C-19 response: Big decisions for CEOs right now – and urgent questions about the time after

Everyone is scrambling to come to terms with the outbreak of COVID-19. That includes business leaders, of course. In the past days we’ve heard from CEOs about the questions they’re asking and the steps they’re taking. We recommend a set of immediate actions – as well as a set of critical questions about something difficult but important to address right now: How to plan for what comes after?

The COVID-19 outbreak is an unprecedented situation for governments, companies and societies. Business leaders should respond promptly and with urgency. This is a key moment for leaders to step up and do what’s right to protect people, customers and the company. Leaders should:

Establish a rapid response room and step up communications. Every leader needs daily – in some cases hourly – updates about the state of the marketplace, the state of operations and the key issues the organization is facing. The issues list changes constantly. Have a virtual response room – an all-in-one, decision-capable “place” that convenes several times per day, ready and able to “work the problem”. Define a crisis communication strategy (who communicates what to whom? and with what frequency?). The audiences will be your own people, your extended leadership team, customers and business partners.

 Stress-test the topline, P&L and cash flow. Establish detailed modeling of your top five markets to estimate how they will develop and to gauge key sensitivities in the P&L. As with the critical issues list, this needs to be an agile model. It must be updated every 48 hours as the crisis unfolds.

Instill commercial urgency in the frontline. Even in this severe downturn, there are pockets of growth. Where are they? Online? In select customer segments or geographies? Charge your frontline teams with finding opportunities wherever and however they can. They will need to organize a fast ramp into online sales channels – to take the company offline-to-online, not only in consumer channels and resale but for all B2B selling. Here, too, creative and agile models work – if you are caught off-guard or if conditions change suddenly, the commercial operation must respond. The emotional stress of the emergency and the reality of remote work make this harder – and much more important.

Stay loyal to customers. Loyalty isn’t just a matter for your frontline – it’s an imperative for you and your leadership team as well. Your customers are under the same stress you are. If you can help your most loyal customers with solutions that make a difference, you will tighten the bonds once the emergency is over.

Build contingency operational plans. The resilience of critical systemic operations is vital to your organization’s mission and survival. Even if you have closed many of your operations – for example, your retail bank branches, your production plants – your back-end and online systems need to function to meet your customers’ needs. Determine what it takes to establish and maintain operational and supply-chain certainty – including how to operate with a workforce impacted by infections or illness.

Protect your people and engage with them. Health and hygiene come first – if your people don’t stay healthy, you don’t have a company. Establish remote working practices – not just the basics, but how to work best and keep up productivity while maintaining social distancing. This is the time to leverage the purpose of your company and have leaders engage with your people on a frequent basis. Address your people’s panic and fear head-on – be honest, be transparent and convey that you share their concerns, but add that we will get through this as one strong team. Take steps to meet practical challenges – for example, support working parents who have to take care of their children and provide for home schooling while delivering on their jobs. Decide how much flexibility you can provide, as this is a very stressful situation. Be inventive. In China, one company is holding online singing, dancing and sports competitions and yoga classes – all of them ways to build bonds among people who are isolated at home. Remember to continue to reward and recognize your top performers and stay close to them.

Reduce the burn rate wherever possible. Make decisive but no-regret moves. Stop salary increases, freeze hiring, reduce the headcount of low performers, reap the savings from cancelled events and significantly reduce marketing during the peak weeks of the outbreak. At the same time, identify radical cost levers to pull at certain trigger points as the crises unfolds. Will you significantly reduce marketing to save it for later or even cancel parts of the spend? Pause or downsize new product launches? Will you close offices? Will you drastically reduce your procurement? How tough an ask will you make to your suppliers? Plan now for worst case scenarios. You need sufficient funds now.

Focus on cash management to strengthen liquidity. Financial strategy should aim to preserve cash above all. Build reserves, and postpone CAPEX projects and large OPEX projects. Reduce your share buybacks. Liquidity should be your sole focus. You will need to consider which trade partners in your value chain are key for you, and that you are prepared to support to survive.

Move preemptively to seize advantage. It’s not only your frontline people who should be looking for pockets of opportunity. Even in difficult times, look for ways to capture market share where you can – whether it’s the result of behavioral changes as customers move online or to new channels, or because conditions allow you to buy distressed assets that will enhance your portfolio.

Harden IT systems. Your IT infrastructure will be under stress as most of your workforce shifts to telework and as other critical operations – such as finance and investment – are forced to rely even more on virtual connections. The strain threatens to hamstring your operations and might make systems vulnerable to cyberattack. Make sure your IT systems and your cybersecurity are both up to the challenge.

Remember to do good. The state of emergency means that all of us – and our organizations – are called on to do our part for the community at large. Remember your community and try to help. Identify pro-bono opportunities. You will improve your organization’s skills and enhance its reputation in society. And it’s the right thing to do.

Those immediate steps are urgent – but they are not enough. Leaders also need to plan for the time after. The world will be very different post COVID-19. What are the key changes, and how do you position your company for that altered reality? Here are the main longer-term imperatives:

Know the “shape” of the recovery – V, U or L-shaped, or not? Several recovery scenarios are possible. China is in a “V-shaped” recovery – a sharp downward plunge followed by a sharp return to something resembling a normal level of business. Japan, Korea, Hong Kong, Singapore are like China. Europe and US talks about “flattening the curve” – slowing the rate of infection instead of getting rid of it. Flattening the curve might be the only alternative in some places – but it means a longer timeline and a drawn-out recovery of several quarters, or perhaps several years. Leaders must watch the initial signs and the developing trends to know how the recovery is evolving – and then synchronize resources and investments to the rebound.

Know what has changed for good. Depending on how long the outbreak lasts, and how severe its impact is, long-term changes are likely. Will consumers return to their old behavior patterns – retail shopping, going to events – or will they stay online (and stay away from mass gatherings) after the “all-clear” signal is given? Will there be new opportunities, for example in a new commitment to health and wellness? Will B2B customers change their buying patterns to exclusively online purchasing? How will supply chains operate – and with what new safeguards? Will travel patterns change in a way that affects the business? What will be the future role of physical events and other traditional forms of marketing and promotions? Demand for more comprehensive healthcare systems and insurance seems likely – how will health insurance costs change and what will be the impact of those changes?

Right now, none of us can say what the future holds. But by acting urgently, making the right immediate moves and asking the right long-term questions – and doing that all the time, for the duration of the outbreak – you and your organization will be better prepared for whatever comes. We urge you to take a leadership perspective and seize this moment of truth.