mid-course correction. Ongoing uncertainty puts a premium on being able to recognize and respond quickly to obstacles and opportunities.
It is tempting to focus all efforts on the very short-term, where there is the least uncertainty. After all, if a company does not successfully navigate the recovery period, it may not exist in the long term. However, competition will ramp up quickly; every company will need to evolve and grow to survive.
Plans should include a set of rapid recovery initiatives that will drive growth, deliver operational efficiencies, and position the company for the New. A vision for the future will influence decisions on what is actually mission critical during the recovery. Growth initiatives may come from fanning the embers of pre-crisis growth projects or by finding new opportunities generated by “defining the new normal” and “deconstructing the uncertainty.” Programs that were reasonably healthy before the crisis but are not strong contributors to sustained growth may need to be abandoned. Any operational efficiency gains can be used to free up capital for investment, without constricting growth.
To spark growth during the recovery period, management teams should anticipate and be prepared to react to potential changes as they occur. Each rapid recovery initiative should include an assessment of potential risks and playbook alternatives to address situations that might occur. Management teams need to agree on how they will identify emerging threats, expedite decision-making, and respond operationally.
The world is entering a new era. We'll all need a strategic reboot to align with the new normal, to address the uncertainties faced, and potentially operate with fewer resources to invest in growth. Critical strategic thinking and leadership will help companies to navigate the recovery more confidently and with greater agility, but only if you work on (re)Igniting Growth now.
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