Businesses must reframe their purpose, priorities
As the coronavirus pandemic rages across the world, even the most rigorous contingency planning and disaster management systems have gone awry. While we are far from overcoming the pandemic at this stage, the examples of China, Taiwan, South Korea and Singapore hold valuable lessons for businesses. An analysis of some of the companies at the forefront of taking effective actions offers some clues on the steps that could stand the test of time.
First, early and decisive action is imperative. Learning from previous experiences, forecasting the impact on the organisations/ partners/ employees, and taking proactive steps will be critical in handling the crisis. Here is an example: Starbucks China closed 80% of its stores within days of news of virus breaking, prioritising its partners’ safety — and employees — above business. It also paid full wages and instituted a partner assistance programme to help with insurance of its partners, employees, including the contract workers employed by individual stores and even their family members. This helped shore up the confidence of all stakeholders and has allowed Starbucks to reopen these stores rapidly since the impact of Covid-19 has receded.
Second, this crisis is an excellent opportunity for companies to refine their purpose and frame the business as part of a larger human ecosystem with broader responsibility to the community. It is a moment to institute internal rules that help the company take more humane decisions. This is not just ethically right but economically prudent.
Companies must ensure that they don’t cash in and fall into the trap of short-term price gouging for immediate gains — such actions could harm their reputation and brand. Going above and beyond the profit motive will reinforce pride among employees and partners and help enhance the stature of the company. For instance, Dyson, a global leader in air-flow technology used for its household products, utilised its know-how to design an entirely new ventilator named Covent and committed to supplying 10,000 units within ten days of the pandemic.
Third, corporate leaders should assess their organisational flexibility and decision delegation to address market upheavals like this. Rallying the whole organisation together towards a few specific actions and then getting the creativity of all team members will stand a company in good stead. The Covid-19 pandemic and the lockdown learnings can help in contingency planning for future shocks to ensure that the company is better prepared instead of finding itself flat-footed. These actions may be aligned towards business continuance. Still, importantly, they must give teams the freedom to respond quickly and make decision-making more democratic and in line with the company’s purpose.
For instance, early in the pandemic cycle, Diageo India forecasts the spike in demand for protective products. Its India team repurposed their 15 factories to produce 300,000 litres of hand-sanitisers and donated 150,000 masks to five public health departments for use by health care workers. Additionally, it created a Rs 30 million insurance fund to support bartenders in this time of need. This is especially critical in countries like India, where social security is minimal at best.
Fourth, businesses should apply a “through-the-cycle” strategy during this critical period. While the initial days of this pandemic crisis will be devoted to ensuring the safety of teams and partners, the next stage presents the organisation an opportunity to think through the cycle and define initiatives that will allow it to come out stronger post the pandemic.
Developing perspectives and projections on life post-Covid-19 can give companies a head-start when business emerges through the current trough. Refining the value proposition and business model, defining the online and e-commerce strategy, driving a more efficacious organisational structure and identifying new growth opportunities can be the areas of focus.
And, finally, it is time for the investor community to rethink its company valuation models. It will become increasingly important to ascertain the resilience of the company rather than just its profitability. In a volatile, uncertain, complex and ambiguous world, the ability of an organisation to withstand shocks — in supply chain management, business continuity or regulatory mechanisms — should be treated as a critical aspect that the market will evaluate while ascribing the right value to the company.
The human, social and economic toll of Covid-19 is still rising, and it will be a long time before its true impact will be understood. Nevertheless, the above actions by companies will hold them in good stead and drive greater resilience in their future operations.
