Minimizing business risk in a time of crisis: The key questions to ask.

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” –Charles Darwin

For many leaders, this is the first time an existential crisis has emerged. Uncertainty around the spread and consequences of COVID-19 has wreaked havoc across the world, in all parts of our lives, at home, work, and everywhere we go in-between. 

Seasoned leaders may believe the crisis is reminiscent of the beginning of the Great Recession. Markets contracted then, businesses changed, and consumer behavior shifted. Never before in our modern life have both health and financial crises been so intertwined. This crisis feels and may turn out to be fundamentally different from previous ones.

In this article, my goal is to energize your thinking around crisis leadership, specifically related to consumer consumption, product and service creation, distribution, budgets, talent, and personal and professional wellness. 

The leaders who will weather this storm will be thinking about and acting on, strategies, and activities that take care of themselves, their families, the viability of their companies, and their customers.

If it's true that our companies are undergoing the quickest changes in history, then the people who are served by our products and services feel the pace of that change too. These changes mean the people who work for or with you are looking for your guidance. The customers you serve are also significantly impacted. 

So, how can you take care of these essential employees and customers? 

I've seen several articles describing how to act in a time of crisis. As a C-Suite Executive and now as an Executive Coach, I think many of those articles are pretty good. 

Before we start, take a deep breath and remember that this will pass, or a new normal will form. Either way, it will feel chaotic in the beginning until new patterns emerge. Take that deep breath. Now:

General management:

Have your expectations about sales, profits, or anything else that drives your business shifted? 

The answer to this question impacts the work people do and how they continue to meet the company's goals. Remember that as this answer shifts, so do the required resources. Your employees may fear to ask for what they need, so encourage them to be bold without consequence.

How have you over-communicated your new expectations with your Executive team or employees? 

Your employees will want to know what is happening, and your transparency will serve multiple goals. It will (1) keep people on track, 2) help people to feel comfortable that you're in control (3) increase certainty in the face of unheard of uncertainty, and (4) deepen the connection with one another.

Have you asked your Executive Team or employees for their feedback on the evolving sales, profits, or anything else?

There's never been a better time to engage your employees in the decisions that impact their lives. Asking your team members how they'd solve the challenges increases your likelihood of buy-in because they feel included. As valued team members, employees will then feel empowered to help navigate the sudden economic disruption rather than merely being buffeted by it.

Planning:

Do you have an evolved plan for the quarter, next two quarters or year or more?

We all know how difficult it is to plan for the month, quarter, or year. And to have to do it multiple times seems like it takes away valuable time for actual work. That couldn't be more untrue. I've been in startups that failed to plan and re-forecast that ended up following unrealistic goals because they didn't stop to reflect on shifting behaviors or resources. Take the time now to look at various scenarios marketing or sales tell you may occur should consumer consumption shift.

Whom are you talking to every day, so you don't feel alone when making decisions? 

When crises strike, it's easy to forget to over-communicate because we fall into reaction mode and hunker down. Instead, every morning, make sure you speak to or email with your Chairman, the Board, your Executive Team, key employees, vendors, service providers. Over-communicate to your key stakeholders, so they see you like the consistent and steady leader you are.

What have you told the Board? Have you asked the Board for their help to make sure they are supporting you?

All those around you are your support network. Use them often. When times are tough, leaders often isolate, many because they fear they have to solve the challenges alone. Your greatest strength as a leader is surrounding yourself with good people. Now is the right time to seek their support and not to close your door and work on this alone. Ask your Executive Team what they think. Call the Board and ask for their strategic help. Ask them to come into the office to roll up their sleeves and work with you and key team members. Make sure the Board knows how you're analyzing the situation and will have a point of view about ways to deal with the challenge. Here's an example of something that may change when times go from more certain to uncertain: If you're a relatively new executive, you may think you know what the Board values when times are relatively stable. When times are uncertain, how does that change? 

Customer Consumption:

What is the relationship between your customers and your product?

Imagine you're one of your customers. How would you normally use your product or service? What have your customers told you about how they use your product? If you don't know, ask them now. Ask them how they are using the product now vs. in the past. Read social sentiment on Facebook or Instagram, in Customer Service or wherever else you interact with your customer. Pay close attention to the shifts you see occurring. See how those shifts create opportunities to continue to delight your customers.

Will the customer use your product less, more or the same amount as a result of this Coronavirus chaos? 

Depending upon the industry in which you operate and your product type, your customer may shift the usage of your product. They may look for a cheaper version. They may seem to use less of your product. They may stockpile your product until they need it again. As an example, if you're a membership box, people receive monthly or quarterly, what is in that box that people may consume in a short period that they will want from your company? 

What is your financial plan for the above scenarios of less, more, or the same usage rates?

Now is the time to work closely with your key teams that spend money. If you look at scenarios of consumption declining, growing, or staying the same, how does that model out for your key performance indicators? Does profit margin drop, but consumer acquisition remains steady. Think about these types of questions based upon your core company needs.

Will your customer use your product differently from its intended use during this period?

