- Many companies acted to assist the public response to the pandemic.
- Companies that already had established relationships with community organizations, governments, business partners, or others, leveraged those connections to channel resources.
- High risk and poor coordination impeded many companies’ early response.
The first phase of the COVID-19 crisis posed an unprecedented challenge for the private sector. In early March, as the pandemic took hold and lockdowns went into effect in the US, companies scrambled to adapt to profound disruptions to their business operations and markets. The rush to protect employees, jobs, financial liquidity – and in some cases the survival of the firm – was all-consuming for many companies.
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However, in those crucial early weeks, many companies also sprang into action to assist the public response to the pandemic. Some adapted their supply chains to produce personal protective equipment (PPE) or medical equipment. Others made substantial contributions of funding or company resources to support first-responders and vulnerable populations. Many of these efforts took place through rapidly-activated partnerships between industry, government, non-profit organizations and others.
Why were some companies able to take action in the public interest so quickly, even in the midst of an all-encompassing business crisis? A review of the private-sector response reveals several key advantages that enabled some companies to be “first movers” – and a number of impediments that left others lagging behind. While these lessons and examples focus on experiences in the United States, they are applicable elsewhere. The key factors that enabled both large and small firms to be first movers were a willingness to innovate boldly, and an ability to partner quickly based on established relationships with governments, non-profits and other companies. For those companies, creativity and trusted networks enabled agility that benefited the public interest – and in many cases brought business benefits as well.
First Movers leveraged their assets decisively to contribute to societal needs
The private sector traditionally plays an integral role in emergency response, During crises – ranging from natural disasters to humanitarian emergencies – companies provide essential supplies and services, both on business terms and through contributions of funding, supplies or volunteers. However the COVID-19 pandemic posed unprecedented challenges to this system. Among the companies that took action to contribute to the public response to the pandemic during its early phase, most exhibited one or more of the following attributes.
Companies that saw a business case for adapting their approach often did so. Those connected to the health sector had the clearest and most urgent incentives. Pharmaceutical companies – ranging from industry giants to new startups – launched intensive R&D efforts to develop vaccine and treatment options. Companies throughout the medical supply chain accelerated production, such as the Braskem America plant which ramped up to 24/7 production of polypropylene for medical supplies. Other industries that stood to benefit from increased demand for essential or socially-beneficial goods and services pursued market share and brand visibility by offering customer perks, incentives and free services. This included Cisco’s commitment of $210 million in technology services to governments and businesses through their Country Digital Acceleration programme; wellness companies like Headspace providing free services to healthcare workers and educators; and UberEats provided free meals and rides to first responders and healthcare workers.
Brand-conscious market leaders
Many large, consumer-facing companies made major philanthropic commitments by contributing either financial or in-kind support. Several companies established $100 million funds including Facebook (focused on small businesses), Netflix (largely supporting their employees and actors), and Tencent (establishing a Global Anti-Pandemic Fund focused on relief efforts). Companies that had experienced major financial losses limited their financial contributions, but often made in-kind contributions – including hospitality companies, such as AirBnB, Hilton and Mariott providing free lodging for healthcare workers, or airlines like United Airlines, JetBlue and Delta providing free flights for medical volunteers. By contrast, hard-hit industries that are largely business-facing, such as real estate and construction, had less visible responses.
These companies played a key role in the early response in some cases. Companies that were able to think out of the box and radically change their mission, operations or modus operandi in short order were able to seize either business opportunities or make substantial in-kind or philanthropic contributions. Non-medical manufacturers pivoted their supply chains to produce essential medical supplies – whether by contract, as major automotive companies like GE and Ford did in producing ventilators, or as philanthropy, with apparel companies like LL Bean and New Balance in producing and donating masks and gowns and many local breweries, such as Grey Sail of Rhode Island, producing and donating hand sanitizer. Others responded with new approaches to address sector-wide business disruptions. Restaurant management firm Toast laid off half of its staff, but joined with other food-industry partners, the Restaurant Workers Community Foundation and World Central Kitchen to found the Rally for Restaurants initiative.
