Disruption is here – as many organizations are busy activating their business continuity plans, suspending travel, having employees work from home, canceling events and so forth, many boards, CEOs and other leaders need to start planning now for the mid to long-term. While no one knows exactly what the future holds, the economy is clearly already feeling the effects of COVID-19.
Whether your organization survives or thrives in this new normal depends largely on decisions you make now. These decisions need to be made in an environment where the facts as we know them change hourly, and the future is not only unknown, but not predestined. The future will be determined, in part, by the decisions made and the bets placed now by the public and private sectors.
Visionary leaders look to the future. In today’s environment there are many factors to consider:
- Supply chain disruption
- Lost business due to suspension of operations
- Healthcare costs driven by COVID-19
- A possible global recession
Today’s leaders came to age during the Great Recession a decade ago. They understand in times of distress there are opportunities to thrive and opportunities to fail. While each organization must determine its own way forward, we suggest the following as a path on this journey through the unknown:
- Develop realistic projections and stress tests for each one. What if one of your major suppliers fails? What if the demand for your products and/or services falls 25 percent? Understanding the effect now allows you to start developing contingency plans and avoid looking like the proverbial deer in the headlights later.
- Increase communication with your stakeholders. Now is the time to start a dialogue with your lenders about your plans to weather the storm clouds forming overhead. Frank and transparent discussions with employees not only gives them confidence that you are working hard behind the scenes but also opens the channel for important intelligence and recommendations from the employees in the trenches. We all know the best ideas come from those who are in daily contact with our customers, on the production line and in the marketplace. Now is the time for more real-time information sharing and leaders must avoid the temptation to hunker down and isolate themselves.
- If you are already feeling the adverse effects, for example companies in the retail or hospitality sectors, focus on cash flow projections. A 13-week cash flow plan has long been the primary tool of turn-around professionals, and for good reason. Understanding your projected cash flows allows you to look at strategic options now while they are truly options.
- Do not lose sight of other risks. If cybersecurity was a key risk before, it is likely still a risk – the same is also true for other risks. While we need to focus on the new normal, we cannot lose sight of other risks and priorities.
- Finally, what demand in the new normal are you prepared meet? There are always winners and losers. Can you shift focus to fit a new demand without abandoning your longterm strategic plan? Not all companies are suited to go into the hand sanitizer business overnight, but if you know your business, understand you clients and are realistic about the changes coming, you may have an opportunity to thrive rather than survive.
If there is one key lesson here, it is to keep your eyes wide open and to not wait for the world to return to normal. True leaders face disruption directly and seize the opportunities it presents. The partners and employees of DHG are working every day to help our clients navigate the waters of disruption. If you want a fresh point of view, please call your DHG engagement partner.