Covid-19 is impacting on many businesses – directly or indirectly: The economy takes a nose-dive, and the future is more uncertain than ever. How should Management react?
Steering a ship in calm waters is difficult already, but holding the helm in rough seas takes perseverance, a clear vision, and trust into own and the team’s capabilities. It is any CEO’s first responsibility to improve (and grow) a business, even in rough times.
- Strategy
The business strategy describes the path to success, in particular considering markets, technology, and competition. Strategic goals and objectives are long term – usually with a minimum horizon of 5-7 years (may be shorter in New Economy business models). Having a strategy at all is a good starting point, but sticking to it is imperative since the determinants of the market environment usually do not change over night – not even in a pandemic. - Tactics
A successful strategy is supported by a series of well-defined, concrete postulations, targeting specific goals and objectives. They define the stepping stones towards full implementation – and largely translate into those strategic projects without which the strategic process comes to a grinding halt. - Drive or Stall?
Exceptional situations require exceptional measures – but panic is a bad advisor. Even in a shrinking economy, the general business direction will remain the same. Instead of stopping all strategic initiatives, each of them should be reviewed carefully for its effectiveness, cash-impact and risk/reward ratio in an objective process. - Risk Management
Obviously, especially in uncertain environments managing risk becomes paramount. Implementing KPI systems, routine milestone reviews, and a stage gate process to control critical waypoints are essential elements of a continuous monitoring process. - Courage
„Killing your puppies is the hardest part!“, is a quote by an R&D Director I used to work with. It takes courage to stop a process one has invested in…. Nevertheless, pulling the plug on a project may very well be the right decision if the project is derailed, and objectives cannot be reached at all or at least not with acceptable efforts.
Summary
“The Chinese use two brush strokes to write the word ‚crisis.‘ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger–but recognize the opportunity.” (Quote by John F. Kennedy)
Unfortunately, there is no one-size-fits-all approach to strategic decision making. However, driving the strategy by implementing strategic projects in a controlled manner will position the business for the future. Heeding this principle will allow you to hit the ground running past the pandemic.
The author: Diethard Engel is an interim manager and consultant, focused on Business Transformation, Post-merger Integration / Carve-out and Executive Finance in the manufacturing industry.