It doesn’t matter if COVID-19 induces a recession or not. It doesn’t matter if the recovery is going to be U-shaped, V-shaped, L-shaped or W-shaped. What we know for certain is, basic human values will continue to hold good, demand and supply situations will prevail, everyone will make progress while some will go farther than the others. How do we take our enterprise forward given the rapid changes induced by the pandemic?
Across industry sectors, barring a few, revenues are down; some of them have drawn a zero. No amount of strategy and business acumen can generate profits when revenues become zero. Though the lockdown is for a temporary period, an organisation’s getting back to normalcy depends upon multiple variables such as the readiness of the supply chain, availability of employees and inflow of orders. Every organisation and industry sector has its unique context; however, in general, the environment presents a myriad of uncertainties before the leaders.
Naturally, one has to look inward, identify the pockets of inefficiency and quickly eliminate those to cut costs. One would lay off people, defer and reduce employee costs by restructuring salaries and benefits, review the productivity metrics to reset targets and tweak measurement systems, reduce supplier costs, optimise supply chains and simplify work processes. Based on the context of each company, the leaders have to prioritise some of these several initiatives over the others. Ideally, all of these have to be done!
It is not enough to look inward to cut costs and improve operational efficiency. One has to look outside and listen to the voices of the customers, suppliers, partners and society. There are opportunities for developing new products or services, new territories to venture into, new partnerships to strike or innovate some of the existing products, change terms of engagement with customers, partners and suppliers. Each of these is an opportunity to grow revenues, profits or brand image for the future.
Leaders have to perform a balancing act between inward focus and outside perspective. Leaning on one side more than the other could lead a company to the extreme of ignoring extremes such as warning signs from the outside world or internal dysfunctionalities.
Resilient Leaders at the helm
Wading through troubled waters throws surprises at us. We need to hold a steady head and a positive mind to be able to get through this part of the trek without major trouble. The leaders have to think clearly, tap into all resources at their disposal and decide their priorities. Since time and resources are limited, leaders have to evolve specific programmes and put their weight behind them. The whole organisation needs to be able to see the leader driving these programmes hands-on.
They need to clearly and openly acknowledge the challenge faced by their organisation, restate the purpose of the organisation and rekindle hope in the minds of their employees, suppliers and shareholders at a regular interval. When a company is laying off people, delaying payment of wages, cutting down employee benefits and rewards, it is not easy to boost employee morale. When cash flows are down, reserves are dwindling and additional credit lines from financiers aren’t coming up, leaders are having sleepless nights. That is the test of resilience!
Execution is the key
Most critical elements to keep up the journey are cash reserves or access to finance alongside the confidence of the shareholders. Unless these two elements are in place, no leader can take the next steps of planning for cost optimization and investments for the future.
Sometimes the leaders enjoy the confidence of their shareholders and have the needed cash to keep the machine running through the troubled times. Yet some fail to steer the ship well because they do not make the right choice of plans or fail to deploy the rigour of executing their brilliant plans. Large organisations need the right systems and processes to execute their new plans; leaders need to review the plans regularly and make course-corrections boldly and quickly. They need to be visible while steering the ship.