You may be in the enviable position of suggesting alternative uses for your product or service, so your customers continue to use your product. One method to figure out the different ways your customer uses your product is to ask them or to read about it on social media. Do a quick informal survey. More information is better than none or guesswork. 

How responsive is your product or service to emerging customer needs during this period?

If your customer is using your product differently, is it possible during this period to develop content that could help support this new usage? Or, can you quickly modify the product or service to add more of what your customer needs if more is what they need?

Product development and distribution:

Will your company be able to deliver the product consistently throughout the crisis? 

Building upon the above, how likely is it that you can consistently deliver on the product or service with the service level agreement you have inside the company, and does the service level align with customer expectations? Think far into the future. Think about all involved in the supply chain. Think about how your employees may not be as productive. Go through whatever list you have that comprises the evolution of your product from conception to delivery. Rip apart every line item, so you know where the weakness and opportunity lies.

If you are unable to deliver your product or service consistently, what do you intend to tell your customers, staff, and other stakeholders, and when will you tell them?

I think we would all agree that we've had enough surprises. I believe the companies that survive this period will be prepared for multiple outcomes, be able to adapt quickly to changing circumstances up and down the supply chain, or customer usage. Communication is important. Tell your customers if your product delivery is going to be altered in any way, whether you're using different materials or it's going to be late. They deserve to know, and if you explain the reasons, they will forgive you. A key lesson I learned during the Great Recession is that consumers want to see their favorite brands survive, and they stick with those who are communicative and tell a story. Be that story-brand for them. Get your consumer to root for your success. Make your consumers feel connected to your brand.

Are you training your employees on how to do the work for you should your expectations shift?

Something that is often forgotten or given less time is re-training the employees on the front line. When things change rapidly, customer service and salespeople hear it loud and often from frustrated customers. Empower your front line people with the crisis communication tools the other companies are not using. That will be a crucial differentiator for your team. Imagine your front line people working with crisis public relations teams to learn how to communicate to get the consumer to stay on your side and to root for you, even if you fail once in a while. Customers can be powerful allies.

Financial implications:

Does your company have enough money to weather three to six months of depressed sales? 

Right now is an excellent time for your Finance and Marketing people to work together to model the best case, worst case, and middle-of-the-road scenarios. 

Then look at your Key Performance Indicators like cost per acquisition, profit margin, lifetime value, conversion rates, visitors. Like I described above, speak with your key stakeholders and tell them how things shift and how they are shifting over time. Understand their concerns about your key metrics and then make your decision. This is an essential step because, as a leader, you need to have support for the big choices you make. Before you finalize your decision, determine whether you have the resources to implement your decision.

Can you cut back on non-essential services now to avoid reducing the workforce as much as possible? 

It might seem tempting to keep pre-crisis perks. We often rationalize that we don't want to hurt relationships or hurt morale. The truth is, if we don't immediately begin making tough decisions, they will be forced on you, and you will have less control over them. So, make a list of everything you don't need now. Figure out ways to deprecate as much as possible. Then, if you have to cut people from your workforce, your employees will know you worked hard to make the company as lean as possible to avoid even more draconian changes.

Can you rebalance your marketing spend so that you are targeting the consumers who are most likely to purchase now or soon, and keep a minimum budget allocated to "awareness" and "brand" building? 

I was Chief Marketing Officer for a good while and am accustomed to the CEO and CFO requesting cuts to the marketing budget. No one wants to be in this position, yet if you're a leader, you will be here often. It is a reality, so don't sweat it because you're a team player. Consider it cutting underperforming dollars and investing them where they will be helpful to the company to learn or accomplish other tangible goals.  

Before you answer the budget cut question, ask a clarifying one. For example, "is the plan to keep growing customers and retaining the ones you have, or is the plan not to produce new customers? 

Either way, as time progresses, carefully watch your cost per acquisition and lifetime value and measure them based upon time, like a prior week, year, day, month. Measure your requests to cancel or suspend services if you have a membership business, so you know how to model retention. In my experience, customer acquisition cost and customer lifetime value will change. The first month of a downturn of lousy news may produce many requests from customers to put your services on hold or even to cancel them outright. If possible, develop a plan to suspend memberships for three or six months so you can keep the customers on your active list. You may want to maintain as many existing customers as possible by offering them flexible plans. 

Talent 

Have you identified the employees that will prove the most beneficial to your business through this time? 

If not, make your list now and ensure they're being trained and coached so they feel valuable during this time, and their utilization rate will increase.

Have you identified the employee you feel may not serve the business during this time? 

Consider Coaching for the underperformers, especially if you need their role and think they can perform better. If Coaching doesn't work out, plan for a compassionate and equitable way to treat their departure, should you need to have layoffs. Be aware of who is on the list and make sure it is fair and equal.

Taking care of yourself and your family

It is essential to your family's and company's success to put yourself first in the critical areas of getting enough sleep, eating the best you can, and being as active as possible. You will need the energy to get through each day.

 Remember: Be kind (to yourself) and unwind (at the end of every day).