This was written over the weekend of 21/22 March and is likely to be out of date by the time you read it.
Standing here now, as the misty fingers of a dawning global pandemic uncurl around us, we’re repeatedly told that we’re experiencing an unprecedented, fast moving situation. The words, now a trope, seem barely capable of expressing the scale of the crisis. Life for people across the globe has already changed irrevocably, millions of childhoods branded with a shared global experience, unified by a shared Internet. Unthinkable numbers of the vulnerable will die. Many businesses will simply cease to exist. Entire industries may finally crumble.
It is appropriate that our thoughts are with our families, with health workers and with those supporting society. But, as ghoulish as it may appear, those of us in business have an important part to play — not just to respond and support our teams — but to define the next generation of the global economy.
Most companies in the United Kingdom and the United States are now voluntarily adopting a move to working from home by default. Some workers, especially those in production and logistics roles, continue to take to the streets. For many businesses the technology was in place, albeit untested, to allow staff to work remotely. The widespread availability of fast internet, video chat and predominantly online business tools has vastly mitigated the productivity impact of this crisis.
However the same isn’t true of the impact on the mental well-being of our teammates. Even those used to remote work this isn’t business as usual (and please do take some time to read this great article from Carmel Eve on the impact of WFH on mental wellbeing). Many home workers are confined indoors, often with loved ones, some with their children who are now prevented from attending school. Many people who are being asked to work from home are sharing accommodation, sitting cross legged on the floor or their bed, or trying to make do with internet connectivity from their mobile phones.
This is not the same as choosing to eschew the commute to an office, it is an enforced and imperfect sanction, which does little to live up to the freedom that experienced remote workers would have had us believe before today. The impact on business is not technological, but psychological.
The three stages of adaptation
I can foresee three developing stages as we adapt to these enforced changes. The first stage, the burn, (where most companies in the West are now) will last just weeks. Exceptional effort will allow us to continue some semblance of normal work. Our teams will work long hours, pushing through adversity to make the novelty of endless video calls bearable. We’ll manage with heroic effort from dedicated employees.
But soon, this first stage will falter under the weight of the second, the collapse. Although we’re technically capable of managing our day to day tasks, we are not yet practised in the infrequent but important activities. How we interview and hire staff; how we manage performance and give feedback; how we make staff redundant, forecast budgets, set strategy or manage risk. In the collapse, which will endure for three to six months into the crisis, the heroic effort will no longer be enough. Our usual default processes and our cultural habits will no longer be fit for purpose. Our team members will be at the edge of burnout, with stress becoming a bigger concern than the virus that is causing it. Many more companies will fail in this second stage than in the first, as it drags out and erodes our reserves.
It is in the third phase, the regeneration, where opportunity reveals itself. Should the crisis persist past six months, the way we work will be transformed. The survivors will be more diverse, more global, more efficient, more remote, more shared and more open. Companies that embrace regeneration will emerge like phoenixes, stronger, fitter and more successful than before the crisis.
The opportunity for growth and rebirth
As a leader in a company today, the careful balance of survival hangs in our ability to prioritise. Short term reactivity during the burn is critical, responding with decisiveness to the economic reality of the situation. The decisions that need to be taken are beyond painful — to cut staff, close businesses and disappoint customers. Responding with speed may be the crucial differentiation between short term survival and collapse.
But businesses can’t survive with pure reactivity. When the regeneration comes — and it will come — the companies which excel will not simply have survived, but maintained an eye on the future. Our priorities now need to balance clear, unblinking and immediate action with sensitivity for the long term capabilities which will enable us to react swiftly as a new economy is re-established.
One immediate caution as we look to save our businesses through cost cutting is to avoid, wherever possible, the loss of our high performing staff. Many costs in our businesses can be turned up or down like a thermostat — marketing, brand, travel costs; but not our staff. It’s crucial to rationalise our costs, but to do so in a way that protects our people, as these will bring the capability and next round of heroic effort to jump start the economy as it recovers.
