COVID-19 and Other Crises: Experience Sharing - "Build Back Better"

My network has now spent almost a year working with organisations as they navigate through the COVID-19 crisis. We have been drawing on experience built up over many years working with businesses through challenging periods, developing strategies and helping with change and transition.

We are holding a regular video call to share our experiences and publishing key points from our discussions in case they are useful for others. On our most recent video call we discussed “building back better” which is a phrase that has taken hold in recent months. The concept is particularly pertinent as governments announce plans for coming out of lockdown and outline their long term visions for the future.

We are helping small and large clients across multiple industries and geographies, from marinas to mining so we had a very good discussion. We discussed how businesses should think about planning for the future as they come out of the crisis. As ever we captured the key points from the discussion. In addition to the 10 points, we found that businesses with a strong sense of purpose tended to be better equipped to face the challenges of the next phase:

1)     There is undoubtedly an opportunity to “build back better” but this is not a helpful phrase in itself. It has in fact become a cliché already. It needs defining for each situation as it can mean many things, from a radical change to the business model, to new products and services or something else. It can mean building renewed resilience, becoming greener, reducing inequity and inequality. Or simply renewing purpose. Businesses are asking: What does “build back better” mean for me? What are my opportunities to do things differently? How can I shape my business for the future? Which elements of my businesses should I change? Where should I make radical versus incremental changes?

2)     There has never been a more important time to think about this and it raises some fundamental questions of strategy. Going into lockdown in many cases was about survival, adrenaline, crisis management and necessity. Now, businesses must think now about taking the right decisions for the long term. Many are finding coming out of lockdown even more challenging than going in. They are asking: To what extent will the status quo return? What will the “new normal” be? How will the needs of our customers change? How should we think differently now? How can we position ourselves for the future? How do we “build back better”? How can I ensure my strategy is both bold and practical?

3)     We are truly in a VUCA (volatile, uncertain, complex, ambiguous) world now. There are some fundamental trends that have only accelerated with COVID-19 and will continue to do so such as sustainability, digitisation, changing ways of working, more interconnected supply chains, collaboration and so on. But these trends are hard to make sense of. Business leaders are asking: What will the trends mean for us?  How will they affect my business? How can we take advantage? What are the opportunities? What are the risks?

4)     The same-old strategy process won’t cut it. Dusting off the strategy from 2020 (or 2019) and updating it isn’t going to work. The standard annual turn-the-handle strategy process is not what is required. The approach needs to be different. It must be more than just another budgeting exercise. And the mindset must be different – among executive teams, boards and investors. Businesses are asking: What strategy process should I follow this year? How do I ensure that it will work and give me the output I need? How can I think differently this time? How do I ensure my team take full ownership? How can I get into the right mindset?

5)     Mental capacity for considering these strategic questions is limited. Businesses are still having to focus on very full agendas including day-to-day operations, internal and external challenges, multiple projects. They are doing this in a situation where their teams are remote and working together effectively is challenging. A commercial ports business and a global shipping business my network has been working with haven’t been in the office for a year now and are dealing with urgent and pressing day-to-day issues. They are asking: How can I seize this opportunity to address important questions of strategy? How can I engage my teams in strategy when they are so busy? How can I do quality strategy work while working remotely?

6)     It is difficult to know whether to make bold moves now, or to follow and take smaller steps. Some businesses are betting that the status quo will return and are waiting, watching and erring more on a return to pre-COVID-19 days. Others are preparing for a more systemic change and a significantly different world and "re-tooling". This is the case in all sectors. In mining for example, one large global multinational is investing heavily in digital, hydrogen and the circular economy, expecting its business model to shift quickly and for good. Another is being more cautious. All businesses are asking: How bold do I need to be? Which bets should they make? How should they do so? To what extent should they be taking the lead? How can they steal a march on the competition?

7)     Creative strategy skills are scarce. The ability to assess the strategic context, core capabilities, competitive positioning, customer needs and markets, road-mapping, vision and ambition, strategic choices have lapsed over the past several years. Skills have become depleted as strategy departments have been cut, the focus has become the annual strategy processes, briefing documents. Businesses are asking: How can I address these questions when I don’t have people internally? Who can I get to help me with this? How can I use this as an opportunity to train my people? How can I run a process that will leverage my team’s knowledge? How can I do this without breaking the bank?

8)     The situation is changing daily. New data is emerging. New variants. New vaccines. Economic and health data. Governments are publishing exit strategies and budgets but these are all dependent on how events unfold. Strategies are required that take the uncertainty into account and can be adjusted and course corrected as the situation develops. Businesses are asking: How can I develop a strategy that I can follow but that can be adjusted? How can I make it future proof? How can I ensure the strategy becomes a tool for taking decisions?

9)     Knowing what to design for is extremely challenging. It is important to be able to consider multiple scenarios. It is important to be able to define the scenarios for how the world might evolve and use these to underpin the strategy. Businesses will need to take the opportunity to place bets and try things that may not work. There is no playbook for this and businesses are asking: What are the key assumptions that I need to make? How will these affect my strategy? How will things play out? What are the uncertainties and unknowns? How do I model all of this?

10)  Conventional teams and their advisors are not necessarily equipped to deal with the challenges of developing strategy at this point. Businesses are realising that something different to the status quo is required. Often, there is a huge amount of knowledge within businesses and they do need support, insight and facilitation. They also need people with the ability to think differently. Businesses are asking: Given the importance of this strategy round, how do I make sure I get it right? How do I take this opportunity to embed a new way of doing things and ensure the new approach is repeatable? Who should I get to help me? How do I build the dream team for this?

The good news is we have a lot of experience of helping clients with these types of questions. We are helping businesses large and small to address all of these questions and finding that there is no playbook and there are benefits in having a diverse and cross functional team supplemented by industry experts and independent consultants that we bring. We have done this many times. We don’t come with a cookie-cutter approach, but do bring a structure and process that works and which we are using with a whole range of companies.

Finally, our resident philosopher drew our attention to building back better applied to inequality and injustice and also sustainability. Given the way in which COVID-19 has highlighted unfairness, how can we address this post crisis. We also discussed sustainability and subsidy regimes which is very topical. In 2019, the International Monetary Fund (IMF) estimated that global fossil fuel subsidies totalled $5.2 trillion. That amounts to 6.5% of the world’s gross domestic product in 2017 and was up from $4.7 trillion just two years previously. If fuel prices had been set entirely by the market in 2015, the IMF said, carbon emissions would now be 28% lower. Governments, financial institutions, businesses, individuals are all rethinking the status quo and it is an exciting time.

Thanks as always to everyone who contributed to the discussion. We hope this is useful for others. Looking forward to future video calls where we will be continuing to share experience and explore other themes over the coming weeks on future calls as our network continues to support organisations in banking, retail, industrials, utilities, consumer businesses and a wide range of other businesses.

Any questions or thoughts? We would love to hear them!

Email us at: [email protected]. Or contact us via www.keyandco.org.