Companies that already had established relationships with community organizations, governments, business partners, or others, leveraged those connections to channel resources or take joint action. Those types of relationships cannot be built overnight – they work best when they are developed, tested and strengthened over time, allowing those involved to build a strong foundation of trust and operational alignment. Many first-mover companies had invested in building such relationships over many years, then were able to deploy them in different ways, such as:
i) Leveraging business relationships
Salesforce leveraged its business partnership with Alibaba to obtain 50 million pieces of PPE, catalyzed by an urgent request from a local hospital, UCSF, which had a longstanding philanthropic relationship with the SalesForce CEO. The company leveraged its business network to bring additional partners onboard including Fedex, Walmart, Uber and State Farm. Gap similarly tapped its supply-chain network to source PPE for local hospitals. Companies leveraged client networks to offer support – for example Bank of America distributed relief funds to households and small businesses, and committed $250 million to Community Development Financial Institutions. Unilever provided $540 million in early payments to support small and medium-sized suppliers in its global supply chains.
ii) Activating philanthropic partnerships and community networks
Companies leveraged existing philanthropic relationships to support non-profits such as Feeding America (supported by Darden, Visa Foundation and others) and No Kid Hungry (supported by Fiat Chrysler). Companies with well-established local presence – such as mining, energy and manufacturing companies – worked with existing community partners to meet urgent local needs, such as Newmont Corporation’s $20 million Community Support Fund. Some established partnership platforms pivoted quickly to respond, such as the Partnership for Quality Medical Donations, whose 40 member organizations have pledged $150 million in donations.
High risk and poor coordination impeded many companies’ early response
Many companies were slower to initiate activities contributing to the pandemic response. Four weeks into the crisis, Harvard Business School (HBS) graduate students reviewed public information from about 320 US-based large and mid-sized companies from diverse industries and found that less than one-third were reporting actions to address community needs outside the company. Approximately 32% reported making philanthropic grants, 24% producing or donating medical supplies, and 14% employee volunteering. Others were initiating measures more related to their core business, such as the 29% offering customer perks or discounts; and 24% providing employee relief through emergency loans, childcare or housing support, or other means. These figures likely do not show the full picture, as they rely on publicly-available information in a fast-evolving, early-stage crisis. Many firms announced or initiated substantial public-interest initiatives after the first month.
While they present an incomplete picture, these relatively low numbers suggest the scale of the challenges that companies were facing in the early stage of the pandemic. Other crises within the US – such hurricanes or wildfires – have triggered a robust private-sector response notable for its speed, scale, and coordination. But in the COVID-19 pandemic, several factors significantly constrained the early private-sector response. These included:
• Unprecedented scope and uncertain outlook of the crisis including its global scope, exponential health impacts; catastrophic economic impacts, long timeframe, and highly uncertain trajectory. As a result, companies may have been cautious or uncertain about which actions to take in the early phases. They also were unprepared for the sheer enormity of the crisis – many had established employee-relief funds for other disasters, for example, but these tended to be quite small ($1 – 5 million) and paled in comparison to the current need.
• Direct threats to business operations, ranging from major financial losses to supply-chain disruptions and operational constraints, required companies to focus on their own survival and adaptation first. This limited their capacity to dedicate attention or contribute financial resources. The global nature of the threat, combined with social distancing guidelines, meant that every aspect of business operations was affected – compared to more typical localized crises where a company could focus their response on one geography, while their headquarters, workforce and supply chains remained largely unaffected.
• Political risk became a factor due to the highly politicized environment around the pandemic response. Politicians praised, criticized or erroneously described companies’ activities, creating reputational and brand risks due to the polarized political environment. As a result, some companies elected to keep a low profile or work only with trusted local government officials.
