COVID-19 has stamped the word “crisis” on headlines all over the world. Unlike other recent times of turbulence, the impacts of the new coronavirus are not restricted to some specific sectors. They affect companies of all sizes and industries, civil society, governments, healthcare and the economy.
To face this moment it is important that corporations are aware of the best crisis management practices. Here at Falconi, with our vast experience in this topic, we reckon that there are three major steps to ensure the survival of a company: the implementation of a crisis committee, the analysis of scenarios and the implementation of anti-crisis measures and, finally, the preparation for the post-crisis.
I – Implementation of a Crisis Committee
The first group to be formed, should be the central crisis committee, representing the main divisions of the company and headed by the CEO. This team must be responsible for evaluating the most relevant stress points for the company, i.e., which sectors will be hit hardest. Let´s use, for example, a retail company. For such type of enterprise the crisis brings about concerns regarding logistics and distribution, as well as the health of its members. Having mapped this situation, the next step is to form sub-committees, working under the guidance of the central committee, to address each one of these concerns.
It is of utmost importance that there should be a well-defined governance, with workflows that ensure the harmony at all administrative levels in the corporation but that, at the same time, care for the agility in the necessary decision-making and implementation steps. Decisions should be made and shared with all, mantaining well-coordinated actions.
II – Analysis of Scenarios and Implementation of Anti-Crisis Measures
Once governance has been established, we move on to the second step, in which the leaders in charge of the crisis management, have to look into possible scenarios. Here we are faced with a unique moment in the recent history of humankind, and that makes projections even harder to make. Therefore, the ideal is to work with at least three scenarios: optimist, neutral, and negative. For each of these possibilities, a plan of action must be designed and new KPIs must be established. The company will need to elect priorities taking into consideration all concerned parties; workers, financial sector and customers. The company must be preserved as much as possible and all possible variables must be taken into consideration, so that new operating practices can be debated.
It is in this second phase, based on the previously forecast scenarios and goals, that quick analyses must be conducted in order to identify opportunities focused on containment actions. Key questions must be analyzed in each specific realm (Financial, People, Operations and Processes, and Customers & Society), allowing for the proposition of specific initiatives. Based on the experience of Falconi´s customers, some initial courses of action are proposed in this paper. Such measures must be essential to ensure the company´s solvency and, therefore, its permanence. The team of specialists at Falconi has come up with several materials, available in our social networks and website, about subjects such as cash-flow management, zero based budgeting (ZBB), prioritization of expenses, among others. Of the literature we have produced, we highlight a Crisis Management evaluation tool designed to aid companies identify how they are reacting to the crisis and what else can be done when concerning the steps and the scope mentioned before. This is the Falconi way of sharing knowledge with corporations and of helping them to come out stronger of this moment of world crisis.
III – Preparation for the Post crisis
In this final step, it is important to understand that every crisis is transitory and that new opportunities will arise, and that preparation is needed for that moment. This phase is an invitation for corporations to re-think their way of operating. When evaluating the recent transformation brought about by COVID-19, we see companies getting used to telecommuting, enterprises creating new ways of being in touch with their customers or betting on e-commerce. Being prepared for this new market demands that, from early on, the leadership is able to create metrics to follow the evolution and transformation of the economy, as well as to have standards that can quickly point to a possible uptake in activity.
It will be necessary to adapt previously established objectives and goals and to revise all the previously forecast consequences, in all levels, from the CEO the operational sector. It is also necessary to map out the opportunities that may arise in your industry in the face of this new reality. Processes may be optimized based on learning acquired during the crisis; commercial, operational and support guidelines may need revision. New products and outflows can be developed, businesses will be transformed.
The most important lesson will be to observe the newly adopted procedures and understand when they are more efficient than the ones that were previously in place so they can be perpetuated, even as the situation goes back to normal. One thing is for sure: as soon as the markets overcome the current moment, we will have a new reality before us. For corporations the lesson is that reinventing themselves, means to set out to do it differently than before.