- Many leaders recognise that their corporate crisis management frameworks were inadequate, too rigid, and too backward-looking to respond resiliently to COVID-19.
- CEOs will need to take a scenario-based approach to post-COVID-19 planning.
- The pandemic will leave permanent marks and disrupt many industries.
The path to recovery from COVID-19 remains unclear. The general consensus is that we face a protracted period with many restrictions still in place, and that even after the initial recovery phase, business will not return to “back to normal”.
The pandemic will leave permanent marks – not just a deep global recession from which it will take some time to recover, but also huge disruption to many industries that will both pose severe challenges and usher in new opportunities.
From day one of the looming crisis, Arthur D. Little management consultants started a dialogue with its network of CEOs, through a series of 25 one-hour virtual meetings, online surveys and conversations. During these meetings, CEOs gave their anecdotes looking back and shared intuitions looking forward.
The crisis as it unfolded
As CEOs came to terms with the radical disruption that had fractured economies locally and worldwide, the first need was to simply understand what was happening day-to-day.
As the crisis gathered momentum, CEOs had to focus first on employee and customer safety, at any cost. Their attentions could then turn to operational stability and cash management.
The CEOs in our network stressed the importance of acting fast and decisively, assuming the worst in the absence of full information, and avoiding stepwise, partial solutions. They talked about the criticality of increased delegation to enable faster decision-making, the need to spend nearly all of your time communicating (especially with staff), and the importance of engaging with suppliers and partners, the government, unions and the community.
The facts that surprised CEOs most about the crisis were:
1. The difficulty of getting reliable information and intelligence from different geographies.
2. The velocity of the crisis, which meant that some crisis management plans were simply too slow to use.
3. The realisation that many different types of planning did not adequately consider the full partner ecosystem.
A good proportion found that their corporate crisis management frameworks were inadequate, too rigid, and too backward-looking. There was a shared view that, looking ahead, business resilience management approaches would need to be more dynamic and smarter at “sensing and responding”.
Views on the future
At the height of the crisis, strategic vision and “readiness for the new world” were at the very bottom of CEOs' lists of concerns. However, we know that now, as some countries are already taking cautious steps towards lifting lockdown restrictions, shaping up for the post-crisis future has moved to the top of the agenda.
There are some shared hopes and agreements on uncertainties across our business network about what the post COVID-19 world could look like. For example:
- Governments will be much more involved in industry. This will especially be the case in critical infrastructure sectors such as utilities, travel and healthcare. More government involvement will mean increased regulation.
- The relocalization of global supply chains is expected by many, and will counter the previously unstoppable march of globalization. States and large companies will seek to gain more technological sovereignty, reducing dependence on others and improving the resilience of their operations to global shocks.
- Digital technologies are expected see a major acceleration in adoption, especially those which enable business activity with less human contact, including e-commerce, virtual networking and robotization.
However, there are big uncertainties about how these trends will progress. For example, how willing will individuals be to accept a world with much less physical interaction? How prepared will people be to give up their rights to data privacy to enable further digitalization?
Then there are great unknowns surrounding how climate change will affect policies and behaviours, and the sustainability of local communities and wider geopolitical issues.
For some industries, especially those involved in infrastructure in the broadest sense, the crisis is a driver for growth. For many industries, of course, the future will be extremely challenging. However, even for these hard-hit industries there are ultimately new opportunities, for example:
- The aviation industry may undergo major structural change, which will provide new opportunities for value-chain players in, for example, “asset-light” and “as-a-service” business models.
- For the automotive sector, the disruptive effect on market volumes could impact key strategic decisions, such as timing for electrification, digitalisation, and new ownership business models.
- For the oil and gas sector, the crisis will accelerate its transition towards cleaner energy sources, products and service offerings.
- For the chemicals sector the disruption could drive companies to seize the potential of technology and industry convergence, applying new business models supported by digital technologies.
- In consumer goods, there will be opportunities for new brands, categories and even services to raise their relevance and establish their footing as consumers change their behaviours.
Have you read?
In all sectors, CEOs will need to take a scenario-based approach to post-COVID-19 planning, asking:
- How can our company shape scenarios and their outcomes in our favour?
- How can we best leverage the things that are most certain?
- What are our strategic options, so we can act boldly when opportunities arise?
- What are our strategic insurances, so we can protect ourselves against undesirable scenarios unfolding?
Today the future remains a scary prospect, but with every crisis comes opportunity. And, just maybe, one legacy of COVID-19 could be a new spirit of collaboration, connectedness and community that will benefit society, business, and the economy alike.