We must take this opportunity to take a hard, calculating look at our businesses to understand how we make the right cuts. We must consider the business units and product lines that have been propped up by more successful portfolio members, those that have been sliding into break-even profitability, marginal loss or slow decline. Even more importantly, the vanity projects, failed experiments, bloated departments, ill considered acquisitions and executive side-gigs should be jettisoned for good.
More than ever, now is not the the time to tolerate inefficient manual interventions, archaic processes, bloated teams or under-performing partnerships. If you could never find the right time or impetus to address the challenges and blockers that were already known across the business, we have now been gifted the perfect opportunity to clean house.
The opportunity for a new global economy
The economy that emerges when this crisis passes will be vastly different than the economy of February 2020. No matter how long the the societal and economic repercussions last, businesses will find ways to become successful again. Some are already adapting — supermarkets, delivery companies and technology firms are already taking advantage of the disruption.
The industries that collapse may not return in a recognisable state; even the survivors in the travel, hospitality, healthcare, and automotive industries will face entirely different demands from their customers. Small startups, always more able to respond quickly to change, will move into areas we had never previously considered viable.
We are being confronted with the spectacle of our own devastating impact on the planet. Generations of Venetian politicians would never have seen fish swim in their crystal clear lagoon, bereft of the tourist boats that fund the economy. But now, the beauty of nature returning as humans are sequestered behind doors may cause them to reconsider allowing the damage to restart.
This golden opportunity to see what might be; a world in which humans are more in harmony with our environment will give us one critical inflection point to put our rapacious legacy behind us. Responsible businesses can lead this change — responding to a new level of consumer awareness of how global we are; how powerless against nature we are yet how much damage we do to her. This crisis clearly sends a message that we are one planet, one species and not the jingoistic collection of warrior tribes our politicians would have us believe.
The new strategy of business can embrace this new global reality. Despite the bombastic chest-thumping of 1990s management books, business is not like war. Rather, it’s like tending a wild garden. Gardens thrive in diversity, their delicate ecosystems growing over time. While there is competition, there is also balance; the system thrives when it is diverse and interconnected.
Our new generation of businesses can compete, but also be supportive of each other. We can choose to build a collaborative ecosystem, with a new focus on sustainability and responsibility. Unlike war, business is not ‘winner take all’; instead, a rising tide can lift all ships — as growth returns, we can share and drive a global recovery.
Winter is a harsh season for gardens. Growth stops and the weak and ill-prepared wither and pass away. But winter is a necessary purge to encourage the healthy and best adapted to survive. Our spring, whether it’s six months, a year or a decade away will follow this economic winter.
Five tips for business leaders planning for the future
Business leaders now need to be aware of these new risks. We need to prioritise and remain reactive during the burn. We then need to drastically minimise the length of the collapse, by facing into hard decisions as quickly as possible. Making the right decisions and saving the right costs will buy us time to survive, but we need to move quickly into the regeneration.
Determine how to rebuild your business by stripping the unnecessary and unsuccessful, and embracing the lean, modern, global and responsible.
Most importantly we need to focus on the opportunity that we are presented with, and assertively work to create a more positive, more equal economy in the regeneration.
- Look for responsible cost saving opportunities within your business. Focus on areas which have been protected by legacy or lethargy up until now. Address the unnecessary drag created by flights of executive fancy and focus on customer value.
- Identify opportunities that will lay the foundations for regrowth. The projects, upgrades and migrations that have been avoided because it was never the “right time”. Put your talented teams to work to create opportunities that will pay back in 6–12 months
- Define a brave and forward looking strategy which re-imagines your business in a new, global economy which can take advantage of a newly trained, newly available remote workforce.
- Prioritise aggressively and responsibly — make decisions which balance immediate, short term requirements for survival with the long term work that will leap you forward in a recovery
For some more evidence on the possibility of a ‘V’ shaped return to form, I strongly recommend checking out this article on Harvard Business Review that details previous macroeconomic recoveries.