• Lack of government coordination to proactively mobilize, engage and coordinate private-sector action, including providing clear requests, guidelines and ways to engage. While many cited a lack of federal-level coordination, state and city-level governments often did not provide clear requests or effective coordination of private-sector action. For example some city hospitals were overwhelmed with companies and many others calling to offer or inquire about PPE supplies; where a clear public sector coordination point could have managed these contributions more effectively.
Many of these risks and impediments can be mitigated or reduced through a company’s ability to quickly mobilize innovation and to leverage existing relationships with governments, business and community partners, and others. Thus the degree to which these threats and risks paralyzed or delayed a company’s contribution to the pandemic response may also reflect a lack of internal and network-based capacity within the company itself to overcome them.
What is the World Economic Forum doing to manage emerging risks from COVID-19?
The first global pandemic in more than 100 years, COVID-19 has spread throughout the world at an unprecedented speed. At the time of writing, 4.5 million cases have been confirmed and more than 300,000 people have died due to the virus.
As countries seek to recover, some of the more long-term economic, business, environmental, societal and technological challenges and opportunities are just beginning to become visible.
To help all stakeholders – communities, governments, businesses and individuals understand the emerging risks and follow-on effects generated by the impact of the coronavirus pandemic, the World Economic Forum, in collaboration with Marsh and McLennan and Zurich Insurance Group, has launched its COVID-19 Risks Outlook: A Preliminary Mapping and its Implications - a companion for decision-makers, building on the Forum’s annual Global Risks Report.
Companies are invited to join the Forum’s work to help manage the identified emerging risks of COVID-19 across industries to shape a better future. Read the full COVID-19 Risks Outlook: A Preliminary Mapping and its Implications report here, and our impact story with further information.
Innovative, well-networked companies are agile corporate citizens
Companies, governments, non-profit organizations and others can learn from the early-stage experience of the pandemic to better leverage corporate capabilities – from talent to financial and in-kind contributions – in supporting both emergency response and longer-term economic recovery. Some of the key lessons for companies include:
Invest in relationship-building. Companies should invest in developing robust, long-term relationships with a diverse network of governments, industry peers, and community organizations, and engage in partnerships addressing issues relevant to their business. The trust, communication capacity, insight and collaboration embedded within these networks takes time and other resources to develop, but is a highly valuable asset that can be quickly mobilized in times of crisis.
Prepare for the unexpected. Building innovation capacity, running scenario exercises, and learning from disruptors and unconventional thinkers can help companies prepare for and respond effectively to rapid changes, unforeseen events and crises. Governments can be proactive in engaging industry in emergency preparedness planning; incentivizing and enabling innovation; and establishing coordinating capacity to mobilize industry action when needed.
Think and act systemically. The pandemic has revealed how much of our market system depends on the health, safety, livelihoods and well-being of all members of society. Companies that recognize the business value of a thriving social and economic system are more likely to develop robust strategies, stakeholder networks and reputations that enable them to navigate crises. They can also play an active role in building that enabling environment by collaborating with other organizations to take a "systems leadership" approach.
Business convening organizations can support companies in building relationships, innovation capacity and systemic perspectives, then translating those into action. The World Economic Forum’s COVID Action Platform is engaging broad networks in collaborative action; and the US Business Roundtable’s CEO Task Force is focused on enabling business continuity and worker safety. Business Fights Poverty, Harvard University and UKAid jointly created a COVID-19 Response Centre with examples and frameworks for rapid innovation.
Beyond the initial crisis response, business leadership will be crucial to the long-term recovery from the pandemic. New approaches will be needed, engaging companies with governments and local communities, to rebuild business operations and economies that are more inclusive, sustainable and resilient enough to weather future challenges.
This article draws on research conducted by Harvard Business School students: Tanishq Bhalla, Shani Carter, Carolyn Cannella, Gegorio Gomez, Vyechi Low, Faith Lyons, Rebecca Milian, Yoonjin Min, Frederic Repond, Tomas Rosales, Parker Tuan, Amy Villasenor and Phoebe Zhang, under the guidance of Prof. Mitchell B. Weiss.